HBA-ALS, ATS, JRA C.S.H.B. 2681 76(R)BILL ANALYSIS


Office of House Bill AnalysisC.S.H.B. 2681
By: Bosse
Business & Industry
4/28/1999
Committee Report (Substituted)



BACKGROUND AND PURPOSE 

The Business Organizations Code (Code) is a joint project of the Business
Law Section of the State Bar of Texas with the assistance of the Office of
the Texas Secretary of State and the Texas Legislative Council.  The Code
has been under development since 1995.  The code is not proposed as a
component of the Legislative Council's continuing statutory revision
program, but the council did provide drafting and other assistance to the
Business Law Section. 

The Code includes both substantive and nonsubstantive provisions, but is
generally a nonsubstantive revision of comparable provisions found in the
Texas Business Corporation Act, Texas Non-Profit Corporation Act, Texas
Miscellaneous Corporation Laws Act, Texas Limited Liability Company Act,
Texas Revised Limited Partnership Act, Texas Real Estate Investment Trust
Act, Texas Uniform Unincorporated Nonprofit Associations Act, Texas
Professional Corporation Act, Texas Professional Associations Act, the
Texas Revised Partnership Act, the Cooperative Associations Act, and other
existing provisions of Texas statutes governing domestic entities. 

The effective date of the Code is January 1, 2002, to permit the 77th Texas
Legislature to make any changes or corrections deemed to be necessary and
to allow for time to educate and inform all interested parties.  The Code
generally does not apply to an entity existing before January 1, 2006,
unless the entity expressly elects to adopt the Code as its governing
statute. 

Codification of the business organization statutes is one of the last steps
in the overall codification of Texas statutes.  The Code is in lieu of a
Legislative Council revision of the statutes codified. 

RULEMAKING AUTHORITY

It is the opinion of the Office of House Bill Analysis that this bill does
not expressly delegate any additional rulemaking authority to a state
officer, department, agency, or institution. 

SECTION BY SECTION ANALYSIS

SECTION 1.  ADOPTION OF CODE.  Adopts the Texas Business Organizations
Code, as follows: 

TEXAS BUSINESS ORGANIZATIONS CODE

TITLE 1.  GENERAL PROVISIONS

CHAPTER 1.  DEFINITIONS AND OTHER GENERAL PROVISIONS

SUBCHAPTER A.  DEFINITIONS AND PURPOSE

Sec. 1.001.  PURPOSE.  Sets forth the purpose of this code.

Sec. 1.002.  DEFINITIONS.  Defines "affiliate," "associate," "association,"
"assumed name," "business," "certificate of formation," "certificate of
ownership," "certificated ownership interest," "contribution,"
"conversion," "converted entity," "converting entity," "cooperative,"
"corporation," "debtor in bankruptcy," "digital signature," "director,"
"distribution," "domestic," "domestic entity," "domestic entity subject to
dissenters' rights,"  "effective date of this code," "entity," "filing
entity," "filing instrument," "filing officer," "for-profit association,"
"for-profit corporation," "for-profit entity," "foreign," "foreign entity,"
"foreign filing entity," "foreign governmental authority," "foreign
nonfiling entity," "fundamental business transaction," "general partner,"
"general partnership," "governing authority," "governing documents,"
"governing person," "individual," "insolvency," "insolvent," "interest
exchange," "Internal Revenue Code," "jurisdiction of formation," "law,"
"license," "limited liability company," "limited partner," "limited
partnership," "manager," "managerial official," "member," "membership
interest," "merger," "non-code organization," "nonfiling entity,"
"nonprofit association," "nonprofit corporation," "nonprofit entity,"
"officer," "organization," "owner," "ownership interest," "parent entity,"
"partner," "partnership," "partnership interest," "party to the merger,"
"president," "professional association," "professional corporation,"
"professional entity," "professional individual," "professional limited
liability company," "professional service," "property," "real estate
investment trust," "registered limited liability partnership," "registered
limited liability limited partnership," "sale of all or substantially all
of the assets," "secretary," "share," "shareholder" or "holder of shares,"
"signature," "subscriber," "subscription," "subsidiary," "treasurer,"
"trustee," "uncertified ownership interest," "vice president," and
"writing" or "written." 

Sec. 1.003.  DISINTERESTED PERSON.  (a)  Provides that for purposes of this
code, a person is disinterested with respect to the approval of,
consideration of, or disposition of a claim or challenge relating to a
contract, transaction, or other matter if the person or the person's
associate is not a party  to the contract or transaction or materially
involved in the conduct that is the subject of the claim or challenge and
does not have a material financial interest in the outcome of the contract
or transaction or the disposition of the claim or challenge. 

(b)  Sets forth situations which do not solely constitute material
involvement in a contract or transaction that is the subject of the claim
or challenge or material financial interest in the outcome of the contract
or transaction or the disposition of the claim or challenge. 

Sec. 1.004.  INDEPENDENT PERSON.  (a)  Sets forth the conditions which must
exist for a person to be considered independent with respect to considering
the disposition of a claim or challenge regarding a contract or
transaction, or particular or alleged conduct. 

(b)  Sets forth situations which do not solely constitute a conflict of
interest. 

Sec. 1.005.  CONSPICUOUS INFORMATION.  Provides that, in this code,
information is conspicuous if it provides or is intended to provide notice
to a reasonable person affected by the information.  Provides that required
information is conspicuous if it is capitalized, boldfaced, italicized,
underlined, or larger or of a different color than the remainder of the
document. 

Sec. 1.006.  SYNONYMOUS TERMS.  Provides, for purposes of this code, that
"articles of incorporation," "articles of organization," "certificate of
limited partnership," and "charter" includes a  "certificate of formation";
"authorized capital stock" includes "authorized shares"; "capital stock"
includes "authorized and issued shares," "issued share," and "stated
capital"; "certificate of registration," "certificate of authority," and
"permit to do business" includes "registration"; "stock" and "shares of
stock" includes "shares"; "stockholder" includes "shareholder"; and "no par
stock" includes "shares without par value." 

Sec. 1.007.  SIGNING OF DOCUMENT OR OTHER WRITING.  Provides, for purposes
of this code, that a writing has been signed by a person when the writing
includes the person's signature and that a transmission or reproduction of
a writing signed by a person is considered signed by that person. 

Sec. 1.008.  SHORT TITLES.  (a)  Authorizes the provisions of this code as
described by this section to be cited as provided by this section. 
 
(b)  Authorizes the provisions of Title 2 and the provisions of Title 1 to
the extent applicable to corporations to be cited as the "Texas Corporation
Law." 

(c)  Authorizes the provisions of Chapters 20 and 21 and the provisions of
Title 1 to the extent applicable to for-profit corporations to be cited as
the "Texas For-Profit Corporation Law." 

(d)  Authorizes the provisions of Chapters 20 and 22 and the provisions of
Title 1 to the extent applicable to nonprofit corporations to be cited as
the "Texas NonProfit Corporation Law." 

(e)  Authorizes the provisions of Title 3 and the provisions of Title 1 to
the extent applicable to limited liability companies to be cited as the
"Texas Limited Liability Company Law." 

(f)  Authorizes the provisions of Chapters 151, 152, and 154 and the
provisions of Title 1 to the extent applicable to general partnerships to
be cited as the "Texas General Partnership Law." 

(g)  Authorizes the provisions of Chapters 151, 153, and 154 and the
provisions of Title 1 to the extent applicable to limited partnerships to
be cited as the "Texas Limited Partnership Law." 

(h)  Authorizes the provisions of Title 5 and the provisions of Title 1 to
the extent applicable to real estate investment trusts to be cited as the
"Texas Real Estate Investment Trust Law." 

(i)  Authorizes the provisions of Chapter 251 and the provisions of Title 1
to the extent applicable to cooperative associations to be cited as the
"Texas Cooperative Association Law." 

(j)  Authorizes the provisions of Title 7 and the provisions of Titles 1,
2, and 3 to the extent applicable to cooperative association to be cited as
the "Texas Professional Entities Law." 

(k)  Authorizes the provisions of Chapter 252 to be cited as the "Uniform
Unincorporated Nonprofit Association Act." 

(l)  Authorizes the provisions of Chapters 301 and 302 and the provisions
of Chapters 20 and 21 and Title 1 to the extent applicable to professional
associations to be cited as the "Texas Professional Association Law." 

(m)  Authorizes the provisions of Chapters 301 and 303 and the provisions
of Chapters 20 and 21 and Title 1 to the extent applicable to professional
corporations to be cited as the "Texas Professional Corporation Law." 

(n)  Authorizes the provisions of Chapters 301 and 304 and the provisions
of Titles 1 and 3 to the extent applicable to professional limited
liability companies to be cited as the "Texas Professional Limited
Liability Company Law." 

Sec. 1.009.  DOLLARS AS MONETARY UNITS.  Provides that a value or amount
required by this code to be stated in monetary terms must be stated in
United States dollars and is considered to be in United States dollars if
not specified. 

SUBCHAPTER B.  CODE CONSTRUCTION

Sec. 1.051.  CONSTRUCTION OF CODE.  Makes Chapter 311 (Code Construction
Act), Government Code, applicable to the construction of each provision in
this code unless  expressly provided otherwise in this code. 

Sec. 1.052.  REFERENCE IN LAW TO STATUTE REVISED BY CODE.  Provides that a
reference in law to a statute or a part of a statute revised by this code
is considered to be a reference to the part of this code that revised that
statute or part of that statute. 

Sec. 1.053.  APPLICABILITY TO FOREIGN AND INTERSTATE AFFAIRS.  Makes this
code applicable to the conduct of affairs with foreign countries and the
other states of the United States only to the extent permitted under the
United States Constitution. 

Sec. 1.054.  RESERVATION OF POWER.  Provides that the legislature at all
times has the power to amend, repeal, or modify this code and to prescribe
binding regulations, provisions, and limitations on any entity governed by
this code as the legislature considers advisable. 

SUBCHAPTER C.  DETERMINATION OF APPLICABLE LAW

Sec. 1.101.  DOMESTIC FILING ENTITIES.  Provides that the law of this state
governs the formation and internal affairs of an entity if the entity's
formation occurs when a certificate of formation filed in accordance with
Chapter 4 (Filings) takes effect. 

Sec. 1.102.  FOREIGN FILING ENTITIES.  Provides that if the formation of an
entity occurs when a certificate of formation or similar instrument is
filed with a foreign governmental authority takes effect, the law of the
state or other jurisdiction in which that foreign governmental authority is
located governs the formation and internal affairs of the entity. 

Sec. 1.103.  ENTITIES NOT FORMED BY FILING INSTRUMENT.  Provides that the
law of an entity's jurisdiction of formation governs the entity's formation
and internal affairs if the formation of the entity does not occur when a
certificate of formation or similar instrument filed with the secretary of
state or with a foreign governmental authority takes effect. 

Sec. 1.104.  LAW APPLICABLE TO LIABILITY.  Makes the law of the
jurisdiction that governs an entity as determined under Sections
1.101-1.103 applicable to the liability of an owner, member, or managerial
official of the entity operating in the person's respective capacities for
an obligation, including a debt or other liability, of the entity for which
the person is not otherwise liable by contract or under provision of law
other than this code. 

Sec. 1.105.  INTERNAL AFFAIRS.  Provides that, for the purposes of this
code, the internal affairs on an entity include the rights, powers, and
duties of its governing authority, governing persons, officers, owners, and
members and matters relating to its membership or ownership interests. 

Sec. 1.106.  ORDER OF PRECEDENCE.  Provides that this title applies to all
domestic entities and foreign entities to the extent provided by this
title.  Provides that each title of this code, other than this title,
applies to a different type of entity to the extent provided by the
appropriate title.  Provides that if a provision of this title conflicts
with a provision in another title of this code, the provision of the other
title supersedes the provision of this title. 

CHAPTER 2.  PURPOSES AND POWERS OF DOMESTIC ENTITY

SUBCHAPTER A.  PURPOSES OF DOMESTIC ENTITY

Sec. 2.001.  GENERAL SCOPE OF PERMISSIBLE PURPOSES.  Provides that a
domestic entity has any lawful purpose or purposes, unless otherwise
provided by this code. 

Sec. 2.002.  PURPOSES OF NONPROFIT ENTITY.  Sets forth the purposes a
domestic nonprofit entity may have. 

 Sec. 2.003.  PROHIBITED PURPOSES.  Prohibits a domestic entity from
engaging in business or activity that is prohibited by state law, unlawful
without a license and a license cannot be lawfully granted to the entity,
or from operating as a bank, trust company, savings association, state
regulated insurance company, railroad company, cemetery organization, or
abstract or title company governed by Chapter 9 (Texas Title Insurance
Act), Insurance Code. 

Sec. 2.004.  LIMITATION ON PURPOSES OF PROFESSIONAL ENTITY.  Authorizes a
professional entity to engage in only one type of professional service,
unless expressly authorized to provide more than one type, and ancillary
services. 

Sec. 2.005.  LIMITATION IN GOVERNING DOCUMENTS.  Authorizes the governing
documents of a domestic entity to contain limitations on the entity's
purpose. 

SUBCHAPTER B.  POWERS OF DOMESTIC ENTITY

Sec. 2.101.  GENERAL POWERS.  Provides that, except as otherwise provided
by this code, a domestic entity has the same powers as an individual to
take action necessary or convenient to carry out its business and affairs.
Sets forth the powers of a domestic entity. 

Sec. 2.102.  ADDITIONAL POWERS OF NONPROFIT ENTITY OR INSTITUTION.
Authorizes a domestic nonprofit entity or institution formed for a
religious, charitable, educational, or eleemosynary purpose to acquire,
own, hold, mortgage, and dispose of and invest its funds in property for
the use and benefit of, under the discretion of, and in trust for a
convention, conference, or association organized under the laws of this
state or another state with which it is affiliated or by which it is
controlled. 

Sec. 2.103.  POWER TO INCUR INDEBTEDNESS.  Authorizes a domestic entity to
create indebtedness for any consideration the entity considers appropriate,
unless otherwise provided by its governing documents or this code.
Provides that the judgment of the governing authority of a domestic entity
as to the value of the consideration received by the entity for
indebtedness is conclusive in the absence of fraud in the transaction.
Provides that a domestic entity is treated as part of the entity creating
indebtedness if it is directly or wholly or partly owned by that entity.
Provides that this section does not apply to indebtedness created by a
for-profit entity for the authorization or payment of a distribution. 

Sec. 2.104.  POWER TO MAKE GUARANTIES.  (a)  Defines "guaranty" in this
section. 

(b)  Authorizes a domestic entity to make a guaranty on behalf of a parent,
subsidiary, or affiliate of the entity or make a guaranty of the
indebtedness of another person if the guaranty may reasonably be expected
to benefit the entity, unless otherwise provided by its governing documents
or this code. 

(c)  Provides that a decision by the governing authority of the domestic
entity that a guaranty may reasonably be expected to benefit the entity is
conclusive and not subject to attack by any person, with certain
exceptions. 

(d)  Provides that this section does not apply to a domestic entity
governed by the Insurance Code or authorize a domestic entity that is not
governed by the Insurance Code to engage in a business or transaction
regulated by the Insurance Code. 

Sec. 2.105.  STATED POWERS IN SUBCHAPTER SUFFICIENT.  Provides that a
domestic entity is not required to state any of the powers provided to the
entity by this subchapter in its governing documents. 

Sec. 2.106.  LIMITATION ON POWERS.  Provides that this subchapter does not
authorize a domestic entity or a managerial official of a domestic entity
to exercise a power in a manner inconsistent with a limitation on the
purposes or powers of the entity contained in its governing documents, this
code, or other law of this state, nor does it authorize any  violation of
this state's antitrust laws. 

Sec. 2.107.  CERTIFICATED INDEBTEDNESS;  MANNER OF ISSUANCE; SIGNATURE AND
SEAL.  Authorizes the seal of an entity, if the entity has adopted a seal,
to be a facsimile that may be engraved or printed on the certificate of
indebtedness. Authorizes the signature of any officer of the domestic
entity used to authenticate such a certificate to be a facsimile signature.
Authorizes such a certificate that contains the manual or facsimile
signature of person who is no longer an officer when the certificate is
delivered to be adopted, issued, and delivered as though the person
remained an officer. 

CHAPTER 3.  FORMATION AND GOVERNANCE

SUBCHAPTER A.  FORMATION, EXISTENCE, AND CERTIFICATE OF FORMATION

Sec. 3.001.  FORMATION AND EXISTENCE OF FILING ENTITIES.  Provides that a
certificate of formation complying with Sections 3.003, 3.004, and 3.005
must be filed in accordance with Chapter 4 to form a filing entity, subject
to the other provisions of this code. Authorizes the filing of such a
certificate of formation to be included in a filing under Chapter 10.
Provides that the existence of a filing entity commences when the filing of
the certificate of formation takes effect as provided by Chapter 4.
Provides that an acknowledgment of the filing of a certificate of formation
issued by the filing officer is conclusive evidence of the formation and
existence of the filing entity, the satisfaction of all preceding
conditions, and the authority of the filing entity to transact business in
this state. 

Sec. 3.002.  FORMATION AND EXISTENCE OF NONFILING ENTITIES.  Provides that
the requirements for the formation of and the determination of the
existence of a nonfiling entity are governed by the title of this code that
applies to that entity. 

Sec. 3.003.  DURATION.  Provides that a domestic entity exists perpetually
unless otherwise provided in the governing documents of the entity.
Authorizes the termination of a domestic entity in accordance with this
code or the Tax Code. 

Sec. 3.004.  ORGANIZERS.  Authorizes any person having the capacity to
contract for the person or for another to be an organizer of a filing
entity.  Provides that each organizer of a filing entity must sign the
certificate of formation of the filing entity, except that each general
partner must sign the certificate of formation of a domestic limited
partnership and each trust manager must sign and acknowledge it before an
authorized officer. 

Sec. 3.005.  CERTIFICATE OF FORMATION.  Sets forth the information that the
certificate of formation must contain.  Authorizes the certificate to
contain other provisions not inconsistent with law.  Provides that Chapter
4 governs the signing and filing of a certificate of formation for a
domestic entity, except as provided by Section 3.004. 

Sec. 3.006.  FILINGS IN CASE OF MERGER OR CONVERSION.  Provides that a
certificate of formation of the entity must be filed with the certificate
of conversion or merger if a new domestic entity is former under such a
plan.  Provides that such a domestic filing entity takes effect and
commences on the effectiveness of the conversion or merger. 

SUBCHAPTER B.  AMENDMENTS AND RESTATEMENTS OF CERTIFICATE OF FORMATION

Sec. 3.051.  RIGHT TO AMEND CERTIFICATE OF FORMATION.  Authorizes a filing
entity to amend its certificate of formation.  Provides that an amended
certificate of formation may only contain provisions that would be
permitted if it were a newly filed original certificate of formation or
that effect a change, exchange, reclassification, or cancellation in the
membership or ownership interests or the rights of owners or members of the
filing entity. 

 Sec. 3.052.  PROCEDURE TO AMEND CERTIFICATE OF FORMATION.  Provides that
the procedure to adopt an amendment to the certificate of formation is as
provided by the title of this code that applies to the entity.  Requires a
filing entity that amends its certificate of formation to sign and file a
certificate of amendment complying with Section 3.053 or a restated
certificate of formation complying with Section 3.057. 

Sec. 3.053.  CERTIFICATE OF AMENDMENT.  Sets forth the information that a
certificate of amendment must contain. 

Sec. 3.054.  EFFECT OF FILING OF CERTIFICATE OF AMENDMENT.  Provides that
an amendment to a certificate of formation takes effect when the filing
takes effect.  Provides that an amendment to a certificate does not affect
an existing cause of action in favor or against that entity, a pending suit
to which the entity is a party, or an existing right of a person other than
an existing owner, regardless of whether the name of the entity is changed
by the amendment. 

Sec. 3.055.  RIGHT TO RESTATE CERTIFICATE OF FORMATION.  Authorizes a
filing entity to restate its certificate of formation.  Provides that an
amendment effected by a restated certificate of formation must comply with
Section 3.051(b). 

Sec. 3.056.  PROCEDURES TO RESTATE CERTIFICATE OF FORMATION.  Provides that
the procedure to adopt a restated certificate of formation is governed by
the title of this code that applies to the entity.  Requires a filing
entity that restates its certificate of formation to sign and file a
restated certificate and accompanying statements complying with Section
3.057. 

Sec. 3.057.  RESTATED CERTIFICATE OF FORMATION.  Sets forth the information
that a restated certificate of formation must contain. 

SUBCHAPTER C.  GOVERNING PERSONS AND OFFICERS

Sec. 3.101.  RIGHTS OF GOVERNING PERSONS IN CERTAIN CASES.  Authorizes a
governing person who is a member of a committee, in discharging a duty or
exercising a power, to rely on information, opinions, reports, or
statements, including financial statements and other financial data,
concerning a domestic entity or another person and prepared or presented by
an officer or employee of the entity, legal counsel, a public accountant,
an investment banker, a person who the governing person reasonably believes
possesses professional expertise in the matter, or a committee of the
governing authority of which the governing person is not a member, unless
the governing person has knowledge of a matter that makes the reliance
unwarranted.  Entitles a governing person held liable on a claim to a
contribution from each of the other governing persons held liable on the
same claim. 

Sec. 3.102.  OFFICERS.  Authorizes officers of a domestic entity to be
elected or appointed in accordance with the governing documents or the
governing authority of the entity unless prohibited by the governing
documents.  Requires an officer to perform the duties in the management of
the entity and establishes that the officer has the authority provided by
the governing documents or governing authority of the entity.  Authorizes a
person to simultaneously hold any two or more offices of an entity unless
prohibited by this code or the governing documents of an entity. 

Sec. 3.103.  REMOVAL OF OFFICERS.  Authorizes an officer to be removed for
or without cause by the governing authority.  Provides that the removal of
an officer does not prejudice any of the officer's contract rights.
Provides that election or appointment of an officer does not by itself
create contract rights. 

Sec. 3.104.  RIGHTS OF OFFICERS IN CERTAIN CASES.  Authorizes an officer of
a domestic entity, in discharging a duty or exercising a power, to rely on
information, opinions, reports, or statements, including financial
statements and other financial data, concerning the entity or another
person and prepared or presented by an officer or employee of the entity,
legal counsel, a public accountant, an investment banker, or a person who
the officer reasonably believes possesses professional expertise in the
matter, unless the officer has knowledge of a matter that makes the
reliance unwarranted. 

SUBCHAPTER D.  RECORDKEEPING

Sec. 3.151.  BOOKS AND RECORDS FOR ALL FILING ENTITIES.  Sets forth the
books and records each filing entity is required to keep, the information
such books and records must contain, and the form in which they must be
kept.  Provides that the records need not be maintained by a partnership or
a limited liability company to the extent such entities are not required by
the governing documents to maintain minutes of proceedings. 

Sec. 3.152.  GOVERNING PERSON'S RIGHT OF INSPECTION.  Authorizes a
governing person to examine the entity's books and records for a purpose
reasonably related to the governing person's service as a governing person.
Authorizes a court to require an entity to open the books and records to
permit a governing person to inspect, make copies of, or take extracts from
the books and records on a showing by the governing person that the entity
refused the governing person's reasonable demand to inspect the books and
records. Authorizes the court to award a governing person attorney's fees
and any other proper relief in such a suit. 

Sec. 3.153.  RIGHT OF EXAMINATION BY OWNER OR MEMBER.  Authorizes each
owner or member of an entity to examine the books and records of an entity
to the extent provided by the governing documents of the entity and the
title of this code governing the entity. 

SUBCHAPTER E.  CERTIFICATES REPRESENTING OWNERSHIP INTEREST

Sec. 3.201.  CERTIFICATED OR UNCERTIFICATED OWNERSHIP INTEREST.  Authorizes
ownership interests in a domestic entity to be certificated or
uncertificated. Provides that the ownership interests in a for-profit
corporation, real estate investment trust, or professional corporation must
be certificated unless the governing documents of the entity or a
resolution adopted by the governing authority of the entity states that the
ownership interests are uncertificated.  Provides that, if a domestic
entity changes the form of its ownership interests from certificated to
uncertificated, a certificated ownership interest subject to the change
becomes an uncertificated ownership interest only after the certificate is
surrendered to the domestic entity.  Provides that ownership interests are
uncertificated unless specified otherwise. 

Sec. 3.202.  FORM AND VALIDITY OF CERTIFICATES; ENFORCEMENT OF ENTITY'S
RIGHTS.  (a)  Authorizes a certificated ownership interest in a domestic
entity to contain an impression or a facsimile of the entity's seal. 

(b)  Provides that, if a domestic entity is authorized to issue ownership
interests of more than one class or series, each certificate representing
ownership interests that is issued by the entity must conspicuously state
on the front or back of the certificate the designations, preferences,
limitations, and relative rights of each class or series, that the
information is stated in the entity's governing documents, and that a free
copy of the information will be provided upon request. 

(c)  Provides that a certificate representing ownership interests must
state on the front of the certificate that the domestic entity is organized
under the laws of this state; the name of the person to whom the
certificate is issued; the number and class of ownership interests and the
designation of the series, if any, represented by the certificate; and the
par value of each share represented by the certificate if the ownership
interests are shares, or a statement that the shares are without par value. 

(d)  Provides that a certificate representing ownership interests that is
subject to a restriction, placed by or agreed to by the domestic entity
under this subchapter, on the  transfer or registration of the transfer of
the ownership interests must state certain information relating to the
restriction on the certificate. 

(e)  Prohibits a domestic entity that fails to provide to the record holder
of a certificate within a reasonable time a copy of the restricting
document from enforcing the entity's rights under the restriction imposed
on the certificated ownership interests. 

Sec. 3.203.  SIGNATURE REQUIREMENT.  Provides that the authorized
managerial official or officials of a domestic entity must sign any
certificate representing an ownership interest in the entity.  Authorizes a
certificated ownership interest that is signed by a person who is no longer
a managerial official when the certificate is issued to be issued in the
same manner and with the same effect as if the person had remained a
managerial official. 

Sec. 3.204.  DELIVERY REQUIREMENT.  Requires a domestic entity to deliver a
certificate representing a certificated ownership interest to which the
owner is entitled. 

Sec. 3.205.  NOTICE FOR UNCERTIFICATED OWNERSHIP INTEREST.  Requires a
domestic entity, after issuing or transferring an uncertificated ownership
interest, to notify the owner of the ownership interest in writing of any
information required under this subchapter to be stated on a certificate
representing the ownership interest, except as provided by Subsection (c)
and in accordance with Chapter 8, Business & Commerce Code. Provides that
an owner of an uncertificated ownership interest has the same rights and
obligations as an owner of a certificated ownership interest of the same
class and series. Provides that a domestic entity is not required to send a
notice under this section if the required information is included in the
governing documents of the entity and the owner is provided with a copy of
such documents. 

CHAPTER 4.  FILINGS

SUBCHAPTER A.  GENERAL PROVISIONS

Sec. 4.001.  SIGNATURE AND DELIVERY.  Requires a filing instrument be
signed by a person authorized by this code to act on behalf of the entity
and delivered to the secretary of state, but does not require the
production of evidence of such authorization. 

Sec. 4.002.  ACTION BY SECRETARY OF STATE.  Requires the secretary of
state, upon finding that the filing conforms to applicable provisions of
this code and applicable rules adopted under Section 12.001, and that all
required fees have been paid, to accept the instrument into the filing
system, assign the instrument a date of filing, and deliver a written or
electronic acknowledgment of filing to the entity.  Requires the secretary
of state to return to the entity duplicate copies with the month, date, and
year of filing, and the word "Filed" on them.  

Sec. 4.003.  FILING OR ISSUANCE OF REPRODUCTION OR FACSIMILE.  Authorizes
the filing or issuance of a photostatic, facsimile, electronic, or similar
reproduction of an original filing instrument, signature, acknowledgment of
filing, or communication in place of an original filing instrument, an
original signature on a filing instrument, or an original acknowledgment of
filing or other written communication from the secretary of state relating
to a filing instrument. 

Sec. 4.004.  TIME FOR FILING.  Requires an entity to promptly file each
required filing instrument. 

Sec. 4.005.  CERTIFICATES AND CERTIFIED COPIES.  Requires a court, public
office, or official body to accept a certificate issued by the secretary of
state or a certified copy of a filing instrument accepted for filing by the
secretary of state as prima facie evidence of the facts stated in the
certificate or instrument.  Authorizes a court, public office, or official
body to record such a certificate or certified copy.  Requires a court,
public office, or official body to accept a certificate issued under an
official seal by the secretary of state as to the existence  or
nonexistence of facts that related to an entity that would not appear from
a certified copy of a filing instrument as prima facie evidence of the
existence or nonexistence of the facts stated in the certificate. 

Sec. 4.006.  FORMS ADOPTED BY SECRETARY OF STATE.  Authorizes the secretary
of state to adopt forms for a filing instrument or report required to be
filed with the secretary of state, but does not require the use of such
forms. 

Sec. 4.007.  LIABILITY FOR FALSE FILING INSTRUMENTS.  Authorizes a person
to recover damages, court costs, and reasonable attorney's fees if the
person incurs a loss due to a filed filing instrument that constitutes an
offense under Section 4.008 or the person reasonable relies on a false
statement or omission of material fact in a filed filing instrument.
Authorizes the person to recover  from each person who signed the filing
instrument, directed the signing and filing of the instrument, or entity
that authorized the filing instrument knowing that it was false or omitted
facts. 

Sec. 4.008.  OFFENSE; PENALTY.  Provides that the signing of a filing
instrument which contains a false statement or the omission of a material
fact with the intent of filing the filing instrument with the secretary of
state is a Class A misdemeanor unless the person's intent is to defraud or
harm another, in which case, the offense is a state jail felony. 

Sec. 4.009.  FILINGS BY REAL ESTATE INVESTMENT TRUST.  Provides that a
filing instrument relating to a real estate investment trust must be filed
with the county clerk of the county of the principal place of business in
Texas of the real estate investment trust.  Makes this chapter applicable
to a filing by a real estate investment trust, except that in relation to
such a filing a reference in this chapter to the secretary of state is
considered to be a reference to the county clerk of the county in which the
real estate investment trust's principal place of business is located. 

SUBCHAPTER B.  WHEN FILINGS TAKE EFFECT

Sec. 4.051. Provides that a filing instrument takes effect upon filing with
the secretary of state. 

Sec. 4.052.  DELAYED EFFECTIVENESS OF CERTAIN FILINGS.  Provides that a
filing instrument may become effective at a specified time and date
subsequent to the date of filing by the secretary of state or upon the
occurrence of a future event or fact. 

Sec. 4.053.  CONDITIONS FOR DELAYED EFFECTIVENESS.  Sets forth the
information required to be included and time limitations for a filing
instrument which is to take effect at a time subsequent to its filing by
the secretary of state. 

Sec. 4.054.  DELAYED EFFECTIVENESS ON FUTURE EVENT OR FACT.  Provides that
a filed filing instrument that is to become effective upon the occurrence
of a future event or fact takes effect on the date and time at which the
last specified event or fact occurs or the date and time at which a
condition is satisfied or waived. 

Sec. 4.055.  STATEMENT OF EVENT OR FACT.  Provides that a subsequent
statement of the event's or fact's occurrence must be filed with the
secretary of state within 90 days of filing a filing instrument that is to
take effect upon the occurrence of a future event or fact. 

Sec. 4.056.  FAILURE TO FILE A STATEMENT.  Provides that the filing
instrument does not take effect if the subsequent statement of the event's
or fact's occurrence is not filed. Provides that, if the event or fact does
not occur, the parties must sign and file a certificate of abandonment. 

Sec. 4.057.  ABANDONMENT BEFORE EFFECTIVENESS.  Authorizes the parties to a
filing instrument to abandon it prior to its effectiveness upon filing a
certificate of abandonment with the secretary of state.  Sets forth the
information the certificate must  contain.  Prohibits the filing of the
certificate, if in the interim prior to filing the certificate of
abandonment the name of an entity that is a party to the action or
transaction becomes the same as or deceptively similar to the name of
another existing entity unless the entity changes its name in the manner
required by this code. 

Sec. 4.058.  DELAYED EFFECTIVENESS NOT PERMITTED.  Prohibits the delay of
the effect of certain filing instruments. 

Sec. 4.059.  ACKNOWLEDGMENT OF FILING WITH DELAYED EFFECTIVENESS. Provides
that  an acknowledgment of filing issued or other action taken by the
secretary of state affirming the filing of a filing instrument that has a
specific delayed effective date must state the date and time at which the
instrument takes effect.  Provides that  an acknowledgment of filing issued
or other action taken by the secretary of state affirming the filing of a
filing instrument the effect of which is delayed until the occurrence of a
future even or fact must state that the effective date and time of the
filing  instrument is conditioned on the occurrence of a future event or
fact as described in the filing instrument or otherwise indicate that the
effective date is condition on the occurrence of a future event or fact. 

SUBCHAPTER C.  CORRECTION AND AMENDMENT

Sec. 4.101.  CORRECTION OF FILINGS.   Authorizes a filed filing instrument
to be corrected by filing a certificate of correction with the secretary of
state. 

Sec. 4.102.  LIMITATION ON CORRECTION OF FILINGS.  Prohibits a certificate
of correction from altering, adding, or deleting language such that the
filing instrument does not conform to this code. 

Sec. 4.103.  CERTIFICATE OF CORRECTION.  Sets forth the information which
must be included on a certificate of correction to be filed with the
secretary of state. 

Sec. 4.104.  FILING CERTIFICATE OF CORRECTION.  Requires  the certificate
of correction be filed with the secretary of state and requires the
secretary of state to deliver to the entity an acknowledgment of the
filing. 

Sec. 4.105.  EFFECT OF CERTIFICATE OF CORRECTION.  Provides that the filed
filing instrument is considered to have been corrected on the date the
filing instrument was originally filed, except as to a party that is
adversely affected by the correction, in which case, the filing instrument
is considered corrected as of the date of filing of the certificate of
correction.  Provides that an acknowledgment of filing applies to the
corrected filing instrument as of the date the corrected filing instrument
is considered to have been filed. 

Sec. 4.106.  AMENDMENT OF FILINGS.  Authorizes a filing entity to amend or
supplement a filing instrument the entity has filed, to the extent
permitted by the title relating to such entity. 

SUBCHAPTER D.  FILING FEES

Sec. 4.151.  FILING FEES:  ALL ENTITIES.  Requires the secretary of state
to collect various filing fees. 

Sec. 4.152.  FILING FEES:  FOR-PROFIT CORPORATION.  Requires the secretary
of state to collect various filing fees for instruments filed by or for a
for-profit corporation. 

Sec. 4.153.  FILING FEES:  NONPROFIT CORPORATIONS.  Requires the secretary
of state to collect various filing fees for instruments filed by or for a
nonprofit corporation. 

Sec. 4.154.  FILING FEES:  LIMITED LIABILITY COMPANIES.  Requires the
secretary of state to collect the same filing fees for instrument filed by
or for a limited liability company as specified for for-profit
corporations. 
 
Sec. 4.155.  FILING FEES:  LIMITED PARTNERSHIPS.  Requires the secretary of
state to collect various filing fees for instrument filed by or for a
limited partnership. 

Sec. 4.156.  FILING FEES:  PROFESSIONAL ASSOCIATIONS.  Requires the
secretary of state to collect various filing fees for instruments filed by
a professional association. 

Sec. 4.157.  FILING FEES:  PROFESSIONAL CORPORATIONS.   Requires the
secretary of state to collect the same filing fees for instrument filed by
or for a professional corporation as specified for for-profit corporations. 

Sec. 4.158.  FILING FEES:  GENERAL PARTNERSHIPS.  Requires the secretary of
state to collect various filing fees for instruments filed by or for a
general partnership. 

CHAPTER 5.  NAMES OF ENTITIES; REGISTERED AGENTS AND
REGISTERED OFFICES

SUBCHAPTER A.  GENERAL PROVISIONS

Sec. 5.001.  EFFECT ON RIGHTS UNDER OTHER LAW.  Provides that the filing of
a certificate of formation, application for registration, or an application
for reservation or registration of a name by a filing entity or foreign
filing entity does not authorize the use of a name in violation of the
rights of another to the name and requires the secretary of state to
provide a notice to this effect upon the formation or registration of a
filing entity or foreign filing entity and upon the registration or
reservation of an entity name. 

SUBCHAPTER B.  GENERAL PROVISIONS RELATING TO NAMES
OF ENTITIES

Sec. 5.051.  ASSUMED NAME.   Authorizes a domestic entity or a foreign
entity having authority to do business in this state to transact business
under an assumed name.  Provides that the requirements of this subchapter
do not apply to an assumed name set forth in a certificate filed under
Chapter 36 (Assumed Business or Professional Name), Business & Commerce
Code. 

Sec. 5.052.  UNAUTHORIZED PURPOSE IN NAME PROHIBITED.  Prohibits a filing
entity or foreign filing entity from having a name that contains any word
or phrase that indicates that it is engaged in a business that it is not
authorized by law to pursue. 

Sec. 5.053.  IDENTICAL AND DECEPTIVELY SIMILAR NAMES PROHIBITED. Prohibits
a filing entity or foreign filing entity from having a name that is the
same as or deceptively similar to the name of another existing filing
entity or foreign filing entity registered to transact business, or a name
registered or reserved by a filing entity or foreign filing entity.
Provides that a similar name may be used if consent is granted by an
existing entity having a similar name. 

Sec. 5.054.  NAME OF CORPORATION, FOREIGN CORPORATION, OR PROFESSIONAL
CORPORATION.  Provides that a word indicative of incorporated status or its
abbreviation must be contained in the name of a for-profit corporation,
foreign corporation, or professional corporation. 

Sec. 5.055.  NAME OF LIMITED PARTNERSHIP OR FOREIGN LIMITED PARTNERSHIP.
Provides that a word indicative of status as a limited partnership or its
abbreviation must be contained in the name of a limited partnership or
foreign limited partnership.  Prohibits the name of a limited partnership
from containing a word or phrase that indicates or implies that it is a
corporation.  Provides that the name of a limited partnership that is a
registered limited liability limited partnership must comply with Chapter
153. 

 Sec. 5.056.  NAME OF LIMITED LIABILITY COMPANY OR FOREIGN LIMITED
LIABILITY COMPANY.  Provides that a phrase indicative of status as a
limited liability company or its abbreviation must be contained in the name
of a limited liability company, but does not require a limited liability
company formed before September 1, 1993, to change its name to comply with
this section. 

Sec. 5.057.  NAME OF COOPERATIVE ASSOCIATION.  Provides  that the name of a
cooperative association must contain the word cooperative or an
abbreviation of the word. Authorizes a domestic or foreign entity to use
the word "cooperative" in its name to the extent permitted by Section
251.502. 

Sec. 5.058.  NAME OF PROFESSIONAL ASSOCIATION.  Provides that a word or
phrase indicative of status as a professional association or its
abbreviation must be contained in the name of a professional association. 

Sec. 5.059.  NAME OF PROFESSIONAL LIMITED LIABILITY COMPANY.   Provides
that a word or phrase indicative of status as a professional limited
liability company or its abbreviation must be contained in the name of a
professional limited liability company. 

Sec. 5.060.  NAME OF PROFESSIONAL ENTITY; CONFLICTS WITH OTHER LAW OR
ETHICAL RULE.  Provides that the name of a professional entity must be
consistent with a law or rule of professional ethics governing a person
providing the professional service through the entity. 

Sec. 5.061.  NAME CONTAINING "LOTTO" OR "LOTTERY" PROHIBITED.  Prohibits a
filing entity or foreign filing entity from having a name that contains the
word "lotto" or "lottery." 

Sec. 5.062.  VETERANS ORGANIZATIONS; UNAUTHORIZED USE OF NAME. Prohibits a
filing entity from having a name that could reasonably be understood to
imply that the organization is created by or for the benefit of war
veterans or their families and from containing any of the specified
restricted words or abbreviations of such words unless written approval or
permission for the use of the name is obtained from a congressionally
recognized veterans organization having a name containing the same words or
abbreviations.  Provides that if no congressionally recognized organization
exists, permission must be obtained from the state commander of the
organization that is created by or for the benefit of war veterans or their
families. 

SUBCHAPTER C.  RESERVATION OF NAMES

Sec. 5.101.  APPLICATION FOR RESERVATION OF NAME.  Authorizes a person to
file an signed application and filing fee with the secretary of state to
reserve the exclusive use of a name.  

Sec. 5.102.  RESERVATION OF CERTAIN NAMES PROHIBITED; EXCEPTIONS. Prohibits
the secretary of state from reserving an entity name that is the same as or
deceptively similar to the name of an existing filing entity or registered
foreign filing entity, or a name reserved or registered to a filing entity
or foreign filing entity without the written consent of the person or
entity having the similar name. 

Sec. 5.103.  ACTION ON APPLICATION.  Requires the secretary of state to
reserve an eligible name for an applicant. 

Sec. 5.104.  DURATION OF RESERVATION OF NAME.  Requires the secretary of
state to reserve the name for 121 days after the date of filing or until
the date the applicant files a written notice of withdrawal with the
secretary of state, whichever is earlier. 

Sec. 5.105.  RENEWAL OF RESERVATION.  Authorizes a person to renew a name
reservation for successive 120-day periods if the person makes a new
application and pays  the required fee for reservation of the name within
30 days preceding the expiration of an effective reservation. 

Sec. 5.106.  TRANSFER OF RESERVATION OF NAME.  Authorizes a person to
transfer a reserved name by filing a notice of transfer with the secretary
of state.  Provides that the notice must be signed by the person for whom
the name is reserved and state the name and address of the person to whom
the reservation is to be transferred. 

SUBCHAPTER D.  REGISTRATION OF NAMES

Sec. 5.151.  APPLICATION BY CERTAIN ENTITIES FOR REGISTRATION OF NAME.
Authorizes a bank, trust company, savings association, or insurance
company, or a foreign filing entity not registered to do business under
this code to register its name under this subchapter. 

Sec. 5.152.  APPLICATION FOR REGISTRATION OF NAME.  Provides that an
organization must file an application to register a name stating that the
organization validly exists and is doing business, briefly stating the
organization's business, setting out the name of the organization, the name
of the jurisdiction under whose laws the organization is formed, and the
date the organization was formed, and pay any required filing fee. 

Sec. 5.153.  CERTAIN REGISTRATIONS PROHIBITED; EXCEPTIONS.  Prohibits the
secretary of state from registering a name that is the same as or
deceptively similar to the name of an existing filing entity or registered
foreign filing entity, or a name reserved or registered to a filing entity
or foreign filing entity without the written consent of the person or
entity having the similar name.  Provides an exception for a bank, trust
company, savings association, or insurance company that has been in
continuous existence from a date that precedes the date the conflicting
name was filed with the secretary of state. 

Sec. 5.154.  DURATION OF REGISTRATION OF NAME.  Provides that the name
registration is effective until one year after the application was accepted
for filing or until the date the entity files a written notice of
withdrawal with the secretary of state, whichever is earlier. 

Sec. 5.155.  RENEWAL OF REGISTRATION.  Authorizes a person to renew the
person's registration of its name for successive one-year periods if a new
application for registration of the name is made within 90 days of the
expiration of an effective registration. 

SUBCHAPTER E.  REGISTERED AGENTS AND REGISTERED OFFICES; SERVICE OF PROCESS

Sec. 5.201.  DESIGNATION AND MAINTENANCE OF REGISTERED AGENT AND REGISTERED
OFFICE.  Requires each filing entity and foreign filing entity to designate
and maintain a registered agent and registered office address in this
state.  Defines a registered agent and sets forth the requirements of a
registered agent and a registered office. 

Sec. 5.202.  CHANGE BY ENTITY TO REGISTERED OFFICE OR REGISTERED AGENT.
Authorizes an entity to change its registered office, registered agent, or
both, by filing a statement with the secretary of state.  Sets forth the
information that must be provided in the statement.  Provides that the
statement is effective as an amendment to the appropriate provision of the
filing entity's certificate of formation or the foreign filing entity's
registration on acceptance of the statement. 

Sec. 5.203.  CHANGE BY REGISTERED AGENT TO NAME OR ADDRESS OF REGISTERED
OFFICE.  Authorizes a registered agent of a filing entity or foreign filing
entity to change its address or name, or both, by filing a statement with
the secretary of state. Sets forth the information that must be provided in
the statement.  Provides that the statement is effective as an amendment to
the appropriate provision of the filing entity's certificate of formation
or the foreign filing entity's registration on acceptance of the statement.
Authorizes a registered agent to file a statement that relates to more than
one entity. 

Sec. 5.204.  RESIGNATION OF REGISTERED AGENT.  Authorizes a registered
agent to resign by giving notice to the represented entity and the
appropriate filing officer.  Specifies where notice to the entity should be
sent.  Provides that notice to the filing officer must be given within 11
days of notice to the entity.  Provides that the appointment of the
registered agent terminates upon notice to the entity and filing officer
and that termination is effective on the 31st day after the secretary of
state receives the notice.  Requires the filing officer to notify the
entity of the registered agent's resignation and file the resignation. 

Sec. 5.205.  FAILURE TO DESIGNATE REGISTERED AGENT.  Provides that the
secretary of state is an agent of a filing entity or foreign filing entity
for purposes of effecting service of process, notice or demand on an entity
under circumstances where the entity fails to appoint or maintain a
registered agent in this state. 

Sec. 5.206.  SERVICE ON SECRETARY OF STATE.  Sets forth the procedure for
effecting service on the secretary of state. 

Sec. 5.207.  ACTION BY SECRETARY OF STATE.  Requires the secretary of
state, upon receipt of service of process in compliance with Sec. 5.206, to
immediately send one of the copies of the process, notice, or demand to the
named entity to the most recent address of the entity on file by certified
mail, with return receipt requested. 

Sec. 5.208.  REQUIRED RECORDS OF SECRETARY OF STATE.  Requires the
secretary of state to maintain a record of each process, notice, or demand
served on the secretary under the provisions of the subchapter and record
the time when each service on the secretary was made and each related
subsequent action taken by the secretary. 

Sec. 5.209.  AGENT FOR SERVICE OF PROCESS, NOTICE, OR DEMAND AS MATTER OF
LAW.  Sets forth persons within a domestic or foreign entity who are
considered agents for the purpose of service of process, notice or demand
as a matter of law. 

Sec. 5.210.  OTHER MEANS OF SERVICE NOT PRECLUDED.  Provides that this
chapter does not preclude other means of service of process, notice, or
demand on a domestic or foreign entity as provided by other law. 

CHAPTER 6.  MEETINGS, NOTICES, RECORD DATES, VOTING,
AND WRITTEN CONSENTS TO ACTION

SUBCHAPTER A.  MEETINGS

Sec. 6.001.  LOCATION OF MEETINGS.  Authorizes the location of meetings of
a domestic entity to be set by the entity's governing documents, the
agreement of all persons entitled to notice of the meeting, or the person
calling the meeting, and establishes the entity's registered or principal
office as the default location. 

Sec. 6.002.  ALTERNATIVE FORMS OF MEETINGS.  Authorizes meetings to occur
by conference telephone or other communications equipment if everyone
participating can communicate with each other. 

Sec. 6.003.  PARTICIPATION CONSTITUTES PRESENCE.  Provides that anyone
participating in a meeting is considered to be present unless that person
is participating for the purpose of objecting to the meeting because it was
not lawfully called or convened. 

Sec. 6.004.  OWNERSHIP OR MEMBERSHIP MEETING LIST FOR CERTAIN ENTITIES.
Makes this section applicable a domestic for-profit corporation, a domestic
nonprofit corporation, and certain domestic limited liability companies and
domestic limited partnerships.  Requires an officer or agent of the entity
who is in charge of the entity's ownership or membership records to
prepare a list containing certain information about each  owner or member
entitled to vote not later than 11 days before each meeting.  Provides that
the original ownership or membership transfer records are prima facie
evidence of the persons entitled to vote.  Provides that failure to comply
with this section does not affect the validity of any action taken at a
meeting. 

SUBCHAPTER B.  NOTICE OF MEETINGS

Sec. 6.051.  GENERAL NOTICE REQUIREMENTS.  Provides that notice of a
meeting must be determined by the governing authority of the entity and
state the date, time and location of the meeting.  Provides that, if
mailed, notice is considered to be delivered when deposited in the United
States mail, or if sent by fax or electronic message, when the transmission
is successful. 

Sec. 6.052.  WAIVER OF NOTICE.  Provides that notice is not required if the
person entitled to notice waives notice in writing or if the person
participates in the meeting. 

Sec. 6.053.  EXCEPTION.  Provides an exception to the notice requirements
if two consecutive notices or payments of distribution or interest on
securities have been returned undeliverable or if the person is considered
a lost security holder under 15 U.S.C. Section 78a et seq., as amended
(Securities Exchange Act).  Provides that an action taken or a meeting held
without giving notice to a person not entitled to notice has the same force
and effect as if notice had been given to the person.  Authorizes a
certificate or other document filed with the secretary of state as a result
of a meeting held or action taken by a filing entity without giving notice
of the meeting or action to a person not entitle to notice under this
section to state that notice was given to each person entitled to notice.  

SUBCHAPTER C.  RECORD DATES

Sec. 6.101.  RECORD DATE FOR PURPOSE OTHER THAN WRITTEN CONSENT TO ACTION.
Authorizes an entity's governing documents to fix the record date or
provide a method by which the record date may be fixed to determine who is
entitled to notice of a meeting, vote at a meeting, receive a distribution,
and  receive notice for any other purpose that requires consent.  Prohibits
the date from being earlier than the 60th day before the date the action
requiring the determination of owners or members is taken.  Authorizes the
governing authority to provide for the closing of the ownership or
membership transfer records for up to 60 days to determine the owners or
members for this purpose.  Provides that, if the owners or members are not
otherwise determined under this section, the record date is the date on
which notice of the meeting is mailed or the governing authority adopts the
resolution declaring a distribution.  Provides that the record date for
determining a meeting applies to any adjournment of a meeting unless the
determination has been made through the closing of the ownership or
membership transfer records and the stated period of closing has expired. 

Sec. 6.102.  RECORD DATE FOR WRITTEN CONSENT TO ACTION.  Authorizes the
governing authority to provide a record date for determining the owners or
members entitled to written consent to action without a meeting unless a
record date has already been provided for that action.  Prohibits the
record date from being earlier than the date the governing authority adopts
the resolution providing for the record date.  Provides that, if no record
date has been fixed and no prior action of the governing authority is
required, it will be the first date that the written consent identifying
the action taken is delivered to the entity.  Provides that if no record
date has been fixed by the governing authority and prior action of the
governing authority is required, the record date will be the date the
governing authority adopts a resolution taking the prior action. 

Sec. 6.103.  RECORD DATE FOR SUSPENDED DISTRIBUTIONS.  Defines
"distribution."  Requires a distribution to be payable to the owner or
member as of the record date determined for that distribution.  Authorizes
the right to a distribution to be transferred by contract, by operation of
law, or under the laws of descent and distribution. 

 SUBCHAPTER D.  VOTING OF INTERESTS

Sec. 6.151.  MANNER OF VOTING OF INTERESTS.  Provides that, subject to
other provisions of this code, voting of interests is governed by an
entity's governing documents. 

Sec. 6.152.  VOTING OF INTERESTS OWNED BY ENTITY.  Prohibits ownership
interests owned by the issuer of the interests from being voted at any
meeting and from being included in determining at any time the total number
of outstanding interests.  Provides that this section does not preclude a
domestic or foreign entity from voting an ownership interest held or
controlled by the entity in a fiduciary capacity or for which the entity
otherwise exercises voting power in a fiduciary capacity. 

Sec. 6.153.  VOTING OF INTERESTS OWNED BY ANOTHER ENTITY.  Authorizes
ownership interests in one entity owned by another entity to be voted by
the person authorized in the owning entity's governing documents or
governing authority if the governing documents do not provide for the
manner of voting. 

Sec. 6.154.  VOTING OF INTERESTS IN AN ESTATE OR TRUST.  Authorizes an
administrator, executor, guardian, or conservator of an estate who holds an
ownership interest as part of the estate to vote the interest without
transferring the interest into the person's name.  Authorizes an ownership
interests in the name of the trust to be voted by the trustee. 

Sec. 6.155.  VOTING OF INTERESTS BY RECEIVER.  Authorizes a receiver to
vote an ownership interest standing in the name of the receiver and to vote
an ownership interest held by or under the control of the receiver without
transferring the interest into the receiver's name if authorized by the
court order appointing the receiver. 

Sec. 6.156.  VOTING OF PLEDGED INTERESTS.  Authorizes a pledged ownership
interest to be voted by the owner until the interest is transferred into
the pledgee's name and the pledgee after the transfer. 

SUBCHAPTER E.  ACTION BY WRITTEN CONSENT

Sec. 6.201.  UNANIMOUS WRITTEN CONSENT TO ACTION.  Authorizes actions taken
at any meeting of the owners or members of an entity, or the governing
authority or committee thereof to be taken by unanimous written consent.
Provides that a unanimous written consent has the same effect as a
unanimous vote at a meeting and may be stated as having that effect in
instruments filed with the secretary of state. 

Sec. 6.202.  ACTION BY LESS THAN UNANIMOUS WRITTEN CONSENT.  Authorizes the
owners or members of an entity to take action by written consent signed by
the minimum number of owners or members that would be necessary to take
that action at a meeting if authorized by the governing documents.
Provides that all the signed written consents must be delivered to the
entity within 60 days of the date that the first signature was obtained.
Requires the entity to promptly notify each owner or member who does not
sign a consent of the action taken. 

Sec. 6.203.  DELIVERY OF LESS THAN UNANIMOUS WRITTEN CONSENT.  Sets forth
the manner of delivery and address of each written consent. 

Sec. 6.204.   ADVANCE NOTICE NOT REQUIRED.  Provides that advance notice is
not required if action is taken by written consent. 

SUBCHAPTER F.  VOTING TRUSTS AND VOTING AGREEMENTS

Sec. 6.251.  VOTING TRUSTS.  Authorizes any number of owners to enter into
a written voting trust agreement to confer on a trustee the right to vote
or otherwise represent ownership or membership interests of the entity.
Requires an ownership or membership  interest that is the subject of such
an agreement to be transferred to the named trustee. Requires a copy of the
agreement to be deposited with the entity and provides that it is subject
to examination by an owner or any holder of an interest in the voting
trust. 

Sec. 6.252.  VOTING AGREEMENTS.  Authorizes any number of owners to enter
into a written voting agreement to provide the manner of voting of the
ownership interests of the entity.  Provides that such an agreement is not
part of the governing documents of the entity. Requires a copy of the
agreement to be deposited with the entity and provides that it is subject
to examination by any owner.  Provides that the agreement is enforceable
against the parties to the agreement and their successors if the ownership
certificates subject to the agreement reference the agreement or if notice
is sent to the subsequent holders.  Provides that the agreement is
enforceable against any person other than a transferee for value who
acquires actual knowledge of the existence of the agreement.  Provides that
the agreement is not enforceable against a transferee for value who does
not have actual knowledge of the agreement at the time of the transfer, or
any subsequent transferee, without regard to value, if the voting agreement
is not noted as required.  Provides that Section 6.251 does not apply to a
voting agreement entered into under this section. 

CHAPTER 7.  LIABILITY

Sec. 7.001.  SEPARATE LEGAL ENTITY APART FROM OWNERS OR MEMBERS. Provides
that a domestic entity is legally separate from its owners or members for
all purposes. 

Sec. 7.002.  LIMITATION OF LIABILITY FOR CONTRACTUAL OR RELATED OBLIGATION.
Prohibits an owner, member, subscriber, or affiliate from being held liable
to the domestic entity for any contractual obligation or relationship
unless an actual fraud is being perpetrated for personal benefit or unless
as otherwise provided by this chapter. Provides that this limitation on
liability of an owner, member, subscriber or affiliate of a domestic entity
is exclusive and preempts any liability under common law or otherwise. 

Sec. 7.003.  IMMUNITY FROM LIABILITY FOR FAILURE TO OBSERVE FORMALITY.
Limits the liability of an owner, member, subscriber, or affiliate of a
domestic entity for its contractual or other obligations because the entity
failed to observe a formality required by its governing documents or this
code or in taking action thereunder. 

Sec. 7.004.  LIMITATION OF LIABILITY OF MANAGERIAL OFFICIAL FOR DEBTS AND
CONTRACTS.  Limits the liability of a person for a domestic entity's debt
or breach of contract, solely because the person is, or is considered to
be, an owner, member, managerial official, or has been authorized to
participate in its management, unless otherwise provided by this code. 

Sec. 7.005.  LIABILITY OF OWNER, MEMBER, OR MANAGERIAL OFFICIAL FOR TORT.
Limits the liability of a person for a domestic entity's tortious act or
omission solely because the person is, or the entity considers the person
to be, an owner, member, or managerial official of the entity, except as
provided by this code. 

Sec. 7.006.  IMPUTED LIABILITY OF OWNER, MEMBER, OR MANAGERIAL OFFICIAL.
Provides that liability is not imputed to a person for a tortious act or
omission by another owner, member, managerial official, or person for which
the entity is liable solely because the person is, or is considered to be,
an owner, member, managerial official, or has been authorized to
participate in a domestic entity's management, except as provided by this
code. 

Sec. 7.007.  PLEDGEES AND TRUSTS.  Prohibits a pledgee or other holder of
an ownership or membership interest from being held personally liable as an
owner or member of the interest.  Prohibits an executor, administrator,
conservator, guardian, trustee, assignee for the benefit of creditor, or
receiver from being held personally liable as an owner or subscriber of an
ownership interest.  Provides that the property being administered by such
a person is subject to liability of an owner or subscriber of an ownership
interest. 

Sec. 7.008.  ASSERTION OF CLAIMS.  Authorizes a person who is, or is
considered to be, an owner, member, or managerial official of a domestic
entity to assert a claim against the entity.  Authorizes the entity to
assert a claim against any such person. 

Sec. 7.009.  EFFECT OF JUDGMENT OR ORDER AGAINST DOMESTIC ENTITY. Provides
that a judgment or order by a court or other governmental entity against a
domestic entity is not a judgment or order against a person who is, or is
considered to be, an owner, member or managerial official of the entity,
unless otherwise provided in the judgment or order. 

Sec. 7.010.  CLAIM NOT ABATED BY CHANGE OF OWNERSHIP, MEMBERSHIP, OR
MANAGEMENT.  Provides that a claim for relief against a domestic entity
does not abate solely because there has been a change in the entity's
owners, members, managerial officials, or persons authorized to manage it. 


Sec. 7.011.  EXCEPTIONS TO LIMITATIONS.  Provides that a partner is a
general partnership or registered limited liability partnership or a
general partner in a limited partnership or registered limited liability
partnership may be held liable for the obligations of the partnership; a
limited partner may be held liable as a general partner of a limited
partnership; an owner of or subscriber in a domestic entity shall pay to
the domestic entity the full amount of consideration that the owner or
subscriber agreed to pay for an ownership interest in the domestic entity;
an owner may be required to make a capital contribution to a domestic
entity as provided by this code and the governing documents of the domestic
entity; and nothing in this chapter limits the liability of person who
agrees to be personally liable or is otherwise liable. 

Sec. 7.012.  LIMITATION OF LIABILITY OF GOVERNING PERSON:  DOMESTIC ENTITY,
CERTAIN OTHER ORGANIZATIONS, CERTAIN FEDERAL FINANCIAL INSTITUTIONS.
Authorizes a domestic entity, other than a partnership or limited liability
company, or any of certain other non-code organizations to adopt provisions
in its certificate of formation that generally exonerate or further limit
liability of a governing person for monetary damages to the entity, or its
owners or members, for the governing person's acts or omissions in that
capacity.  Provides that this does not authorizes the entity to eliminate
or limit such liability to the extent the person has breached a duty of
loyalty, took action or omitted to act not in good faith in such a way that
it breached some other duty owed to the entity or involved intentional
misconduct or knowing violation of the law, has received an improper
benefit, or is otherwise made liable by statute. 

Sec. 7.013.  LIMITATION UNDER GOVERNING DOCUMENTS OF PARTNERSHIPS AND
LIMITED LIABILITY COMPANIES.  Authorizes a partnership or limited liability
company to modify the duties, including fiduciary duties, of its managerial
officials, owners or other persons in its governing documents. 

CHAPTER 8 .  INDEMNIFICATION AND INSURANCE

SUBCHAPTER A.  GENERAL PROVISIONS

Sec. 8.001.  DEFINITIONS.  Defines "delegate," "enterprise," "expenses,"
"former governing person," "official capacity," "predecessor enterprise,"
"proceeding," "representative," and "respondent." 

Sec. 8.002.  APPLICATION OF CHAPTER.  Provides that this chapter does not
apply to general partnerships and limited liability companies.  Authorizes
the governing documents of these enterprises to adopt provisions of this
chapter or to contain enforceable provisions relating to indemnification,
advancement of expenses, or insurance or other arrangements to indemnify or
hold harmless a governing person. 
 
 SUBCHAPTER B.  MANDATORY AND COURT-ORDERED INDEMNIFICATION

Sec. 8.051.  MANDATORY INDEMNIFICATION.  Requires an enterprise to
indemnify an existing or former governing person for expenses incurred in a
proceeding in which the person is a respondent because of that status if
the person is wholly successful in defense of the proceeding.  Requires the
court to order indemnification, if a governing person is entitled to
indemnification, and award to the person the expenses incurred in securing
the indemnification. 

Sec. 8.052.  COURT-ORDERED INDEMNIFICATION.  Authorizes a court to order
indemnification of an existing or former governing person or delegate, on
that person's application, if the court determines that the person is
fairly and reasonably entitled to indemnification, whether or not the
person satisfies the requirements of Section 8.101,  but is limited to
reasonable expenses if the person is found liable to the enterprise or
because the person improperly received a personal benefit. 

Sec. 8.053.  LIMITATIONS IN GOVERNING DOCUMENTS.  Authorizes the
certificate of formation of an enterprise to restrict the circumstances
under which the enterprise must sue or may indemnify a person under this
subchapter.  Authorizes the written partnership agreement of a limited
partnership to restrict the circumstances in the same manner as the
certificate of formation. 

SUBCHAPTER C.  PERMISSIVE INDEMNIFICATION AND ADVANCEMENT
OF EXPENSES

Sec. 8.101.  PERMISSIVE INDEMNIFICATION.  (a)  Authorizes an enterprise to
indemnify an existing or former governing person or delegate who was, is,
or is threatened to be made a respondent in a proceeding under Section
8.102 if it is determined that the person acted in good faith and
reasonably believed that the person's conduct in official capacity was in
the enterprise's best interests or, in any other case, was not opposed to
the enterprise's best interests and did not have, in the case of a criminal
proceeding, reasonable cause to believe that the conduct was unlawful; that
the expenses are reasonable; and that the indemnification should be paid. 

(b)  Provides that an action taken or omitted by a governing person or
delegate with respect to an employee benefit plan in performing the
person's duty for an enterprise reasonably believed by the person to be in
the interest of the participants and beneficiaries of the plan is not
opposed to the best interests of the enterprise. 

(c)  Provides that action taken or omitted by a delegate to another
enterprise for a purpose reasonably believed by the delegate to be in the
interest of the other enterprise or its owner is not opposed to the
interests of the first enterprise. 

(d)  Provides that a person does not fail to meet these standards solely
because of the termination of a proceeding by judgment, order, settlement,
conviction or nolo contendere plea. 

Sec. 8.102.  GENERAL SCOPE OF PERMISSIVE INDEMNIFICATION.  (a)  Authorizes
an enterprise to indemnify an existing or former governing person or
delegate against a judgment, penalty, settlement, fine, or excise tax
against the person regarding an employee benefit plan and reasonable
expenses actually incurred in the proceeding. 

(b)  Limits indemnification of a person who is found liable to the
enterprise or is found liable because of improperly receiving a personal
benefit to reasonable expenses and bars indemnification if  the person is
found liable for wilful or intentional misconduct in performance of duty to
the enterprise, breach of duty of loyalty to the enterprise or any act or
omission not in good faith that constituted breach of duty to the
enterprise. 

(c)  Provides that a person is considered to have been found liable only if
the liability is  established by an order and all appeals of the order are
exhausted or foreclosed by law. 

(d)  Prohibits indemnification or advancement of expenses that conflicts
with a restriction in the enterprise's governing documents. 

Sec. 8.103. MANNER FOR DETERMINING PERMISSIVE INDEMNIFICATION. Sets forth
the manner in which a determination under Section 8.101(a) must be made.
Requires special legal counsel, if the special legal counsel determines
that a person meets the standard under Section 8.101(a), to determine
whether the amount of expenses is reasonable, but provides that the council
may not determine whether indemnification should be paid. Provides that a
provision contained in the governing documents of the enterprise, a
resolution of the owners, members, or board of directors, or an agreement
that requires indemnification of a person who meets the basic standard of
Section 8.101(a)(1) constitutes a determination under Section 8.101(a)(3)
that indemnification should be paid even though the provision may not have
been adopted in the same way as the determinations required under Section
8.101(a). 
 
Sec. 8.104.  ADVANCEMENT OF EXPENSES.  Authorizes an enterprise to advance
or reimburse reasonable expenses of an existing or former governing person
or delegate who is or is threatened to be made a respondent in a
proceeding, subject to certain provisions and restrictions. 


Sec. 8.105. INDEMNIFICATION OF AND ADVANCEMENT OF EXPENSES TO PERSONS OTHER
THAN GOVERNING PERSONS.  (a)  Authorizes an enterprise to indemnify and
advance expenses to a person who is not a governing person, including an
officer, employee, agent or delegate, as provided by the governing
documents, general or specific action of the governing persons, resolution
of the owners or members, contract or common law, notwithstanding any other
provision of this chapter.  Requires an enterprise to indemnify and advance
expenses to an officer to the same extent it is required to indemnify and
advance expenses to a governing person. Authorizes a person who is not a
governing person to seek indemnification or advancement of expenses to the
same extent as a governing person.  Authorizes the certificate of formation
of an enterprise to restrict the circumstances under which the enterprise
must sue or may indemnify a person under this subchapter. Authorizes the
written partnership agreement of a limited partnership to restrict the
circumstances in the same manner as the certificate of formation. 

Sec. 8.106.  PERMISSIVE INDEMNIFICATION OF AND REIMBURSEMENT OF EXPENSES TO
WITNESSES.  Authorizes an enterprise to pay or reimburse reasonable
expenses incurred by a governing person, officer, employee, agent,
delegate, or other person in connection with that person's appearance as a
witness or other participation in a proceeding at a time when the person is
not a respondent in the proceeding. 

SUBCHAPTER D.  LIABILITY INSURANCE; REPORTING REQUIREMENTS

Sec. 8.151.  INSURANCE AND OTHER ARRANGEMENTS.  (a)  Authorizes an
enterprise to obtain and maintain insurance or another arrangement to
indemnify or hold harmless an existing or former governing person,
delegate, officer, employee or agent against any liability asserted against
and incurred by the person in that capacity or arising out of the person's
status in that capacity.   

(b)  Authorizes the insurance or other arrangement to insure against such
liability, whether or not the enterprise otherwise would have power to
indemnify against that liability.   

(c)  Authorizes insurance or another arrangement that involves
self-insurance or an agreement to indemnify with the enterprise or with a
person not regularly engaged in the insurance business to provide for
payment of a liability outside the enterprise's power to indemnify only
with the approval of the owners or members of the enterprise. 

(d)  Authorizes an enterprise, in addition to obtaining insurance or other
arrangement, to  create a trust fund, self-insure, contract to indemnify,
grant security, or establish a letter of credit, guaranty or surety
arrangement for the benefit of a person to be indemnified. 

(e)  Authorizes insurance or other arrangement to be obtained and
maintained within the enterprise or with any insurer or with any other
person considered appropriate by the governing authority, regardless of
whether the enterprise owns an interest in the insurer or other person. 

(f)  Makes conclusive the governing authority's decision as to insurance or
other arrangement and protects governing persons from liability for
approving it even though they may be beneficiaries of it. 

Sec. 8.152.  REPORTS OF INDEMNIFICATION AND ADVANCES.  Requires that an
enterprise submit a written report any indemnification or advance paid to
its governing persons before the notice or waiver of notice of the next
meeting, but not later than one year after the date of the indemnification
or advance. 

CHAPTER 9.  FOREIGN ENTITIES

SUBCHAPTER A.  REGISTRATION

Sec. 9.001.  FOREIGN ENTITIES REQUIRED TO REGISTER.   Provides that a
foreign entity that would be required to file a certificate of formation if
it were formed in this state, or that affords limited liability to owners
or members under the law of its jurisdiction of formation, to file an
application for  and maintain registration with the secretary of state to
transact business in Texas.   

Sec. 9.002.  FOREIGN ENTITIES NOT REQUIRED TO REGISTER.  Provides that a
foreign entity not described by Section 9.001 may transact business in this
state without registration with the secretary of state, but does not
relieve the foreign entity from the duty to comply with applicable
registration requirements under other law.  Provides that foreign entities
authorized to transact business in this state by other state law are not
required to register under this chapter.  Provides that a foreign
unincorporated nonprofit association is not required to register under this
chapter. 

Sec. 9.003.  PERMISSIVE REGISTRATION.  Authorizes a foreign entity that is
eligible under other law of this state to register to transact business in
this state to register under this chapter unless prohibited by the other
law.   Provides that registration under this chapter confers only the
authority provided by this chapter. 

Sec. 9.004.  REGISTRATION PROCEDURE.  Provides that a foreign filing entity
registers by filing an application for registration as provided by Chapter
4.  Sets forth the requirements for the registration application.
Authorizes a foreign filing entity to register regardless of any
differences between the law of the entity's jurisdiction of formation and
those of this state applicable to the governing of the internal affairs or
to the liability of an owner, member, or managerial official. 

Sec. 9.005.  EFFECT OF REGISTRATION.  Provides that the registration takes
effect when the application is filed and remains in effect until
terminated, withdrawn or revoked. Provides that the acknowledgment issued
by the secretary of state is evidence of the authority of the foreign
entity to transact business in this state, except in a proceeding to revoke
the registration. 

Sec. 9.006.  AMENDMENTS TO REGISTRATION.  Provides that a foreign filing
entity must amend its registration if its name or business or activity has
changed.  Authorizes a foreign entity to amend its original application by
filing an amendment of registration. Provides that an amendment to reflect
the change of name or purpose must be filed within 90 days following the
change. 

 Sec. 9.007.  VOLUNTARY WITHDRAWAL OF REGISTRATION.  (a)  Authorizes a
foreign filing entity to withdraw its registration at any time by filing a
certificate of withdrawal. 

(b)  Sets forth the  information which must be included on a withdrawal
certificate. 

(c)  Provides that if the foreign filing entity is a foreign professional
corporation, foreign for-profit corporation, or foreign limited liability
company it must file a certificate from the comptroller that all franchise
taxes have been paid. 

(d)  Requires a certificate that evidences the termination to be filed with
the secretary of state if the existence or separate existence of a foreign
filing entity registered in this state terminates. 

(e)  Provides that the registration of the foreign filing entity terminates
when a certificate of withdrawal is filed. 

(f)  Provides that, if the address stated in a certificate of withdrawal
changes, the foreign filing entity must promptly amend the certificate of
withdrawal. 

(g)  Provides that a certificate of withdrawal does not terminate the
authority of the secretary of state to accept service of process on the
foreign filing entity with respect to a cause of action arising out of
business or activity in this state. 

Sec. 9.008.  REVOCATION OF REGISTRATION BY COURT ACTION.  Authorizes the
attorney general to apply to a court to revoke the registration of foreign
entities under specified circumstances.  Provides that only a Travis County
district court or a district court of the county in which a foreign filing
entity's registered office is located has jurisdiction of such a suit.
Provides that venue is in either court.  Requires the clerk of the court to
file a certified copy of the order of revocation with the secretary of
state who is required to file a certificate of revocation and deliver it to
the foreign filing entity.  Provides that the certificate of revocation
must state the cause of the revocation.  Provides that the revocation takes
effect on the date the court issues the order of revocation. 

Sec. 9.009.  REVOCATION OF REGISTRATION BY STATE ACTION.  Authorizes the
secretary of state to revoke the registration of a foreign entity under
specified circumstances after notice and an opportunity to correct the
entity's failure.  Requires the secretary of state to file a certificate of
revocation and deliver it to the foreign entity.  Sets forth the
information the certificate of revocation must contain.  Provides that the
revocation takes effect on the date the certificate is filed. 

Sec. 9.010.  REINSTATEMENT.  Requires the secretary of state to reinstate
the registration of an entity that has been revoked when the entity has
corrected the circumstances that led to the revocation or when the
secretary of state determines that the circumstances did not exist at the
time of revocation. Provides that the registration of an entity that is
reinstated within three years of revocation is considered to have been
registered at all times during the period of revocation. 

Sec. 9.011.  NAME CHANGE OF FOREIGN ENTITY.  Provides that the registration
of a foreign entity must be suspended if it has changed its name to a name
that would not be available for its use in Texas.  Provides that the
registration is suspended until the entity files an amendment to its
registration to change its name to a name that is available to it under the
laws of this state. 

Sec. 9.012.  TRANSACTING BUSINESS OR MAINTAINING COURT PROCEEDING WITHOUT
REGISTRATION.  Authorizes a court on application of the attorney general to
enjoin a foreign entity from transacting business in this state if the
entity is not registered or the entity's registration is obtained under
false pretenses.  Prohibits  a foreign entity from maintaining legal action
in this state that arises out of the transaction of business in this state
unless the entity is registered as required.  Specifies that the validity
of any contract or act of the entity  is not affected by the failure to
register and that the entity is not prevented from defending a legal action
in this state.  Specifies that an owner, member, or managerial official of
the entity is not liable by contract or under other provisions of law for
failure of the entity to register. 

Sec. 9.013.  CIVIL PENALTY.  Imposes civil penalties on a foreign filing
entity for failure to register, including all fees and taxes that would
have been imposed by law on the entity had the entity registered when first
required and any applicable penalties and interest for failure to pay those
fees and taxes.  Authorizes the attorney general to bring suit to recover
amounts due under this section. 

Sec. 9.014.  VENUE.  Authorizes a suit under Section 9.012 or 9.013 to be
brought in  Travis County in addition to any other venue authorized by law. 

Sec. 9.015.  LATE FILING FEE.  Authorizes the secretary of state to collect
a late filing fee equal to the registration fee for the entity for each
year of delinquency if an entity has transacted business in this state for
more than 90 days without a certificate of authority. Authorizes the
secretary to condition the effectiveness of a registration on the payment
of the late filing fee. 

Sec. 9.016.  REQUIREMENTS OF OTHER LAW.  Provides that this chapter does
not excuse a foreign entity from complying with requirements under other
laws. 

Sec. 9.017.  INVOLUNTARY REVOCATION OF REGISTRATION BY STATE ACTION;
NOTIFICATION OF ATTORNEY GENERAL.  Requires the secretary of state to
simultaneously notify the attorney general and a foreign filing entity if
the secretary of state determines that cause exists for the judicial
revocation of the foreign filing entity's registration.  Requires the
secretary of state to maintain a record of the date notice is mailed.
Requires a court to accept a certificate stating  the grounds for judicial
revocation and the mailing of the notice for revocation as prima facie
evidence of such. 

Sec. 9.018.  ACTION TO REVOKE REGISTRATION.  Requires the attorney general
to file an action against a foreign filing entity in the name of the state
to revoke the registration of a foreign filing entity if the entity does
not cure the problems for which revocation was sought within 30 days of the
notification under Section 9.017 and the attorney general determines that
cause exists for revocation.  Requires such an action to be abated if the
filing entity cures the problems before judgment is rendered and pays the
costs of the action. 

Sec. 9.019.  APPLICATION FOR STAY OF JUDGMENT.  Authorizes a foreign filing
entity to make an application for stay of judgment to allow the entity the
opportunity to cure the problems when the entity obtains a finding that the
problems for which the entity was found guilty were not wilful or the
result of a failure to take reasonable precautions. Requires the court to
stay an entry of judgment for no longer than 60 days after the date the
court's findings are made pursuant to Section 9.018, to dismiss the action
if the problems are cured and the costs of the action paid, and to enter a
final judgment if the problems are not cured within the time prescribed. 

Sec. 9.020.  OPPORTUNITY FOR CURE AFTER AFFIRMATION OF FINDINGS BY APPEALS
COURT.  Requires an appellate court that affirms a trial court's findings
against a foreign filing entity under this section to remand the case to
the trial court to grant the entity an opportunity to cure after
affirmation of findings by an appellate court if the foreign filing entity
did not make an application for stay of the entry of the judgement, the
appellate court is satisfied that the appeal was taken in good faith, the
appellate court finds that the problems are capable of being cured, and the
foreign entity has prayed for the opportunity to cure its problems in the
appeal.  Requires the appellate court to determine the length of time, not
to exceed 60 days, to be given to the foreign entity to cure its problems.
Requires the trial court to dismiss the action if the foreign entity cures
its problems and pays all court costs.  Requires the revocation to become
final if the foreign entity does not cure its problems  within the
prescribed period. 

Sec. 9.021.  VENUE.  Requires the attorney general to bring an action for
the involuntary revocation of the registration of a foreign filing entity
in a district court of the county in which the filing entity is located or
a district court of Travis County. 

Sec. 9.022.  PROCESS IN STATE ACTION.  Requires citation in an action for
the involuntary revocation of the registration of a foreign filing entity
to be issued and served as provided by law. 

Sec. 9.023.  PUBLICATION OF NOTICE.  Requires citation by publication when
service is returned not found and sets forth procedures for such service. 

Sec. 9.024.  FILING OF DECREE OF REVOCATION AGAINST FOREIGN FILING ENTITY.
Requires the clerk of a court to file a certified copy of a judicial decree
with the secretary of state when a court has entered a decree revoking a
foreign entity's registration to transact business.  Prohibits a fee from
being charged for such a filing. 

SUBCHAPTER B.  BUSINESS, RIGHTS, AND OBLIGATIONS

Sec. 9.051.  BUSINESS OF FOREIGN ENTITY.  Prohibits a foreign entity from
conducting in this state a business or activity that is not permitted to be
transacted by a corresponding domestic entity, unless authorized by other
law of this state. 

Sec. 9.052.  RIGHTS AND PRIVILEGES.  Provides that a foreign entity enjoys
the same, but no greater, rights and privileges than a corresponding
domestic entity. 

Sec. 9.053.  OBLIGATIONS AND LIABILITIES.  Provides that the owners,
members, and managerial officials of a foreign entity are subject to the
same duties, restrictions, penalties and liabilities imposed on those
persons of a corresponding domestic entity. 

Sec. 9.054.  RIGHT OF FOREIGN FILING ENTITY TO PARTICIPATE IN THE BUSINESS
OF CERTAIN DOMESTIC ENTITIES.  Provides that a foreign filing entity can
exercise its ownership or membership rights in a domestic entity even
though not registered to transact business in this state. 

SUBCHAPTER C.  DETERMINATION OF TRANSACTING BUSINESS IN
THIS STATE

Sec. 9.101.  ACTIVITIES NOT CONSTITUTING TRANSACTING BUSINESS IN THIS
STATE.   Lists those activities that do not constitute transaction of
business in this state. 

Sec. 9.102.  OTHER ACTIVITIES.  Provides that the list provided in Section
9.101 is not exclusive.  


SUBCHAPTER E.  MISCELLANEOUS PROVISIONS

Sec. 9.201.  APPLICABILITY OF THIS CODE TO CERTAIN FOREIGN ENTITIES. Makes
the provisions regarding foreign registration, including filing procedures,
applicable to entities granted authority to transact business under a
special statute if the statute specifically provides or to supplement any
special statute to the extent not inconsistent with the provisions of the
statute. 

CHAPTER 10.  MERGERS, INTEREST EXCHANGES, CONVERSIONS
AND SALES OF ASSETS

Sec. 10.001.  ADOPTION OF PLAN OF MERGER.   (a)  Authorizes a domestic
entity to effect a merger and provides that it must be set forth in a plan
of merger. 

 (b)  Provides that, to effect a merger, the governing authority of each
domestic entity that is a party to the merger must act on the plan of
merger in the manner prescribed by this code. 

(c)  Provides that, if one or more non-code organizations is a party to the
merger or is to be created by the merger, each non-code organization must
take all required action and the merger must be permitted by the law of the
state or country under whose law each non-code organization is incorporated
or organized, or each non-code organization's governing documents.
Provides that each non-code organization must comply with the applicable
laws under which it is incorporated or organized and its governing
documents. 

(d)  Prohibits an organization from merging if an owner or member of that
entity will become personally liable, without that person's consent, for a
liability or other obligation of any other person as a result of the
merger. 

Sec. 10.002.  PLAN OF MERGER:  REQUIRED PROVISIONS.  Sets forth the
information that a plan of merger must include. 

Sec. 10.003.  CONTENTS OF PLAN OF MERGER:  MORE THAN ONE SUCCESSOR. Sets
forth the information that a plan of merger must include if more than one
organization is to survive or be created by the plan of the merger. 

Sec. 10.004.  PLAN OF MERGER:  PERMISSIVE PROVISIONS.  Sets forth the
information that a plan of merger may include. 

Sec. 10.005.  CREATION OF HOLDING COMPANY BY MERGER.  Defines "direct or
indirect wholly owned subsidiary" and "holding company" in this section.
Authorizes a domestic entity to restructure the ownership structure to
create a holding company structure without the approval of the owners or
members in specified cases.  Provides that the governing documents of the
surviving entity must require that an act or transaction by or involving
the surviving entity that requires the approval of the owners or members
must also require the approval of the owners or members of the holding
company by the same vote. Authorizes the governing documents of the
surviving entity to change the classes and series of ownership or
membership interests and the number of interests that the surviving entity
is authorized to issue.  Provides that provisions contained in Section
21.606 continue to apply to the holding company.  Provides that an owner or
member of a domestic entity involved in a merger does not solely by reason
of the merger become an owner or member of the holding company. Provides
that the ownership or membership interests of the holding company are
represented by the certificates if the name of the holding company is the
same as the name of the domestic entity. 

Sec. 10.006.  SHORT FORM MERGER.   Authorizes and sets forth the
requirements for effecting a "short-form" merger where one entity owns more
than 90% of the voting ownership interest in another entity. 

Sec. 10.007.  EFFECTIVENESS OF MERGER.  Provides that a merger takes effect
at the time provided by the plan of merger or otherwise agreed to by the
parties, except that a merger that requires a filing under Subchapter D
takes effect on the acceptance of the filing of the certificate of merger
by the secretary of state or county clerk. 

Sec. 10.008.  EFFECT OF MERGER.   (a)  Provides that when a merger takes
effect the separate existence of each domestic entity ceases; all rights,
title, and interests to all real estate and other property owned by each
organization is allocated to and vested in one or more of the surviving or
new organizations; all liabilities and obligations of each organization are
allocated to one or more surviving or new organizations, which become the
primary obligors; any pending proceeding against any organization may be
continued as if the merger did not occur or an organization to which the
liability, obligation, asset, or right is allocated to and vested in may be
substituted in the proceeding; the governing documents of each surviving
domestic entity are amended to the extent provided by the plan of the
merger; each new entity whose certificate of formation is included in the
plan of merger is formed as a domestic entity; ownership and membership
interests that are to be converted or exchanged are converted or exchanged;
and the surviving or new organization named as primarily obligated to pay
the fair value of an ownership or membership interest is the primary
obligor for that payment. 

(b)  Provides that, if the plan of merger does not provide for af any
property, liability, or obligation, unallocated property is owned in
undivided interest by, or the liability or obligation is the joint and
several liability and obligation of, each of the surviving and new
organizations, pro rata to the total number of surviving and new
organizations. 

(c)  Provides that, if a surviving organization in a merger is not a
domestic entity, the surviving organization is considered to have appointed
the secretary of state in this state as its service of process in an
enforcement proceeding and to have agreed to promptly pay to the dissenting
owners or members of each domestic entity that is a party to the merger the
amount to which they are entitled. 

(d)  Requires a surviving organization that is not a domestic entity to
register to transact business in this state if the entity is required to
register for that purpose by another provision of this code. 

Sec. 10.009.  SPECIAL PROVISIONS APPLYING TO PARTNERSHIP MERGERS.  (a)
Provides that a partner of a domestic partnership that is a party to a
merger does not become liable as a result of the merger for the liability
or obligation of another person party to the merger unless the partner
consents. 

(b)  Provides that a partner of a domestic partnership that is a party to a
merger who remains in or enters a partnership is treated as an incoming
partner when the merger takes effect for purposes of determining liability. 

(c)  Authorizes a former partner, if a partnership merges with an
organization, who becomes an owner or member of the surviving organization
to bind the surviving organization to a transaction as before the merger in
certain circumstances. 

(d)  Provides that, if a partnership is formed under a merger, the
existence of the partnership takes effect with the merger. 

(e)  Requires a partner in a domestic partnership that is a party to a
merger but does not survive to be treated as a partner who withdrew from
the nonsurviving domestic partnership as of the effective date of the
merger. 

Sec. 10.010.  SPECIAL PROVISIONS APPLYING TO NONPROFIT ENTITY MERGERS.
Prohibits a domestic nonprofit entity from merging into another entity if
the domestic nonprofit entity would lose or impair its charitable status.
Authorizes one or more domestic for-profit entities or non-code
organization to merge into one or more domestic nonprofit entities that
continue as the surviving entity or entities.  Prohibits a domestic
nonprofit entity from merging into a foreign for-profit entity if the
domestic entity does not continue as the surviving entity.  Authorizes one
or more domestic nonprofit entities and non-code organization to merge into
one or more foreign nonprofit entities that continue as the surviving
entity or entities. 

SUBCHAPTER B.  EXCHANGES OF INTERESTS

Sec. 10.051.  INTEREST EXCHANGES.  Authorizes one or more domestic entities
or noncode organizations to adopt a plan of exchange for the purpose of
acquiring all of the outstanding ownership or membership interests of one
or more classes or series of one or more domestic entities.  Provides that
to make an interest exchange the governing authority of each domestic
entity involved must act on a plan of exchange and, if required, the owners
and members must approve the plan, and each acquiring domestic entity must
take all  required action.  Provides that a non-code organization must take
all required action to acquire ownership or member ship interests.
Provides that, if one or more non-code organizations issues ownership or
membership interests, the issuance  must be permitted by the laws under
which they are incorporated.  Prohibits a plan of exchange from being
effected if any owner or member of an entity that is a party to the
exchange becomes personally liable without the person's consent for the
liabilities or obligation of any other person. 

Sec. 10.052.  PLAN OF EXCHANGE:  REQUIRED PROVISIONS.  Sets forth the
information a plan of exchange must include. 

Sec. 10.053.  PLAN OF EXCHANGE:  PERMISSIVE PROVISIONS.  Authorizes a plan
of exchange to include any other provisions not required by Section 10.052
relating to the interest exchange. 

Sec. 10.054.  EFFECTIVENESS OF EXCHANGE.  Provides that an interest
exchange takes effect at the time provided in the plan of exchange or
otherwise agreed to by the parties, except that an interest exchange that
requires a filing under Subchapter D takes effect on the acceptance of the
filing of the certificate of exchange by the secretary of state or county
clerk. 

Sec. 10.055.  GENERAL EFFECT OF INTEREST EXCHANGE.  Provides that when an
interest exchange takes effect the ownership or membership interest of each
acquired organization is exchanged as provided in the plan of exchange, and
the former owners are entitled to only the rights provided in the
certificate of exchange or, if applicable, a right to receive the fair
value for the ownership or membership interests provided under Subchapter
H.  Provides that the acquiring organization has all rights, title, and
interests with respect to the ownership or membership interest to be
acquired by it, subject to the provisions of the certificate of exchange. 

SUBCHAPTER C.  CONVERSIONS

Sec. 10.101.  CONVERSION OF DOMESTIC ENTITIES.  Authorizes a domestic
entity to convert into a different type of domestic entity or a non-code
organization by adopting a plan of conversion.  Sets forth the procedures
and requirements for a conversion. 

Sec. 10.102.  CONVERSION OF NON-CODE ORGANIZATIONS.  Authorizes a non-code
organization to convert into a domestic entity by adopting a plan of
conversion.  Sets forth the procedures and requirements for a conversion. 

Sec. 10.103.  PLAN OF CONVERSION:  REQUIRED PROVISIONS.  Sets forth the
information a plan of conversion must include. 

Sec. 10.104.  PLAN OF CONVERSION:  PERMISSIVE PROVISIONS.  Authorizes a
plan of conversion to include other provisions relating to the conversion
that are not inconsistent with law. 

Sec. 10.105.  EFFECTIVENESS OF CONVERSION.  Provides that a conversion
takes effect at the time provided in the plan of conversion or otherwise
agreed to by the parties, except that a conversion that requires a filing
under Subchapter D takes effect on the acceptance of the filing of the
certificate of conversion by the secretary of state or county clerk. 

Sec. 10.106.  GENERAL EFFECT OF CONVERSION.  Provides that when a
conversion takes effect the converting entity continues to exist without
interruption in the organizational form of the converted entity; all
rights, title, and interests to all property owned by the converting entity
continue to be owned by  the converted entity; all liabilities and
obligations of the converting entity continues to be liabilities and
obligations of  the converted entity; rights of creditors to or against the
previous owners may be enforced as if a conversion had not occurred;
proceedings pending by or against the entity or its owners may be continued
by or against the converted entity; ownership or membership interests to be
converted are converted; an owner's or member's liabilities and obligations
take effect to the extent that the person agrees, was liable before the
conversion, or becomes liable under the conversion; and the converted
entity, if it is a non-code organization, is considered to have appointed
the secretary of state in this state as its agent for service of process in
an enforcement proceeding and agreed to pay the dissenting owners or
members the amount to which they are entitled. 

Sec. 10.107.  SPECIAL PROVISIONS APPLYING TO PARTNERSHIP CONVERSIONS.
Provides that if a partnership is formed under a plan of conversion, the
existence of the partnership as a partnership begins and the designated
owners or members become partners when the conversion takes effect. 

Sec. 10.108.  SPECIAL PROVISIONS APPLYING TO NONPROFIT ENTITY CONVERSIONS.
Prohibits a domestic nonprofit entity from converting into a for-profit
entity. 

SUBCHAPTER D.  CERTIFICATE OF MERGER, EXCHANGE,
OR CONVERSION


Sec. 10.151.  CERTIFICATE OF MERGER AND EXCHANGE.  Sets forth the
requirements for a certificate of merger or exchange to become effective.
Sets forth the information a certificate of merger or exchange must
include.  Authorizes a certificate of merger to constitute a certificate of
exchange if it contains the information required for a certificate of
exchange. 

Sec. 10.152.  CERTIFICATE OF MERGER:  SHORT FORM MERGER.  Provides that a
certificate of merger under Section 10.006 is required to be signed only by
an officer or other authorized representative of the parent organization.
Sets forth the information which must be included in the certificate. 

Sec. 10.153.  FILING OF CERTIFICATE OF MERGER OR EXCHANGE.  Provides that,
if a certificate of merger or exchange must be filed, it  and the
certificate of formation of each filing entity formed under the merger must
filed with the secretary of state in accordance with Chapter 4.  Provides
that, if a domestic real estate investment trust is a party to the merger
or if an ownership interest in such a trust is to be acquired, the
certificate of merger or exchange must be filed with the county clerk of
the county in which the trust's principal place of business in this state
is located in accordance with Chapter 4.  Provides that if a domestic real
estate investment trust is created under the merger, the certificate of
formation of the trust must also be filed with the county clerk in
accordance with Chapter 4. 

Sec. 10.154.  CERTIFICATE OF CONVERSION.  Provides that a certificate of
conversion must filed after approval of a plan of conversion to become
effective if any domestic entity that is a party to the conversion or is
created by the conversion is a filing entity.  Provides that a certificate
must be signed and include the plan of conversion certifying certain
information and a statement that the plan of conversion has been approved. 

Sec. 10.155.  FILING OF CERTIFICATE OF CONVERSION.   Provides that, if a
certificate of conversion must be filed, it and the certificate of
formation of each filing entity formed under the conversion must filed in
accordance with Chapter 4 with the secretary of state. Provides that, if
the converting entity is a domestic real estate investment trust, the
certificate of conversion must be filed in accordance with Chapter 4 with
the county clerk of the county in which the trust's principal place of
business in this state is located.  Provides that if a domestic real estate
investment trust is created under the conversion, the certificate of
formation of the trust must also be filed in accordance with Chapter 4 with
the county clerk. 

Sec. 10.156.  ACCEPTANCE OF CERTIFICATE FOR FILING.  Prohibits the filing
officer from accepting a certificate of merger, exchange, or conversion for
filing if it does not conform to law or if the required franchise taxes
have not been paid. 

 SUBCHAPTER E.  ABANDONMENT OF MERGER, EXCHANGE, OR CONVERSION

Sec. 10.201.  ABANDONMENT OF PLAN OF MERGER, EXCHANGE, OR CONVERSION.
Authorizes a plan of merger, interest exchange, or conversion to be
abandoned after its approval before it takes effect without action by the
owners or members. 

Sec. 10.202.  ABANDONMENT AFTER FILING.  Authorizes a merger, interest
exchange, or conversion to be abandoned prior to its effectiveness after
the certificate has been filed. Provides that a certificate is not required
if no filing is required to make the merger, exchange, or conversion
effective. 

Sec. 10.203.  ABANDONMENT IF NO FILING REQUIRED.  Provides that a merger,
interest exchange, or conversion is abandoned when and on the terms
provided by the plan of merger or governing authority if no filing is
required. 

SUBCHAPTER F.  PROPERTY TRANSFERS AND DISPOSITIONS

Sec. 10.251.  GENERAL POWER OF DOMESTIC ENTITY TO SELL, LEASE, OR CONVEY
PROPERTY.  Authorizes a domestic entity to transfer and convey an interest
in its property with or without the goodwill of the entity, on any terms
and conditions and for any consideration, and be evidenced by a deed,
assignment, or other instrument with or without the seal of the entity.
Authorizes a domestic entity to grant a pledge, mortgage, deed of trust, or
trust indenture with respect to an interest in property of the entity with
or without the seal of the entity. 

Sec. 10.252.  NO APPROVAL REQUIRED FOR CERTAIN DISPOSITIONS OF PROPERTY.
Provides that a sale, lease, assignment, conveyance, pledge, mortgage, deed
of trust, trust indenture, or other transfer of an interest in real
property or other property made by a domestic entity does not require the
approval of the governing authority, members, or owners of the entity,
except as otherwise provided in this code or in the governing documents of
the domestic entity, or specific limitations established by the governing
authority. 

Sec. 10.253.  RECORDING INSTRUMENT CONVEYING REAL PROPERTY OF DOMESTIC
ENTITY.  Authorizes a deed or other instrument executed by a domestic
entity that conveys an interest in real property to be recorded in the same
manner and with the same effect as similar instruments if it is signed and
acknowledged by an authorized person. Provides that such document
constitutes prima facie evidence that the sale or conveyance was authorized
under this code and the governing documents of the entity. 

Sec. 10.254.  DISPOSITION OF PROPERTY NOT A MERGER OR CONVERSION;
LIABILITY.  Provides that a disposition of the property of a domestic
entity is not a merger or conversion for any purpose.  Prohibits a person
acquiring such property from being held responsible or liable for a
liability of the transferring domestic entity that is not expressly assumed
by the person. 

SUBCHAPTER G.  BANKRUPTCY REORGANIZATION

Sec. 10.301.  REORGANIZATION UNDER BANKRUPTCY AND SIMILAR LAWS.  Sets forth
the actions a designated individual acting on behalf of a domestic entity
that is being reorganized under a federal  statute is authorized to take to
carry out the plan of reorganization, without action by or notice to the
domestic entity's governing authority, owners, or members.  Provides that
such actions take effect on entry of the order approving the plan of
reorganization or on a specified date, without further action of the
domestic entity. 

Sec. 10.302.  SIGNING OF DOCUMENTS.  Authorizes a designated individual
acting on behalf of a domestic entity that is being reorganized under a
federal  statute to sign a certificate of amendment or restated certificate
of formation, a certificate of merger or  exchange, a certificate of
termination, a statement of change of registered office or registered agent
or both, or a certificate of conversion, each of which must contain certain
information. 

Sec. 10.303.  REORGANIZATION WITH OTHER ENTITIES.  Sets forth the
applicable laws, procedures, and information required in a certificate of
merger or exchange if a domestic entity or non-code organization that is
not being reorganized under federal statute merges or exchanges an interest
with a domestic entity that is being reorganized under a federal statute. 

Sec. 10.304.  RIGHT OF DISSENT AND APPRAISAL EXCLUDED.  Provides that an
owner or member of a domestic entity being reorganized under a federal
statute does not have a right to dissent and appraisal under this code
except as provided by the plan of reorganization. 

Sec. 10.305.  AFTER FINAL DECREE.  Provides that this subchapter does not
apply after the entry of a final decree in a reorganization case. 

Sec. 10.306.  CHAPTER CUMULATIVE OF OTHER CHANGES.  Provides that this
chapter does not preclude other changes in a domestic entity or its
ownership or membership interests or securities by a plan of reorganization
ordered by a court under a federal statute. 

SUBCHAPTER H.  RIGHTS OF DISSENTING OWNERS

Sec. 10.351.  APPLICABILITY OF SUBCHAPTER.  Provides that this subchapter
does not apply to a fundamental business transaction of a domestic entity
if, immediately before the effective date of the transaction, all of the
ownership interests of the entity otherwise entitled to rights to dissent
and  appraisal under this code are held by one owner or only by the owners
who approved the transaction.  Provides that this subchapter applies only
to a "domestic entity subject to dissenters' rights," as defined in Section
1.002.  Provides that term includes a domestic for-profit corporation,
professional corporation, professional association, and real estate
investment trust. 

Sec. 10.352.  DEFINITIONS.  Defines "dissenting owner" and "responsible
organization" in this subchapter. 

Sec. 10.353.  FORM AND VALIDITY OF NOTICE.  Provides that notice under this
subchapter must be in writing and be mailed, hand delivered, or delivered
by courier or electronic transmission.  Provides that failure to provide
notice as required by this subchapter does not invalidate any action taken. 

Sec. 10.354.  RIGHTS OF DISSENT AND APPRAISAL.  Entitles an owner of an
ownership interest in a domestic entity subject to dissenters' rights to
dissent from certain specified actions and to obtain the fair value of that
ownership interest through an appraisal.  Prohibits an owner from
dissenting from a plan of merger or conversion in which there is a single
surviving or new domestic entity or non-code organization, or from a plan
of exchange if certain conditions exist. 

Sec. 10.355.  NOTICE OF RIGHT OF DISSENT AND APPRAISAL.  Requires a
domestic entity subject to dissenters' rights that takes or proposes to
take an action regarding which an owner has a right to dissent and obtain
an appraisal to notify each affected owner of the owner's rights if the
action or proposed action is submitted to a vote at a meeting or approval
is obtained by written consent.  Requires such an entity that proposes to
effect a short form merger to notify the owners who have a right to dissent
to the merger not later than the 10th day after the effective date of the
merger.  Sets forth the requirements for the notice. 

Sec. 10.356.  PROCEDURE FOR DISSENT BY OWNERS AS TO ACTIONS; PERFECTION OF
RIGHT OF DISSENT AND APPRAISAL.  Authorizes an owner of an ownership
interest of a domestic entity subject to dissenters' rights who has the
right to dissent and appraisal from any of the actions referred to in
Section 10.354 to exercise that  right only with respect to an ownership
interest that is not voted in favor of the action and only by complying
with the procedures specified in this subchapter.  Sets forth the
procedures for perfecting the owner's rights of dissent and appraisal.
Provides that an owner who does not make a demand within the period
required is bound by the action and is not entitled to exercise the rights
of dissent and appraisal.  Provides that an owner must submit to the
responsible organization any certificates representing the ownership
interest to which the demand relates within 20 days of making the demand
and that failure to do so terminates the demand unless a court directs
otherwise.  Prohibits a dissenting owner from bringing suit to recover the
value of the ownership interest or money damages relating to the action if
the entity satisfies the requirements of this subchapter and the owner
fails to perfect the right of dissent. 

Sec. 10.357.  WITHDRAWAL OF DEMAND FOR FAIR VALUE OF OWNERSHIP INTEREST.
Prohibits an owner from withdrawing a demand for the payment of the fair
value of an ownership interest without the consent of the responsible
organization before payment has been made or a petition has been filed. 

Sec. 10.358.  RESPONSE BY ORGANIZATION TO NOTICE OF DISSENT AND DEMAND FOR
FAIR VALUE BY DISSENTING OWNER.  Requires a responsible organization to
respond to a dissenting owner in writing within 20 days of the demand.
Requires the organization, if it accepts the amount claimed, to pay the
amount demanded within 90 days if the owner delivers proof of ownership to
the responsible organization. Requires the organization, if it rejects the
amount claimed, to provide an estimate of the fair value of the ownership
interest and an offer to pay the estimated amount to the owner, which must
remain open for at least 60 days.  Requires the organization to pay the
offered amount within 60 days if the owner accepts the offer. 

Sec. 10.359.  RECORD OF DEMAND FOR FAIR VALUE OF OWNERSHIP INTEREST.
Requires a responsible organization to note the record receipt of a demand
for payment from any dissenting owner.  Provides that, if an ownership
interest is transferred as payment, a new certificate representing that
ownership must contain a reference to the demand and the name of the
original dissenting owner of the ownership interest. 
 
Sec. 10.360.  RIGHTS OF TRANSFEREE OF CERTAIN OWNERSHIP INTEREST. Provides
that such a transfer does not confer on the new owner additional rights
with respect to the responsible organization following the transfer. 

Sec. 10.361.  PROCEEDING TO DETERMINE FAIR VALUE OF OWNERSHIP INTEREST AND
OWNERS ENTITLED TO PAYMENT; APPOINTMENT OF APPRAISERS.  Authorizes a
dissenting owner to file a petition requesting a finding and determination
of the fair value of owner's ownership interests if the organization
rejects the amount demanded and the dissenting owner and the organization
are unable to reach an agreement within the prescribed period.  Sets forth
the procedures and requirements for filing such a petition. 

Sec. 10.362.  COMPUTATION AND DETERMINATION OF FAIR VALUE OF OWNERSHIP
INTEREST.  Provides that the fair value of an ownership interest is the
fair value on the date preceding the date of the action that is the subject
of the appraisal. Provides that any appreciation or depreciation in the
value occurring in anticipation of the proposed action or as a result of
the action must be specifically excluded.  Provides that consideration must
be given to the value of the organization as a going concern without
including any payment for a control premium or minority discount or
limitation placed on the rights and preferences of those ownership
interests.  Prohibits the use of the determination of the fair value of an
ownership interest for a purpose other than this subchapter or for
determining the fair value of another ownership interest. 

Sec. 10.363.  POWERS AND DUTIES OF APPRAISER; APPRAISAL PROCEDURES.
Provides that an appraiser appointed under Section 10.361 has the power and
authority that is granted by the court in the order appointing the
appraiser and that may be conferred by a  court to a master in chancery.
Requires the appraiser to determine the fair value of an ownership interest
of an owner adjudged by the court to be entitled to payment for such and
file with the court a report of that determination.  Entitles the appraiser
to examine the books and records of a responsible organization and
authorizes the appraiser to conduct appropriate investigations.  Authorizes
a dissenting owner to submit evidence and relevant information to the
appraiser.  Requires the clerk of the court appointing the appraiser to
provide notice of the filing of the report to each dissenting owner and the
responsible organization. 

Sec. 10.364.  OBJECTION TO APPRAISAL; HEARING.  Authorizes a dissenting
owner or a responsible organization to object to the appraisal report.
Requires the court to hold a hearing to determine the fair value of the
ownership interest and to require the responsible organization to pay the
determined value with interest.  Requires the responsible organization to
immediately pay the amount of the judgment to the holder of an
uncertificated ownership interest and to the holder of a certificated
interest on proof of ownership.  Provides that the dissenting owner does
not have an interest in the ownership interest for which payment is made or
in the responsible organization with respect to that interest. 

Sec. 10. 365.  COURT COSTS; COMPENSATION FOR APPRAISER.  Entitles an
appraiser to a reasonable fee payable from court costs.  Requires all court
costs to be allocated between the responsible organization and the
dissenting owners in a fair and equitable manner. 

Sec. 10.366.  STATUS OF OWNERSHIP INTEREST HELD OR FORMERLY HELD BY
DISSENTING OWNER.  Requires an ownership interest of an organization
acquired by a responsible organization, in the case of a merger,
conversion, or interest exchange, to be held or disposed of as provided in
the plan of merger, conversion, or interest exchange. Authorizes such an
interest to be held or disposed of in the same manner as other ownership
interests acquired by an organization or held in its treasury in all other
cases.  Provides that an owner that has demanded payment for the owner's
ownership interest is not entitled to vote or exercise any other rights
except to receive payment or bring an action to obtain relief on the ground
that the action which the demand relates would be or was fraudulent.
Prohibits an ownership interest for which payment has been demanded from
being considered outstanding for purposes of any subsequent vote or action. 

Sec. 10.367.  RIGHTS OF OWNERS FOLLOWING TERMINATION OF RIGHT OF DISSENT.
Sets forth the situations which result in the termination of the rights of
a dissenting owner and the consequences of such termination. 

Sec. 10.368.  EXCLUSIVITY OF REMEDY OF DISSENT AND APPRAISAL.  Provides
that the right of an owner of an ownership interest to dissent from an
action and obtain the fair value of the interest is the exclusive remedy
for recovery of the value of the ownership interest or money damages to the
owner with respect to the ownership interest and the owner's right in the
organization with respect to a fundamental business transaction. 

SUBCHAPTER Z.  MISCELLANEOUS PROVISIONS

Sec. 10.901.  CREDITORS; ANTITRUST.  Provides that this code does not
affect, nullify, or repeal the antitrust laws or abridge any right or
rights of any creditor under existing laws. 

Sec. 10.902.  NONEXCLUSIVITY.  Provides that this chapter does not limit
the power of a domestic entity or non-code organization to acquire all or
part of the ownership or membership interests of one or more classes or
series of a domestic entity through a voluntary exchange or otherwise. 

CHAPTER 11.  WINDING UP AND TERMINATION OF DOMESTIC ENTITY

SUBCHAPTER A.  GENERAL PROVISIONS

Sec. 11.001.  DEFINITIONS.  Defines "claim," "event requiring a winding
up," "existing  claim," "terminated entity," "voluntary decision to wind
up," "voluntary winding up," and "winding up" in this chapter. 

SUBCHAPTER B.  WINDING UP OF DOMESTIC ENTITY

Sec. 11.051.  EVENT REQUIRING WINDING UP OF DOMESTIC ENTITY.  Provides that
the events that require the winding up of a domestic entity are the
expiration of the entity's period of duration, a voluntary decision to wind
up, an event specified in the governing documents, an event specified in
this code, or a court decree. 

Sec. 11.052.  WINDING UP PROCEDURES.  Requires the domestic entity to cease
carrying on its business; notify its claimants, except as provided by Title
4; collect and sell its property; and perform other acts required to wind
up its business and affairs, as soon as reasonably practicable.  Authorizes
the domestic entity to prosecute or defend a civil, criminal or
administrative action during the winding up process. 

Sec. 11.053.  PROPERTY APPLIED TO DISCHARGE LIABILITIES AND OBLIGATIONS.
Requires a domestic entity  to apply and distribute its property to
discharge the entity's liabilities or to make adequate provision for the
discharge of the liabilities. Provides that, if the property is not
sufficient to discharge all liabilities, the entity must apply the property
to the extent possible to the just and equitable discharge of liabilities
or make adequate provision for such discharge.  Requires distributions to
be made to the entity's owners after all liabilities are discharged or
adequately provided for.  Authorizes a domestic entity to continue its
business in whole or in part, including delaying the disposition of the
entity's property, only for the limited period necessary to avoid
unreasonable loss of the entity's property or business. 

Sec. 11.054.  COURT SUPERVISION OF WINDING UP PROCESS.  Authorizes a court
to supervise the winding up, appoint a person to carry out the winding up,
and make other orders regarding a winding up on application of an entity or
its owner or member. 

Sec. 11.055.  COURT ACTION OR PROCEEDING DURING WINDING UP.  Authorizes a
domestic entity to continue a court action during the winding up process. 

SUBCHAPTER C.  TERMINATION OF DOMESTIC ENTITY

Sec. 11.101.  CERTIFICATE OF TERMINATION FOR FILING ENTITY.  Provides that
the filing entity must file a certificate of termination upon completion of
the winding up process and specifies the information a certificate of
termination must contain.  

Sec. 11.102.  EFFECTIVENESS OF TERMINATION OF FILING ENTITY.  Provides that
the existence of an entity terminates on the filing of the certificate of
formation. 

Sec. 11.103.  EFFECTIVENESS OF TERMINATION OF NONFILNG ENTITY.  Provides
that the existence of a nonfiling entity terminates on the completion of
the winding up of its business and affairs.  Provides that notice of the
termination must be provided by the nonfiling entity in the manner provided
by the governing documents of the nonfiling entity if notice of termination
is required under the governing documents. 

Sec. 11.105.  ACTION BY THE SECRETARY OF STATE.  Requires the secretary of
state to remove from its active records a domestic filing entity whose
period of duration has expired when the secretary of state determines that
the entity has failed to file a certificate of termination and the entity
has failed to file an amendment to extend its existence. 

SUBCHAPTER D.  REVOCATION AND CONTINUATION

Sec. 11.151.  REVOCATION OF VOLUNTARY WINDING UP.  Authorizes a domestic
entity to revoke a voluntary decision to wind up in the manner specified in
the title governing the entity.  Authorizes the entity to continue its
business following such a revocation. 
 
Sec. 11.152.  CONTINUATION OF BUSINESS WITHOUT WINDING UP.  Authorizes a
domestic entity to cancel the event requiring winding up within one year
after an event requiring winding up specified either in the governing
documents or this code.  Authorizes a domestic entity to extend its period
of duration within three years after the expiration by amending its
governing documents.  Prohibits a domestic entity to cancel an even
requiring winding up and continue its business if the action is prohibited
by the entity's governing documents or this code.  Authorizes a domestic
entity to cancel an event requiring winding up if the action is not
prohibited by its governing documents and is expressly authorized by this
code.  Authorizes the domestic entity to continue its business on
cancellation of an event requiring winding up. 

SUBCHAPTER E.  REINSTATEMENT OF TERMINATED ENTITY

Sec. 11.201.  CONDITIONS FOR REINSTATEMENT.  Sets forth conditions under
which a terminated entity may be reinstated. 

Sec. 11.202.  PROCEDURES FOR REINSTATEMENT.  Provides that an entity must
complete the procedures specified in the title of this code governing the
domestic entity no later than the third anniversary of the termination to
be reinstated.  Provides that the owners, members, governing persons, or
other persons must approve the reinstatement.  Requires the entity to file
a certificate of reinstatement before the third anniversary of the
termination. Sets forth the information a certificate of reinstatement must
contain.  Provides that a letter of eligibility from the comptroller
stating that the filing entity has satisfied all franchise tax liabilities
and is authorized to be reinstated must be filed with the certificated of
restatement if the filing entity is a professional corporation, for-profit
corporation, or limited liability company. 

Sec. 11.203.  USE OF NAME SIMILAR TO PREVIOUSLY REGISTERED NAME. Prohibits
the secretary of state from accepting for filing a certificate of
reinstatement if the filing entity's name is the same, deceptively similar,
or similar to a reserved or registered name. 

Sec. 11.204.  EFFECTIVENESS OF REINSTATEMENT OF NONFILING ENTITY. Provides
that reinstatement of a terminated nonfiling entity takes effect on the
approval required by Section 11.202. 

Sec. 11.205.  EFFECTIVENESS OF REINSTATEMENT OF FILING ENTITY.  Provides
that the reinstatement of a terminated filing entity takes effect on the
filing of the entity's certificate of reinstatement. 

Sec. 11.206.  EFFECT OF REINSTATEMENT.  Provides that the existence of a
reinstated terminated entity is considered to have continued without
interruption from the date of termination and authorizes the terminated
entity to carry on its business as if the termination had not occurred.  

SUBCHAPTER F.  INVOLUNTARY TERMINATION OF FILING ENTITY BY SECRETARY OF
STATE 

Sec. 11.251.  TERMINATION OF FILING ENTITY BY SECRETARY OF STATE.
Authorizes the secretary of state to terminate a filing entity's existence
for failure to timely file a required report, pay a fee or penalty, or
maintain a registered agent or office if the entity does not remedy its
failure within 90 days of being notified of the failure by the secretary of
state. 

Sec. 11.252.  CERTIFICATE OF TERMINATION.  Authorizes the secretary of
state to terminate a filing entity's existence by issuing and delivering to
the filing entity at its registered office or principal place of business a
certificate of termination stating that the filing entity has been
involuntarily terminated and the date and cause of the termination. 
 
Sec. 11.253.  REINSTATEMENT AFTER INVOLUNTARY TERMINATION.  Requires the
secretary of state to reinstate a filing entity that corrects the
circumstances that led to its involuntary termination and files an
appropriate certificate of reinstatement.  Provides that a filing entity
reinstated before the third anniversary of its involuntary termination is
considered to have continued in existence without interruption from the
date of termination. 

Sec. 11.254.  REINSTATEMENT OF TAX FORFEITURE OF CERTIFICATE OF FORMATION.
Provides that a filing entity whose certificate of formation has been
forfeited under the provisions of the Tax Code must follow the procedures
in the Tax Code to reinstate its certificate of formation. 

SUBCHAPTER G.  JUDICIAL WINDING UP AND TERMINATION

Sec. 11.301.  GROUNDS CONSTITUTING INVOLUNTARY WINDING UP AND TERMINATION
OF FILING ENTITY BY STATE ACTION.  Sets forth the grounds upon which a
court may enter a decree requiring winding up of a filing entity's business
and terminating its existence as a result of state action. 

Sec. 11.302.   NOTIFICATION OF CAUSE OF ACTION BY SECRETARY OF STATE. Sets
forth the procedures that must be followed by the secretary of state in
notifying the attorney general and the filing entity of facts relating to
the cause for the winding up and termination. 

Sec. 11.303.  FILING OF ACTION BY ATTORNEY GENERAL.  Requires the attorney
general to file an action against the filing entity in the name of the
state seeking a winding up and termination if the cause for winding up and
termination is not cured within 30 days after the date the notice is sent
to the filing entity. 

Sec. 11.304.  CURE BEFORE FINAL JUDGEMENT.  Requires an action to be abated
if the entity cures the problems and pays the costs of the action. 

Sec. 11.305.  JUDGMENT REQUIRING WINDING UP AND TERMINATION.  Requires a
court to enter a judgment no earlier than the fifth day after the court
finds that proper grounds exist for winding up and termination. 

Sec. 11.306.  APPLICATION FOR STAY OF JUDGMENT.  Authorizes a filing entity
to file a sworn application for stay of entry of the judgment to permit it
to cure the problems. Provides that the stay lasts no longer than 60 days
after the date of the courts findings that a stay is appropriate.  Requires
the court to dismiss the action if the problems are cured during this stay
and to enter final judgment requiring a winding up of the filing entity's
business that are not cured during the stay. 

Sec. 11.307.  OPPORTUNITY FOR CURE AFTER AFFIRMATION OF FINDINGS BY APPEALS
COURT.  Requires an appellate court that affirms a trial court's findings
against a filing entity under this subchapter to remand the case to the
trial court to grant the entity an opportunity to cure its problems if  did
not make an application for stay of the entry of the judgement, the
appellate court is satisfied that the appeal was taken in good faith, the
appellate court finds that the problems are capable of being cured, and the
entity has prayed for the opportunity to cure its problems in the appeal.
Requires the appellate court to determine the length of time, not to exceed
60 days, to be given to the entity to cure its problems.  Requires the
trial court to dismiss the action if the entity cures its problems and pays
all court costs.  Requires the revocation to become final if the entity
does not cure its problems within the prescribed period. 

Sec. 11.308.  JURISDICTION AND VENUE.  Requires the attorney general to
bring an action for involuntary winding up  and termination of a filing
entity in a district court of the county where the registered office or
principal place of business of the filing entity in this state is located
or a Travis County district court.  Provides that this court has
jurisdiction over  the action. 


Sec. 11.309.  PROCESS IN STATE ACTION. Requires a citation in an action for
the involuntary winding up and termination of a filing entity to be issued
and served as provided by law. 

Sec. 11.310.  PUBLICATION OF NOTICE.  Requires the attorney general to
publish a notice in a newspaper in  the county in which the registered
office of the filing entity in this state is located if process is returned
not found.  Sets forth information the notice must contain.  Provides that
notice must be published at least once a week for two consecutive weeks.
Authorizes one notice to cover multiple entities.  Prohibits a default
judgment from being taken before the 31st day after the attorney general
sends a copy of the notice to the filing entity at its registered office. 

Sec. 11.311.  ACTION ALLOWED AFTER EXPIRATION OF FILING ENTITY'S DURATION.
Provides that the expiration of a filing entity's period of duration
creates no vested right in an owner or creditor to prevent an action by the
attorney general under this subchapter. 

Sec. 11.312.  COMPLIANCE BY TERMINATED ENTITY.  Requires a filing entity
subject to a court decree requiring winding up to comply with the
requirements of the decree and Subchapter B to the extent it does not
conflict with the decree. 

Sec. 11.313.  TIMING OF TERMINATION.  Authorizes a court to terminate the
existing of a filing entity by decree when the court considers it necessary
or advisable or on completion of the winding up process. 

Sec. 11.314.  INVOLUNTARY WINDING UP AND TERMINATION IN PRIVATE ACTIONS.
Provides that a district court in the county in which the registered office
or principal place of business of a domestic partnership or limited
liability is located has jurisdiction to order the winding up and
termination of the partnership or limited liability company on application
by a partner in the partnership if the court determines the economic
purpose of the partnership is likely to be unreasonably frustrated or
another partner has engaged in conduct making it unreasonably practical to
carry on the business in partnership with that partner.  Authorizes
application for either type of entity to also be made by an owner if the
court determines it is not reasonably practical to carry on the entity's
business in conformity with its governing documents. 

Sec. 11.315.  FILING OF DECREE OF TERMINATION AGAINST FILING ENTITY.
Requires the clerk of a court entering a decree terminating a filing entity
to file the decree in accordance with Chapter 4 at no charge. 

SUBCHAPTER H.  CLAIMS RESOLUTION ON TERMINATION

Sec. 11.351.  LIABILITY OF TERMINATED ENTITY.  Provides that a terminated
entity is liable for an existing claim.   

Sec. 11.352.  DEPOSIT WITH COMPTROLLER OF AMOUNT DUE OWNERS AND CREDITORS
WHO ARE UNKNOWN OR CANNOT BE LOCATED.  Provides that a terminated entity
must reduce to cash the portion of its assets distributable to unknown or
unlocatable creditors or owners.  Requires money from the liquidated assets
to be deposited with the comptroller together with a statement containing
specified information. 

Sec. 11.353.  DISCHARGE OF LIABILITY OF PERSON RESPONSIBLE FOR LIQUIDATION.
Provides that a person responsible for liquidating a filing entity's assets
will be released from further liability  with respect to money deposited
with the comptroller. 

Sec. 11.354.  PAYMENT FROM ACCOUNT BY COMPTROLLER.  Sets forth the
requirements for a person to claim money deposited with the comptroller
within seven years  after the deposit. 

Sec. 11.355.  NOTICE OF ESCHEAT; ESCHEAT.  Requires the comptroller to
publish in a newspaper in Travis County a notice of the proposed escheat of
the money deposited with the comptroller if no claimant has proved a right
to the money.  Sets forth the information which the notice must contain.
Provides that the money becomes the property of the state if no one
properly claims the money within 60 days after the notice is published. 


Sec. 11.356.  LIMITED SURVIVAL AFTER TERMINATION.  Provides that a
terminated entity continues in existence for three years for certain
purposes.  Prohibits a terminated entity from continuing its existence for
the purpose of continuing the business for which it was formed unless it is
reinstated.  Provides that the terminated entity survives beyond the
three-year period to defend or prosecute an existing claim and to
distribute its property.   

Sec. 11.357.  GOVERNING PERSONS OF ENTITY DURING LIMITED SURVIVAL. Requires
the governing persons of the terminated entity at the time of termination
to continue to manage the affairs during the three-year survival period.
Provides that the duties and liabilities of the governing persons are the
same as before the termination. 

Sec. 11.358.  ACCELERATED PROCEDURE FOR EXISTING CLAIM RESOLUTION.
Authorizes a terminated entity to shorten the period for resolving an
existing claim against the entity through a specified notice procedure.
Sets forth the information which a notice must contain.  Provides that a
person must present the claim in writing to the terminated entity.
Authorizes the terminated entity receiving a claim to reject the claim by
sending a notice containing specified information. 

Sec. 11.359.  EXTINGUISHMENT OF AN EXISTING CLAIM.  Provides that an
existing claim by or against a terminated entity is extinguished unless it
is brought within three years after  the filing of the entity's certificate
of termination, if it is a filing entity, or within three years of the date
of notice.  Authorizes a person's claim against the entity to be terminated
earlier if the entity fails to properly make a claim  or fails to bring an
action on a rejected claim before 180 days after the rejection and the
third anniversary of the effective date of the termination. 

SUBCHAPTER I.  RECEIVERSHIP

Sec. 11.401.  CODE GOVERNS.  Authorizes a receiver to  be appointed for a
domestic entity or for its property or business only as provided for and on
the conditions set forth in this Code. 

Sec. 11.402.  JURISDICTION TO APPOINT RECEIVER.  Provides that a court has
jurisdiction over the property of a domestic or foreign entity located in
this state.  Provides that a district court in the county in which the
registered office or principal place of business of a domestic entity is
located has jurisdiction to appoint a receiver for the property and
business of the entity or to order the liquidation of the property and
business of a domestic entity.  

Sec. 11.403.  APPOINTMENT OF RECEIVER FOR SPECIFIC PROPERTY.  Authorizes
the court having jurisdiction over specific property to appoint a receiver
in certain actions if specified conditions are satisfied.  Provides that
the court appointing  a receiver has and shall retain exclusive
jurisdiction over the specific property placed in receivership.  Requires
the court to determine the rights of the parties in the property or its
proceeds.  Requires the receivership to be terminated immediately, the
management of the domestic entity to be restored to its managerial
officials, and the property redelivered if the condition necessitating the
appointment of a receiver under this section is remedied. 

Sec. 11.404.  APPOINTMENT OF RECEIVER TO REHABILITATE DOMESTIC ENTITY.
Authorizes a court to appoint a receiver for a domestic entity's property
and business if certain matters are established by an owner or member of
the domestic entity or  by a creditor of the entity.  Provides that the
receivership must be terminated if the condition necessitating the
appointment of the receiver is remedied. 

Sec. 11.405.  APPOINTMENT OF RECEIVER TO LIQUIDATE DOMESTIC ENTITY;
LIQUIDATION.  Authorizes a court to order the liquidation of the property
and business of the domestic entity and to appoint a receiver to effect the
liquidation under certain conditions.  Provides that the receivership must
be terminated if the condition necessitating the appointment of the
receiver is remedied. 

Sec. 11.406.  RECEIVERS:  QUALIFICATIONS, POWERS, AND DUTIES.  Provides
that a receiver must be either an individual U.S. citizen or an entity
authorized to act as a receiver, must give a bond required by the court,
and has the power to sue and other powers and duties provided by other laws
applicable to receivers and as stated in the order appointing the receiver.
Authorizes a foreign filing entity to be a receiver if it is registered to
transact business in this state. 

Sec. 11.407.  COURT-ORDERED FILING OF CLAIMS.  Authorizes a court to
require all claimants of a domestic entity in receivership to file with the
court clerk or the receiver a sworn proof of the claims and sets forth the
procedures for the filing of claims.  Authorizes a court to bar a claimant
who fails to file proof of claim from participating in a distribution of
the property of a domestic entity, but prohibits it from ordering or
effecting a discharge of the claim or of the claimant. 

Sec. 11.408.  SUPERVISING COURT; JURISDICTION; AUTHORITY.  Authorizes the
supervising court to pay the receiver or the receiver's attorney from the
property of the domestic entity that is in receivership.  Provides that the
court appointing the receiver has exclusive jurisdiction over the domestic
entity and all of its property, regardless of where the property is
located. 

Sec. 11.409.  ANCILLARY RECEIVERSHIPS OF FOREIGN ENTITIES.  Authorizes a
district court in the county in which the registered office of a foreign
entity doing business in this state is located to appoint an ancillary
receiver for the property and business of the entity if the court
determines circumstances require the appointment.  Provides that the
receiver serves ancillary to a receiver acting under orders of an out of
state court having appropriate jurisdiction to appoint that receiver. 


Sec. 11.410.  RECEIVERSHIP FOR ALL PROPERTY AND BUSINESS OF FOREIGN ENTITY.
Authorizes a district court to appoint a receiver for all the property in
and outside this state of a foreign entity doing business in this state and
its business if the court determines that circumstances require the
appointment.  Requires the appointing court to convert the receivership to
an ancillary receivership if a court in another state has ordered a
receivership of all property and business of the entity and the appointing
court determines the ancillary receivership is appropriate. 

Sec. 11.411.  GOVERNING PERSONS AND OWNERS NOT NECESSARY PARTIES DEFENDANT.
Provides that governing persons and owners or members of a domestic entity
are not necessary parties to an action for receivership or liquidation of
the property and business of a domestic entity unless relief is sought
against those persons individually. 

Sec. 11.412.  DECREE OF INVOLUNTARY TERMINATION.  Requires the court, in an
action to liquidate the property and business of a domestic entity, to
enter a decree terminating the entity and provides that the entity ceases
to exist when the expenses of the action and all obligations and
liabilities of the domestic entity have been paid or adequately provided
for and all of the entity's remaining property has been  distributed to its
owners and members or, if the entity's property is not sufficient to
discharge such expenses, obligations and liabilities, when all the property
of the entity has been applied toward their payment. 

CHAPTER 12.  ADMINISTRATIVE POWERS

 SUBCHAPTER A.  SECRETARY OF STATE

Sec. 12.001.  AUTHORITY OF SECRETARY OF STATE.  Authorizes the secretary of
state to adopt procedural rules for the filing of instruments under the
provisions of this code. Provides that the secretary of state has the power
and authority reasonably necessary to enable the secretary to perform the
duties imposed on the secretary under this code. 

Sec. 12.002.  INTERROGATORIES BY SECRETARY OF STATE.  Authorizes the
secretary of state to issue interrogatories to require a filing entity or
foreign filing entity to provide further information to determine whether
the entity has complied with the provisions of this code.  Sets forth the
time within which the interrogatory must be answered, and the action to be
taken by the secretary of state when written answers disclose a violation
of this code or the when the entity fails to provide answers to the
interrogatory. 

Sec. 12.003.  INFORMATION DISCLOSED BY INTERROGATORIES.  Provides that the
interrogatory and the answer to the interrogatory are subject to disclosure
under the provisions of Chapter 552 (Public Information Act), Government
Code. 

Sec. 12.004.  APPEALS FROM SECRETARY OF STATE.  Requires the secretary of
state to provide written notification within 11 days of the delivery of a
filing instrument if the secretary of state determines that a filing
instrument cannot be filed.  Authorizes a de novo judicial appeal of the
secretary of state's disapproval, establishes venue in Travis county, and
sets forth the information to be provided in the petition.  Authorizes the
final order or judgment entered by the district court in review of any rule
or decision of the secretary of state to be appealed as in other civil
actions. 

SUBCHAPTER B.  ATTORNEY GENERAL

Sec. 12.151.  AUTHORITY OF ATTORNEY GENERAL TO EXAMINE BOOKS AND RECORDS.
Authorizes the attorney general to examine, inspect, and make copies of any
of the books and records of a filing entity or foreign filing entity. 

Sec. 12.152.  REQUEST TO EXAMINE.  Requires the attorney general to make a
written request to a managerial official of the entity to examine the
business of a filing entity or foreign filing entity.  

Sec. 12.153.  AUTHORITY TO EXAMINE MANAGEMENT OF ENTITY.  Authorizes the
attorney general to examine the management and conduct of a domestic or
foreign filing entity to determine whether the entity has been or is
engaged in acts in violation of its governing documents or in violation of
any law of this state. 

Sec. 12.154.  AUTHORITY TO DISCLOSE INFORMATION.  Provides that information
held by the attorney general and derived in the course of an examination of
the entity's records or documents is not public information and is not
subject to Chapter 552, Government Code, and prohibits its disclosure
except in the course of certain administrative or judicial proceedings in
which the state is a party. 

Sec. 12.155.  FORFEITURE OF BUSINESS PRIVILEGES.  Provides that failure to
permit the attorney general to examine or take copies of a record of the
entity forfeits an entity's right to do business in the state and requires
the cancellation or forfeiture of the entity's certificate of formation or
registration. 

Sec. 12.156.  CRIMINAL PENALTY.  Provides that the failure or refusal of a
managerial official or other authorized individual managing the affairs of
an entity to permit the attorney general to make an investigation of the
entity or take copies of a record of the entity is a Class B misdemeanor.  

SUBCHAPTER C.  ENFORCEMENT LIEN

 Sec. 12.201.  LIEN FOR LAW VIOLATIONS.  Provides that the state has a lien
on all property of a filing entity or foreign filing entity in this state
upon the filing of a suit by the attorney general for the violation of a
law of this state for which violation a fine, penalties, or forfeiture of
the entity's formation or registration is provided. 

SUBCHAPTER D.  ENFORCEMENT PROCEEDINGS

Sec. 12.251.  RECEIVER.  Requires a court in which a suit is pending to
terminate a filing entity's certificate of formation or a foreign filing
entity's registration to appoint a receiver for the property and business
of an entity in this state if the entity commences the process of winding
up its business or a judgement is rendered against it.  Authorizes the
court to appoint a receiver for the entity if the interest of the state
requires the appointment. 

Sec. 12.252.  FORECLOSURE.  Authorizes the attorney general to bring suit
to foreclose a lien created by this chapter and provides procedures for
citation in such suit when the entity is dissolved or has had its formation
instrument or registration terminated by a judgment. 

Sec. 12.253.  ACTION AGAINST INSOLVENT ENTITY.  Requires the attorney
general to bring an action to forfeit an entity's formation instrument or
registration when the attorney general is convinced that a filing entity or
foreign filing entity is insolvent. 

Sec. 12.254.  SUITS BY DISTRICT OR COUNTY ATTORNEY.  Requires a district or
county attorney to bring suit under Sections 12.252 and 12.253 when
directed to do so by the attorney general. 

Sec. 12.255.  PERMISSION TO SUE.  Provides that the attorney general, or a
district or county attorney, must obtain permission to sue an entity under
the provisions of Sections 12.252 or 12.253 by obtaining the leave of the
judge of the court in which the suit would be filed. 

Sec. 12.256.  EXAMINATION AND NOTICE.  Requires a judge to examine the
petition and facts before granting leave to sue.  Entitles the entity
proceeded against to 10 days notice before the day set for the hearing. 

Sec. 12.257.  DISMISSAL OF ACTION.  Requires the dismissal of an action
under Section 12.253 or 12.258 if the entity, through its owners or
members, reduces its indebtedness so that it is not insolvent.  Requires
the respondent to pay the costs of the dismissed suit. 

Sec. 12.258.  LIQUIDATION OF INSOLVENT ENTITY.  Authorizes a court hearing
a proceeding under Section 12.253 to appoint a receiver for the entity and
its property to liquidate the insolvent entity.  Authorizes the court to
continue the existence of the entity for three years, and for additional
reasonable time as necessary to accomplish the purposes of this subchapter. 

Sec. 12.259.  EXTRAORDINARY REMEDIES; BOND.  Provides that this state has a
right to the remedies of a writ of attachment, garnishment, sequestration,
or injunction, without bond, to aid in the enforcement of the state's
rights. 

Sec. 12.260.  ABATEMENT OF SUIT.  Provides that the dissolution or
forfeiture of a filing entity's formation instrument or the cancellation of
a foreign filing entity's registration does not abate an action by the
state for a fine, penalty, or forfeiture against the entity. 

Sec. 12.261.  PROVISIONS CUMULATIVE.  Provides that the rights and remedies
provided by the chapter are cumulative and do not affect any other right or
remedy provided by law. 

TITLE 2.  CORPORATIONS

CHAPTER 20. GENERAL PROVISIONS
 
Sec. 20.001.  REQUIREMENT THAT FILING INSTRUMENT BE SIGNED BY OFFICER.
Provides that a filing instrument of a corporation must be signed by an
officer of the corporation. 

Sec. 20.002.  ULTRA VIRES ACTS.  Prohibits the lack of capacity of a
corporation from being the basis of any claim or defense at law or in
equity.  Provides that an act of a corporation or a transfer of property
by or to a corporation is not invalid because the act or transfer was
beyond the scope of the purpose of the corporation or inconsistent with a
limitation on an officer or director's authority to exercise a statutory
power of the corporation.  Authorizes such an act or transfer to be
asserted in certain proceedings. Authorizes the court to set aside and
enjoin the performance of the contract if the unauthorized act or transfer
sought to be enjoined is being or is to be performed or made under a
contract to which the corporation is a party and if each party to the
contract is a party to the proceeding.  Authorizes the court to award
compensation as appropriate. 

CHAPTER 21.  FOR-PROFIT CORPORATIONS

SUBCHAPTER A.  GENERAL PROVISIONS

Sec. 21.001.  APPLICABILITY OF CHAPTER.  Makes this chapter applicable only
to domestic for-profit corporations formed under this code and to foreign
for-profit corporations that transact business in the State of Texas,
whether or not the foreign corporation is registered to transact business
in the State of Texas. 

Sec. 21.002.  DEFINITIONS.  Defines "authorized share," "board of
directors," "cancel," "consuming assets corporation," "corporation" or
"domestic corporation," "distribution," "foreign corporation," "Investment
Company Act," "net assets," "share distribution," "stated capital,"
"surplus," and "treasury shares." 

Sec. 21.003.  PERMISSABLE PURPOSE OF CORPORATION RELATED TO RAILROADS.
Authorizes corporations to engage in certain activities relating to the
construction and maintenance of railways, notwithstanding Section
2.003(2)(E).  

Sec. 21.004.  PROHIBITED ACTIVITIES.  Prohibits a corporation from
operating a cooperative association, limited cooperative association, or
labor union; transacting a combination of the businesses of raising cattle
and owning land for the raising of cattle, other than operating and owning
feed lots and feeding cattle, and operating stockyards and slaughtering,
refrigerating, canning, curing, or packing meat; or engaging in a
combination of the petroleum oil producing business in this state and the
oil pipeline business in this state other than through stock ownership in a
corporation engaged in the oil pipeline business and other than the
ownership or operation of private pipelines in and about the corporation's
refineries, fields or stations. 

Sec. 21.005.  NONPROFIT CORPORATIONS.  Prohibits corporations formed to
operate a nonprofit institution from forming as a for-profit corporation
under this chapter. 

Sec. 21.006.  ADDITIONAL POWERS OF CERTAIN PIPELINE BUSINESSES.  Provides
that a corporation or a partnership or other combination of corporations
engaged in certain pipeline business have all the rights and powers
conferred on a common carrier by Sections 111.019-111.022 (Right of Eminent
Domain; Costs of Relocation of Property; Limitations on the Powers of
Eminent Domain in Certain Situations; Restoration of Property; Pipeline
Easements; Pipeline on Public Stream or Highway; Pipeline Under Railroad,
Street Railroad, or Canal; Right to Use Street or Alley in City or Town),
Natural Resources Code. 

SUBCHAPTER B.  FORMATION AND GOVERNING DOCUMENTS

Section 21.051.  SUPPLEMENTAL PROVISIONS REQUIRED IN CERTIFICATE OF
FORMATION.  Sets forth information that must be included in a certificate
of formation of  a corporation in addition to the information required for
all filing entities by Section 3.005. Sets forth information that must be
included, with respect to each class of share, in a certificate of
formation of a corporation.  Sets forth information that must be included
in a certificate of formation of a corporation that elects to become a
close corporation in accordance with Subchapter O.  Provides that a
provision contained in such a certificate must be preceded by a statement
that the provision is subject to the corporation remaining a close
corporation. 

Sec. 21.052.  NO PROPERTY RIGHT IN CERTIFICATE OF FORMATION.  Provides that
a certificate of formation (certificate) does not grant a shareholder of a
corporation any vested property right. 

Sec. 21.053.  PROCEDURES TO ADOPT AMENDMENT TO CERTIFICATE OF FORMATION.
Requires the board of directors of a corporation (board), in order to adopt
an amendment to the certificate, to adopt a resolution stating the proposed
amendment and follow the procedures prescribed by this section and Sections
21.054-21.057.  Authorizes a resolution to incorporate the proposed
amendment in a restated certificate of formation that complies with Section
3.057. 

Sec. 21.054.  ADOPTION OF AMENDMENT BY BOARD OF DIRECTORS.  Authorizes a
board to adopt a proposed amendment to a corporation's certificate by
resolution without shareholder approval if the corporation does not have
any issued or outstanding shares. 

Sec. 21.055.  ADOPTION OF AMENDMENT BY SHAREHOLDERS.  Provides that a
resolution proposing to adopt an amendment to a corporation's certificate
must also direct that the proposed amendment be submitted to a vote of the
shareholders at a meeting, and that the shareholders must approve the
proposed amendment in the manner provided by Section 21.056, if a
corporation has issued and outstanding shares.  

Sec. 21.056.  NOTICE OF AND MEETING TO CONSIDER PROPOSED AMENDMENT.
Requires each shareholder of record entitled to vote to be given written
notice, conforming to the requirements of the code, containing the proposed
amendment or a summary of the changes.  Authorizes the proposed amendment
or summary to be included in the notice required to be provided for an
annual meeting.  Requires the proposed amendment to be adopted, at the
meeting, only on receiving the affirmative vote of shareholders entitled to
vote required by Section 21.364.  Authorizes an unlimited number of
amendments to be submitted for adoption by the shareholders at a meeting. 

Sec. 21.057.  SUPPLEMENTAL PROVISIONS FOR CERTIFICATE OF AMENDMENT. (a)
Provides that a certificate of amendment for a corporation must state if
the amendment provides for an exchange, reclassification, or cancellation
of issued shares, the manner in which the exchange, reclassification, or
cancellation of the issued shares will be effected if the manner is not
specified in the amendment, and, if the amendment effects a change in the
amount of stated capital, the manner in which the change in the amount of
stated capital is effected and the amount of stated capital expressed in
dollar terms as changed by the amendment. 

(b) Requires an officer of the corporation to sign the certificate of
amendment on behalf of the corporation.  Authorizes a majority of the
directors to sign the certificate of amendment on behalf of the corporation
if shares of the corporation have not been issued and the certificate of
amendment is adopted by the board of directors. 

(c) Provides that the certificate of amendment must be filed in accordance
with Chapter 4 and that the certificate of amendment takes effect as
provided by Subchapter B, Chapter 3. 

Sec. 21.058.  RESTATED CERTIFICATE OF FORMATION.  (a) Authorizes a
corporation to adopt a restated certificate of formation (restated
certificate), by following the same procedures to amend its certificate,
except that shareholder approval is not required if an  amendment is not
adopted. 

(b) Requires an officer to sign the restated certificate on behalf of the
corporation. Authorizes the majority of the board to sign the restated
certificate on behalf of the corporation if shares of the corporation have
not been issued and the restated certificate is adopted by the board. 

(c) Authorizes a restated certificate to update the current number of
directors and the names and addresses of the persons serving as directors. 

(d) Requires the restated certificate to be filed with Chapter 4 and
provides that the certificate of amendment takes effect as provided by
Subchapter B, Chapter 3. 

Sec. 21.059.  BYLAWS.  Requires a board to adopt initial bylaws.
Authorizes the bylaws to contain provisions for the regulation and
management of affairs of the corporation that are consistent with law and
the corporation's certificate.  Authorizes a board to amend or repeal
bylaws or adopt new bylaws unless the corporation's certificate or this
code reserves the power exclusively to the corporation's shareholders, or,
in amending, repealing, or adopting a bylaw, the shareholders expressly
provide that the board is prohibited from amending, repealing, or
readopting that bylaw. 

Sec. 21.060.  DUAL AUTHORITY.  Authorizes a corporation's shareholders to
amend, repeal, or adopt the corporation the corporation's bylaws regardless
of whether the bylaws may also be amended, repealed, or adopted by the
corporation's board, unless the certificate or a bylaw adopted by the
shareholders provide otherwise as to all or a part of a corporation's
bylaws. 

Sec. 21.061.  ORGANIZATION MEETING.  (a) Provides that this section does
not apply to a corporation created as a result of a conversion or merger
the plan of which states the bylaws and names the officers of a
corporation. 

(b) Requires an organizational meeting to be held, after the filing of a
certificate takes effect, at the call of the majority of the initial board
or the persons named in the certificate, to adopt bylaws, elect officers,
and transact other business. 

(c) Requires the directors or other persons calling the meeting to send
notice of the meeting's time and place to each other director or person
named in the certificate by the third day before the date of the meeting. 

SUBCHAPTER C.  SHAREHOLDERS' AGREEMENTS

Sec. 21.101.  SHAREHOLDERS' AGREEMENT.   Authorizes the shareholders of a
corporation to enter into a shareholder agreement.  Enumerates the range of
activities authorized to be covered by an agreement.  An agreement can:  

 _restrict the discretion or powers of the board of directors;

 _eliminate the board of directors and authorize the business and affairs
of the corporation to be managed, wholly or partly, by one or more of its
shareholders or other persons; 

 _establish the individuals who shall serve as directors or officers of the
corporation; 

 _determine the term of office, manner of selection or removal, or terms or
conditions of employment of a director, officer, or other employee of the
corporation, regardless of the length of employment; 

 _govern the authorization or making of distributions  whether in
proportion to ownership of shares, subject to Section 21.303; 
 
 _determine the manner in which profits and losses will be apportioned;

 _govern, in general or with regard to specific matters, the exercise or
division of voting power by and between the shareholders, directors, or
other persons, including use of disproportionate voting rights or director
proxies; 

 _establish the terms of an agreement for the transfer or use of property
or for the provision of services between the corporation and another
person, including a shareholder, director, officer, or employee of the
corporation; 

 _authorize arbitration or grant authority to a shareholder or other person
to resolve any issue about which there is a deadlock among the directors,
shareholders, or other persons authorized to manage the corporation; 

 _require winding up and termination of the corporation at the request of
one or more shareholders or on the occurrence of a specified event or
contingency, in which case the winding up and termination of the
corporation will proceed as if all of the shareholders had consented in
writing to the winding up and termination as provided by Subchapter K; or 

 _otherwise govern the exercise of corporate powers, the management of the
business and affairs of the corporation, or the relationship among the
shareholders, the directors, and the corporation as if the corporation were
a partnership or in a manner that would otherwise be appropriate only among
partners and not contrary to public policy. 

(b) Provides that a shareholders' agreement authorized by this section must
be contained in the certificate or bylaws if approved by all of the
shareholders at the time of the agreement, or a written agreement that is
signed by all of the shareholders at the time of the agreement and made
known to the corporation, and amended only by all of the shareholders at
the time of the amendment, unless the agreement provides otherwise. 

Sec. 21.102.  TERM OF AGREEMENT.  Provides that a shareholders' agreement
is valid for 10 years, unless the agreement provides otherwise. 

Sec. 21.103.  DISCLOSURE OF AGREEMENT; RECALL OF CERTAIN CERTIFICATES. (a)
Requires the existence of a shareholder agreement to be noted conspicuously
on the front or back of each certificate of outstanding shares or on the
information statement required for uncertificated shares by section 3.205. 

(b) Describes the statement required to be included on the disclosure
required by this subsection. 

(c) Requires a corporation that has outstanding shares represented by
certificates at the time the shareholders of the corporation enter into an
agreement to recall the outstanding certificates and issue substitute
certificates. 

(d) Provides that the failure to note the existence of the agreement on the
certificate or information statement does not affect the validity of the
agreement or an action taken pursuant to the agreement. 

Sec. 21.104.  EFFECT OF SHAREHOLDERS' AGREEMENT.  Provides that a
shareholders' agreement that complies with this subchapter is effective
among the shareholders and between the corporation even if the terms of the
agreement are inconsistent with this code. 

Sec. 21.105.  KNOWLEDGE OF PURCHASER OF SHARES.  (a) Entitles a purchaser
of shares who does not have knowledge at the time of purchase of the
existence of a  shareholders' agreement to rescind the purchase. 

(b) Provides that a purchaser is considered to have knowledge of the
existence of the shareholders' agreement for purposes of this section if
the existence of the agreement is noted on the certificate or information
statement for shares as required by Section 21.103, and if, with respect to
shares that are not represented by a certificate, the information statement
noting existence of the agreement is delivered to the purchaser by the time
the shares are purchased. 

(c) Provides that an action to enforce the right of rescission authorized
by this section must be commenced by the earlier of the 90th day after the
date the existence of the shareholder agreement is discovered, or the
second anniversary of the purchase date of the shares. 

Sec. 21.106.  AGREEMENT LIMITING AUTHORITY OF AND SUPPLANTING BOARD OF
DIRECTORS; LIABILITY.  (a) Provides that a shareholders' agreement that
limits the discretion or powers of the board or supplants the board
relieves the directors of, and imposes on a person in whom the discretion
or powers of the board or the management of the business and affairs of the
corporation is vested, liability for an act or omission of the person. 

(b) Provides that a person on whom liability for an act or omission is
imposed is liable in the same manner and to the same extent as a director
on whom liability for an act or omission is imposed by this code or other
law. 

Sec. 21.107.  LIABILITY OF SHAREHOLDER.  Provides that the existence of or
a performance under a shareholders' agreement is not a ground for imposing
personal liability on a shareholder for an act or obligation of the
corporation by disregarding the separate existence of the corporation or
otherwise.  Applies this non-ground to an agreement or a performance under
the agreement which treats the corporation as if the corporation were a
partnership or in a manner that is otherwise appropriate only among
partners; results in the corporation being considered a partnership for
purposes of taxation; or results in failure to observe the corporate
formalities otherwise applicable to the matters governed by the agreement. 

Sec. 21.108.  PERSONS ACTING IN PLACE OF SHAREHOLDERS.  Authorizes an
organizer or a subscriber for shares to act as a shareholder with respect
to a shareholders' agreement if no shares have been issued when the
agreement is signed. 

Sec. 21. 109.  AGREEMENT NOT EFFECTIVE.  (a) Provides that a shareholders'
agreement ceases to be effective when shares of the corporation are
publicly-traded securities. 

(b) Requires a board to be instituted or reinstated if a corporation does
not have a board and a shareholders' agreement ceases to be effective. 

(c) Authorizes the board, if an ineffective shareholder's agreement is
contained in or referred to by the certificate or bylaws, to adopt an
amendment to the certificate or bylaws, without shareholder action, to
delete the agreement and any references to the agreement. 

SUBCHAPTER D.  SHARES, OPTIONS, AND CONVERTIBLE SECURITIES

Sec. 21.151.  NUMBER OF AUTHORIZED SHARES.  Authorizes a corporation to
issue the number of authorized shares stated in the corporation's
certificate. 

Sec. 21. 152.  CLASSES AND SERIES OF SHARES.  (a) Authorizes a
corporation's certificate to divide the corporation's authorized shares
into one or more classes.  Authorizes a corporation's certificate to divide
one or more classes of authorized shares into or more  series.  Provides
that the certificate must designate each class and series of authorized
shares to distinguish that class and series from any other class or series. 

(b) Provides that shares of the same class must be of the same par value or
be without par value, as stated in the certificate. 

(c) Provides that shares of the same class must be identical in all
respects unless the shares have been divided into one or more series.
Authorizes the shares of a class, if they have been divided into one or
more series, to vary between series.  Provides that all shares of the same
series will be identical in all respects. 

Sec. 21.153.  DESIGNATIONS, PREFERENCES, LIMITATIONS, AND RIGHTS OF A CLASS
OR SERIES.  (a) Provides that each class or series of authorized shares of
a corporation must have the designations, preferences, limitations, and
relative rights, including voting rights, stated in the corporation's
certificate. 

(b) Authorizes the certificate to limit or deny the voting rights of, or
provide special voting rights for, the shares of a class or series or the
shares of a class or series held by a person or class of persons to the
extent the limitation, denial, or provision is not inconsistent with this
code. 


(c) Authorizes the making of a designation, preference, limitation, or
relative right of a class or series of shares to be dependent on facts not
contained in the certificate, if their operation is clearly and expressly
stated in the certificate. 

Sec. 21.154.  CERTAIN OPTIONAL CHARACTERISTICS OF SHARES.  Enumerates a
non-exclusive list of the types of preferences and rights that a class or
series of shares may have.  Prohibits the conversion of shares without par
value into shares with par value unless at the time of conversion, the part
of the corporation's stated capital represented by the shares without par
value is at least equal to the aggregate par value of the shares to be
converted, or the amount of any deficiency is transferred from surplus to
stated capital.  Provides that shares may be redeemed, exchanged, or
converted at the option of the corporation, shareholder, or other person or
on the occurrence of a designated event. 

Sec. 21.155.  SERIES OF SHARES ESTABLISHED BY BOARD OF DIRECTORS.  (a)
Authorizes the board to establish series of unissued shares of any class by
setting and determining the designations, preferences, limitations, and
relative rights, including voting rights, of the shares of the series to be
established if expressly authorized by the corporations certificate and
subject to the certificate. 
 
(b)  Specifies the procedure needed to be followed by the board to
establish a series if authorized by the certificate of formation. 

(c)  Authorizes the board to increase or decrease the number of shares in
each series to be established, if the certificate of formation does not
expressly restrict the board from increasing or decreasing the number of
unissued shares of a series to be established under Subsection (a).
Prohibits the board from decreasing the number of shares in a particular
series to a number that is less than the number of shares in that series
that are issued at the time of the decrease. 

(d)  Specifies the procedure needed to be followed by the board to increase
or decrease the number of shares of a series under Subsection (c). 
 
(e)  Authorizes the board of directors by resolution to delete the series
from the certificate of formation, if no shares of a series established by
board resolution under Subsection (b) are outstanding because no shares of
that series have been issued or no issued shares of that series remain
outstanding, and delete any reference to the series contained in the
certificate of formation. 

 (f)  Authorizes the board of directors to amend the designations,
preferences, limitations, and relative rights of the series or amend any
designation, preference, limitation, or relative right that is not set and
determined by the certificate of formation, if no shares of a series
established by resolution of the board of directors are outstanding because
no shares of that series have been issued.  

Sec. 21.156.  ACTIONS WITH RESPECT TO SERIES OF SHARES.   Provides that to
effect an action authorized under Section 21.155, the corporation must file
with the secretary of state a statement that contains the enumerated
information.  Provides that on the filing of a statement, the enumerated
resolutions will become an amendment of the certificate of formation, as
appropriate.  Provides that an amendment of the certificate of formation is
not subject to the procedure to amend the certificate of formation
contained in Subchapter B.  

Sec. 21.157.  ISSUANCE OF SHARES.  Authorizes a corporation, except as
provided by Section 21.158, to issue shares for consideration if authorized
by the board of directors of the corporation.  Prohibits shares from being
issued until the consideration has been received by the corporation.
Provides that, when the consideration is received, the shares are
considered to be issued, the subscriber or other person entitled to receive
the shares is a shareholder with respect to the shares, and the shares are
considered fully paid and nonassessable.  
 
Sec. 21.158.  ISSUANCE OF SHARES UNDER PLAN OF MERGER OR CONVERSION.
Authorizes a converted corporation under a plan of conversion or a
corporation created by a plan of merger to issue shares for consideration
if authorized by the plan of conversion or plan of merger, as appropriate.
Authorizes a corporation to issue shares in the manner provided by and for
consideration specified under a plan of merger or plan of conversion.  
 
Sec. 21.159.  TYPES OF CONSIDERATION FOR SHARES.  Authorizes shares with or
without par value be issued for the enumerated types of consideration. 
  
Sec. 21.160.  DETERMINATION OF CONSIDERATION FOR SHARES.  Provides that
consideration to be received for shares must be determined by the
enumerated entities. Requires the shareholders, if the corporation's
certificate of formation reserves to the shareholders the right to
determine the consideration to be received for shares without par value, to
determine the consideration for those shares before the shares are issued.
Prohibits the board of directors from determining the consideration for
shares.  Authorizes a corporation to dispose of treasury shares for
consideration that may be determined by the board of directors.  

Sec. 21.161.  AMOUNT OF CONSIDERATION FOR ISSUANCE OF CERTAIN SHARES.
Prohibits consideration from being received by a corporation for the
issuance of shares with par value from being less than the par value of the
shares.  Provides that the part of the surplus of a corporation that is
transferred to stated capital on the issuance of shares as a share
distribution is considered to be the consideration for the issuance of
those shares. Provides that the consideration received by a corporation for
the issuance of shares on the conversion or exchange of its indebtedness or
shares is the enumerated items.  Provides that the consideration received
by a corporation for the issuance of shares on the exercise of rights or
options is the enumerated considerations. 
 
Sec. 21.162.  VALUE AND SUFFICIENCY OF CONSIDERATION.  Provides that in the
absence of fraud in the transaction, the judgment of the board of
directors, the shareholders, or the party approving the plan of conversion
or the plan of merger, as appropriate, is conclusive in determining the
value and sufficiency of the consideration received for the shares.  
 
Sec. 21.163.  ISSUANCE AND DISPOSITION OF FRACTIONAL SHARES OR SCRIP.
Authorizes a corporation to perform the enumerated actions.  Authorizes the
board of directors to issue scrip on the enumerated information.  
 
Sec. 21.164.  RIGHTS OF HOLDERS OF FRACTIONAL SHARES OR SCRIP.  Provides
that a holder of a certificated or uncertificated fractional share is
entitled to perform the specified actions.  Provides that a holder of a
certificate for scrip is not entitled to perform the specified actions.  
 
Sec. 21.165.  SUBSCRIPTIONS.  Authorizes a corporation to accept a
subscription by notifying the subscriber in writing.  Provides that a
subscription to purchase shares in a corporation in the process of being
formed is irrevocable for six months if the subscription is in writing and
signed by the subscriber, unless the subscription provides for a longer or
shorter period or all of the other subscribers agree to the revocation of
the subscription. Provides that a written subscription entered into after
the corporation is formed is a contract between the subscriber and the
corporation.  

Sec. 21.166.  PREFORMATION SUBSCRIPTION.  Authorizes the corporation to
determine the payment terms of a preformation subscription unless the
payment terms are specified by the subscription.  Authorizes the payment
terms to authorize payment in full on acceptance or by installments.
Requires a corporation, unless the subscription provides otherwise, to make
calls placed to all subscribers of similar interests for payment on
preformation subscriptions uniform as far as practicable. Authorizes a
corporation, after it is formed, to perform the enumerated actions.
Authorizes the corporation, although the forfeiture of a subscription
terminates all the rights and obligations of the subscriber, to retain any
amount previously paid on the subscription.  
 
Sec. 21.167.  COMMITMENT TO PURCHASE SHARES.  Authorizes a person who
contemplates the acquisition of shares in a corporation to commit to act in
a specified manner with respect to the shares after the acquisition.
Provides that the commitment must be in writing and be signed by the person
acquiring the shares to be binding.  Provides that a written commitment
entered into is a contract between the shareholder and the corporation.  
 
Sec. 21.168.  STOCK RIGHTS, OPTIONS, AND CONVERTIBLE INDEBTEDNESS.
Authorizes a corporation, except as provided by the corporation's
certificate of formation and regardless of whether done in connection with
the issuance and sale of any other share or security of the corporation, to
create and issue the enumerated items.  Requires a right, option, or
indebtedness to be evidenced in the manner approved by the board of
directors. Provides that subject to the certificate of formation, a right
or option or convertible indebtedness must state the terms on which, the
time within which, and any consideration for which the shares are
authorized to be purchased or received from the corporation on the exercise
of the right or option. 
 
Sec. 21.169.  TERMS AND CONDITIONS OF RIGHTS AND OPTIONS.  Authorizes the
terms and conditions of rights or options to include the enumerated
restrictions or conditions. Provides that rights or options created or
issued before the effective date of this code that comply with this section
and are not in conflict with other provisions of this code are ratified.
Provides that unless otherwise provided under the terms of rights or
options or the agreement or plan under which the rights or options are
issued, the authority to grant, amend, redeem, extend, or replace the
rights or options on behalf of a corporation is vested exclusively in the
board of directors of the corporation.  Prohibits a bylaw from requiring
the board to grant, amend, redeem, extend, or replace the rights or
options.  
 
Sec. 21.170.  CONSIDERATION FOR RIGHTS, OPTIONS, AND CONVERTIBLE
INDEBTEDNESS.  Provides that in the absence of fraud in the transaction,
the judgment of the board of directors of a corporation as to the adequacy
of the consideration received for rights, options, or convertible
indebtedness is conclusive.  Authorizes a corporation to issue rights or
options to its shareholders, officers, consultants, independent
contractors, employees, or directors without consideration if, in the
judgment of the board of directors, the issuance of the rights or options
is in the interests of the corporation.  Prohibits the consideration for
shares having a par value, other than treasury shares, and issued on the
exercise of the rights or options from being less than the par value of the
shares.  Prohibits a privilege of conversion from being conferred on, or
altered with respect to, any indebtedness that would result in the
corporation receiving less than the minimum  consideration required to be
received on issuance of the shares.   Requires the consideration for shares
issued on the exercise of rights, options, or convertible indebtedness to
be determined as provided by Section 21.161.  
 
Sec. 21.171.  TREASURY SHARES.  Provides that treasury shares are
considered to be issued shares and not outstanding shares.  Prohibits
treasury shares from being included in the total assets of a corporation
for purposes of determining the net assets of a corporation. 

Sec. 21.172.  EXPENSES OF ORGANIZATION, REORGANIZATION, AND FINANCING OF
CORPORATION.  Authorizes a corporation to pay or authorize to be paid from
the consideration received by the corporation as payment for the
corporation's shares the reasonable charges and expenses of the
organization or reorganization of the corporation and the sale or
underwriting of the shares without rendering the shares not fully paid and
nonassessable.   

SUBCHAPTER E.  SHAREHOLDER RIGHTS AND RESTRICTIONS
 
Sec. 21.201.  REGISTERED HOLDERS AS OWNERS.  Authorizes a corporation,
except as otherwise provided by this code and subject to Chapter 8
(Investment Securities), Business & Commerce Code, to consider the person
registered as the owner of a share in the share transfer records of the
corporation at a particular time as the owner of that share at that time
for the enumerated purposes 
 
Sec. 21.202.  DEFINITION OF SHARES.  Defines, for Sections 21.203-21.207,
"shares."  

Sec. 21.203.  NO STATUTORY PREEMPTIVE RIGHT UNLESS PROVIDED BY CERTIFICATE
OF FORMATION.  Provides that except as provided by Section 21.208, a
shareholder of a corporation does not have a preemptive right to acquire
the corporation's unissued or treasury shares except to the extent provided
by the corporation's certificate of formation.  Provides that if the
certificate of formation includes a statement that the corporation "elects
to have a preemptive right" or a similar statement, Section 21.204 applies
to a shareholder except to the extent the certificate of formation
expressly provides otherwise.  
 
Sec. 21.204.  STATUTORY PREEMPTIVE RIGHTS.  (a)  Provides that if the
shareholders of a corporation have a preemptive right, the shareholders
have a preemptive right to acquire proportional amounts of the
corporation's unissued or treasury shares on the decision of the
corporation's board of directors to issue the shares.  Provides that the
preemptive right granted is subject to uniform terms and conditions
prescribed by the board of directors to provide a fair and reasonable
opportunity to exercise the preemptive right.  
 
(b)  Provides that no preemptive right exists with respect to the
enumerated shares. 
 
(c)  Provides that a holder of a share of a class without general voting
rights but with a preferential right to distributions of profits, income,
or assets does not have a preemptive right with respect to shares of any
class.  
 
(d)  Provides that a holder of a share of a class with general voting
rights but without preferential rights to distributions of profits, income,
or assets does not have a preemptive right with respect to shares of any
class with preferential rights to distributions of profits, income, or
assets unless the shares with preferential rights are convertible into or
carry a right to subscribe for or acquire shares without preferential
rights.  
 
(e)  Authorizes shares subject to preemptive rights that are not acquired
by a shareholder, for a one-year period after the date the shares have been
offered to shareholders, to be issued to a person at a consideration set by
the corporation's board of directors that is not lower than the
consideration set for the exercise of preemptive rights.  Provides that an
offer at a lower consideration or after the expiration of the period is
subject to the shareholder's preemptive rights.  
 
Sec. 21.205.  WAIVER OF PREEMPTIVE RIGHT.  Authorizes a shareholder to
waive a preemptive right granted to the shareholder.  Provides that a
written waiver of a preemptive right is irrevocable regardless of whether
the waiver is supported by consideration.  
 
Sec. 21.206.  LIMITATION ON ACTION TO ENFORCE PREEMPTIVE RIGHT.  Provides
that an action brought against a corporation, the board of directors or an
officer, shareholder, or agent of the corporation, or an owner of a
beneficial interest in shares of the corporation for the violation of a
preemptive right of a shareholder must be brought by a certain date.
Provides that the notice must meet the specified requirements. 
 
Sec. 21.207.  DISPOSITION OF SHARES HAVING PREEMPTIVE RIGHTS.  Provides
that the transferee or successor of a share that has been transferred or
otherwise disposed of by a shareholder of a corporation whose preemptive
right to acquire shares in the corporation has been violated does not
acquire the preemptive right, or any right or claim based on the violation,
unless the previous shareholder has assigned the preemptive right to the
transferee or successor.  
 
Sec. 21.208.  PREEMPTIVE RIGHT IN EXISTING CORPORATION.  Provides that
subject to the certificate of formation, a shareholder of a corporation
incorporated before the effective date of this code has a preemptive right
to acquire unissued or treasury shares of the corporation to the extent
provided by Sections 21.204, 21.206, and 21.207.  Authorizes a corporation,
after the effective date of this code, to limit or deny the preemptive
right of the shareholders of the corporation by amending the corporation's
certificate of formation.  
 
Sec. 21.209.  TRANSFER OF SHARES AND OTHER SECURITIES.  Provides that
except as otherwise provided by this code, the shares and other securities
of a corporation are transferable in accordance with Chapter 8, Business &
Commerce Code.  
 
Sec. 21.210.  RESTRICTION ON TRANSFER OF SHARES AND OTHER SECURITIES.
Authorizes a restriction on the transfer or registration of transfer of a
security to be imposed by the enumerated entities.  Provides that a
restriction is not valid with respect to a security issued before the
restriction has been adopted, unless the holder of the security voted in
favor of the restriction or is a party to the agreement imposing the
restriction.  

Sec. 21.211.  VALID RESTRICTIONS ON TRANSFER.  Provides that
notwithstanding Sections 21.210 and 21.213, a restriction placed on the
transfer or registration of transfer of a security of a corporation is
valid if the restriction reasonably meets any of the enumerated conditions. 
 
Sec. 21.212. BYLAW OR AGREEMENT RESTRICTING TRANSFER OF SHARES OR OTHER
SECURITIES. (a) Authorizes a corporation that has adopted a bylaw or is a
party to an agreement that restricts the transfer of the shares or other
securities of the corporation to file with the secretary of state, in
accordance with Chapter 4, a copy of the bylaw or agreement. Specifies the
provisions for the statement attached to the copy.  

(b) Provides that after a copy of the bylaw or agreement is filed with the
secretary of state, the bylaws or agreement restricting the transfer of
shares or other securities is a public record, and the fact that the
statement has been filed is authorized to be stated on a certificate
representing the restricted shares or securities if required by Section
3.202.  

(c) Authorizes a corporation that is a party to an agreement restricting
the transfer of the shares or other securities of the corporation to make
the agreement part of the corporation's certificate of formation without
restating the provisions of the agreement in the certificate of formation
by amending the certificate of formation. Requires the certificate of
amendment, if the agreement alters any provision of the certificate of
formation, to identify the altered provision by reference or description.
Provides that if the agreement is an addition to the certificate of
formation, the certificate of amendment must state that fact.  
 
(d) Specifies the provision for the certificate of amendment.

Sec. 21.213. ENFORCEABILITY OF RESTRICTION ON TRANSFER OF CERTAIN
SECURITIES. (a) Provides that a restriction placed on the transfer or
registration of the transfer of a security of a corporation is specifically
enforceable against the holder, or a successor or transferee of the holder,
provided that the restriction is reasonable and noted conspicuously on the
certificate or other instrument representing the security, or with respect
to an uncertificated security, the restriction is reasonable and a notation
of the restriction is contained in the notice sent with respect to the
security under Section 3.205.  

(b) Provides that unless noted conspicuously on the certificate with
respect to a certificate or other instrument or an uncertificated security,
an otherwise enforceable restriction is ineffective against a transferee
for value without actual knowledge of the restriction at the time of the
transfer or against a subsequent transferee, regardless of whether the
transfer is for value. Provides that a restriction is specifically
enforceable against a person other than a transferee for value from the
time the person acquires actual knowledge of the restriction's existence.  

Sec. 21.214. JOINT OWNERSHIP OF SHARES. (a) Authorizes a corporation, if
shares are registered on the books of a corporation in the names of two or
more persons as joint owners with the right of survivorship and one of the
owners dies, to record on its books and effect the transfer of the shares
to a person, including the surviving joint owner, and to pay any
distributions made with respect to the shares, as if the surviving joint
owner was the absolute owner of the shares. Provides that the recording and
distribution authorized by this subsection must be made after the death of
a joint owner and before the corporation receives actual written notice
that a party other than a surviving joint owner is claiming an interest in
the shares or distribution.  

(b) Provides that the discharge of a corporation from liability under
Section 21.216 and the transfer of full legal and equitable title of the
shares does not affect, reduce, or limit any cause of action existing in
favor of an owner of an interest in the shares or distributions against the
surviving owner.  

Sec. 21.215. LIABILITY FOR DESIGNATING OWNER OF SHARES. Prohibits a
corporation or an officer, director, employee, or agent of the corporation
from being held liable for considering a person to be the owner of a share
for a purpose described by Section 21.201, regardless of whether the person
possesses a certificate for that share.  

Sec. 21.216. LIABILITY REGARDING JOINT OWNERSHIP OF SHARES. Provides that a
corporation that transfers shares or makes a distribution to a surviving
joint owner under Section 21.214 before the corporation has received a
written claim for the shares or distribution from another person, is
discharged from liability for the transfer or payment.  

Sec. 21.217. LIABILITY OF ASSIGNEE OR TRANSFEREE. Prohibits an assignee or
transferee of certificated shares, uncertificated shares, or a subscription
for shares in good faith and without knowledge that full consideration for
the shares or subscription has not been paid, from being held personally
liable to the corporation or a creditor of the corporation for an unpaid
portion of the consideration.  

Sec. 21.218. EXAMINATION OF RECORDS. (a) Provides that in this section, a
holder of a beneficial interest in a voting trust entered into under
Section 6.251 is a holder of the shares represented by the beneficial
interest.  

(b) Entitles an owner of outstanding shares of a corporation, subject to
the governing documents and on written demand stating a proper purpose, for
at least six months immediately preceding the owner's demand, or a holder
of at least five percent of all of the outstanding shares of a corporation,
to examine and copy, at a reasonable time, the corporation's relevant
books, records of account, minutes, and share transfer records.  Authorizes
the examination to be conducted in person or through an agent, accountant,
or attorney.  

(c) Sets forth that this section does not impair the power of a court, on
the presentation of proof of proper purpose by a beneficial or record
holder of shares, to compel the production for examination by the holder of
the books and records of accounts, minutes, and share transfer records of a
corporation, regardless of the period during which the holder was a
beneficial holder or record holder and regardless of the number of shares
held by the person.  

Sec. 21.219. ANNUAL AND INTERIM STATEMENTS OF CORPORATION. Requires a
corporation, on written request of a shareholder of the corporation, to
mail to the shareholder the annual statements of the corporation for the
last fiscal year that contain in reasonable detail the corporation's assets
and liabilities and the results of the corporation's operations, and the
most recent interim statements, if any, that have been filed in a public
record or other publication. Requires the corporation to be allowed a
reasonable time to prepare the annual statements.  

Sec. 21.220. PENALTY FOR FAILURE TO PREPARE VOTING LIST. Provides that an
officer or agent of a corporation who is in charge of the corporation's
share transfer records and who does not prepare the list of owners, keep
the list on file for a 10-day period, or produce and keep the list
available for inspection at the annual meeting as required by Sections
6.004 and 21.354 is liable to an owner who suffers damages because of the
failure for the damage caused by the failure.  

Sec. 21.221. PENALTY FOR FAILURE TO PROVIDE NOTICE OF MEETING. Provides
that if an officer or agent of a corporation is unable to comply with the
duties prescribed by Sections 6.004 and 21.354 because the officer or agent
did not receive notice of a meeting of owners within a sufficient time
before the date of the meeting, the corporation, rather than the officer or
agent, is liable to an owner who suffers damages because of the failure for
the extent of the damage caused by the failure.  

Sec. 21.222. PENALTY FOR REFUSAL TO PERMIT EXAMINATION OF CERTAIN RECORDS.
(a) Provides that a corporation that refuses to allow a person to examine
and make copies of account records, minutes, and share transfer records
under Section 21.218 is liable to the owner for any cost or expense,
including attorney's fees, incurred in enforcing the owner's rights under
Section 21.218. Provides that the liability imposed on a corporation under
this subsection is in addition to any other damages or remedy afforded to
the owner by law.  

(b) Specifies a defense to an action brought under this section. 

SUBCHAPTER F.  REDUCTIONS IN STATED CAPITAL;
 CANCELLATION OF TREASURY SHARES

Sec. 21.251. REDUCTION OF STATED CAPITAL BY REDEMPTION OR PURCHASE OF
REDEEMABLE SHARES. (a) Provides that at the time a corporation redeems or
purchases the redeemable shares of the corporation, the redemption or
purchase has the effect of canceling the shares, so a statement of
cancellation must be filed in accordance with Chapter 4 and Section 21.252,
and restoring the shares to the status of authorized but unissued shares,
unless the corporation's certificate of formation provides that shares may
not be reissued after the shares are redeemed or purchased by the
corporation.  

(b) Provides that if the corporation is prohibited from reissuing the
shares by the certificate of formation following a redemption or purchase
under Subsection (a), the filing of the statement of cancellation operates
as an amendment to the  certificate of formation and reduces the number of
shares of the class that the corporation is authorized to issue by the
number of shares canceled.  

 (c) Provides that if shares redeemed or purchased by a corporation under
Subsection (a) constitute all of the outstanding shares of a particular
class of shares and the certificate of formation provides that the shares
of the class, when redeemed and repurchased, may not be reissued, the
filing of the statement of cancellation operates as an amendment to the
certificate of formation by deleting all references to the class of shares
and reduces the classes of shares the corporation is authorized to issue
accordingly.  

Sec. 21.252. CONTENTS AND FILING OF STATEMENT OF CANCELLATION OF CERTAIN
REDEEMABLE SHARES. (a) Specifies the provisions for the statement of
cancellation required by Section 21.251. 

(b) Provides that the filing of the statement of cancellation has the
effect of reducing the stated capital of the corporation by an amount equal
to that part of the stated capital that was, at the time of the
cancellation, represented by the canceled shares.  

(c) Sets forth that this section does not prohibit a cancellation of shares
or a reduction of stated capital in any other manner permitted by law.  

Sec. 21.253. CANCELLATION OF TREASURY SHARES. (a) Authorizes a corporation,
by resolution of the board of directors of the corporation, to cancel all
or part of the corporation's treasury shares at any time.  

(b) Specifies the provisions of a statement of cancellation for a
corporation that cancels all or part of the treasury shares of the
corporation.  

(c) Requires the stated capital of the corporation, upon the filing of a
statement of cancellation, to be reduced by that part of the stated capital
that was, at the time of the cancellation, represented by the canceled
shares, and the canceled shares to be restored to the status of authorized
but unissued shares.  

(d) Sets forth that this section does not prohibit a cancellation of shares
or a reduction of stated capital in any other manner permitted by law.  

Sec. 21.254. PROCEDURES FOR REDUCTION OF STATED CAPITAL BY BOARD OF
DIRECTORS. (a) Authorizes the stated capital of the corporation, if all or
part of the stated capital of a corporation is represented by shares
without par value, to be reduced in the manner provided by this section.  

(b) Specifies the provisions for the resolution that is required to be
adopted by the board of directors.  

(c) Requires each shareholder of record entitled to vote on the reduction
of stated capital to be given written notice stating that the purpose or
one of the purposes of the meeting is to consider the matter of reducing
the stated capital of the corporation in the amount and manner proposed by
the board of directors. Requires the notice to be given in the time and
manner provided by this code for giving notice of shareholders' meetings.  

(d) Provides that the affirmative vote of the holders of at least the
majority of the shares entitled to vote on the matter is required for
approval of the resolution proposing the reduction of stated capital.  

Sec. 21.255. STATEMENT OF REDUCTION OF STATED CAPITAL BY BOARD. (a)
Specifies the provisions of a statement filed on behalf of the corporation,
when a reduction of the stated capital of a corporation has been approved
by the shareholders under Section 21.254.  

(b) Requires the stated capital of the corporation, upon the filing of the
statement, to be reduced in the manner provided by the statement.  

 Sec. 21.256. RESTRICTION ON REDUCTION OF STATED CAPITAL. Prohibits the
stated capital of a corporation from being reduced under this subchapter if
the amount of the aggregate stated capital of the corporation would be
reduced to an amount equal to or less than the sum of a certain amount. 

SUBCHAPTER G.  DISTRIBUTIONS AND SHARE DISTRIBUTIONS

Sec. 21.301. DEFINITIONS. Defines "distribution limit," with respect to a
distribution made by a corporation, "distribution limit," with respect to a
distribution that is a purchase or redemption of its own shares by an
investment company, and "investment company" in this subsection. 

Sec. 21.302. AUTHORITY FOR DISTRIBUTIONS. Authorizes the board of directors
of a corporation to authorize a distribution and authorizes the corporation
to make a distribution, subject to Section 21.303.  

Sec. 21.303. LIMITATIONS ON DISTRIBUTIONS. (a) Prohibits a corporation from
making a distribution that violates the corporation's certificate of
formation.  

(b) Prohibits a corporation, unless the distribution is made in compliance
with Chapter 11, from making a distribution that will cause the corporation
to become insolvent, or exceeds the distribution limit.  

Sec. 21.304. REDEMPTIONS. (a) Authorizes a distribution by a corporation
that involves a redemption of outstanding redeemable shares of the
corporation subject to redemption to be related to any or all of those
shares.  

(b) Requires the shares to be redeemed, if less than all of the outstanding
redeemable shares of a corporation subject to redemption are to be
redeemed, to be selected for redemption in accordance with the
corporation's certificate of formation, or ratably or by lot in the manner
prescribed by resolution of the corporation's board of directors, if the
certificate of formation does not specify how shares are to be selected for
redemption.  

(c) Provides that a redemption of redeemable shares takes effect by call
and written notice of the redemption of the shares.  

Sec. 21.305. NOTICE OF REDEMPTION. (a) Specifies the provision stated in a
notice of redemption of redeemable shares of a corporation. 

(b) Requires the notice of redemption to be sent to each holder of
redeemable shares being called no later than 21 days or earlier than 60
days before the date set for redemption.  

(c) Provides that a notice that is mailed is considered to have been sent
when the notice is deposited in the United States mail, with postage
prepaid, addressed to the shareholder at the shareholder's address as it
appears on the share transfer records of the corporation.  

(d)  Authorizes a corporation to give the transfer agent described
irrevocable instructions to send or complete the notice of redemption. 
 
Sec. 21.306.  DEPOSIT OF MONEY FOR REDEMPTION.  (a) Authorizes a
corporation to deposit, after the date the notice of redemption is sent and
before the day after the date set for redemption of redeemable shares of
the corporation, with a bank or trust company in this or another state of
the United States an amount sufficient to redeem the shares.  Provides that
the amount must be deposited as a trust fund. 
 
(b)  Provides that, unless the corporation's certificate of formation
provides otherwise, if a corporation deposits money and gives payment
instructions in accordance with Subsection (a) and Section 21.307(b): 

 (1)  the shares called for redemption are considered redeemed, and
distributions on those shares cease to accrue on and after the date set for
redemption; and 
(2)  the deposit constitutes full payment of the shares called for
redemption to the holders of the shares on and after the date set for
redemption.  

(c)  Provides that the shares called for redemption are not considered
outstanding, unless the certificate of formation provides otherwise, after
the date a deposit is made and instructions are given, and the holders of
the shares cease to be shareholders of the shares and have no right with
respect to the shares other than: 

(1)  the right to receive payment of the redemptive price of the shares
without interest from the bank or trust company; and 
(2)  any right to convert those shares.

(d)  Requires a bank or trust company receiving a deposit under this
section to pay to the corporation on demand the balance of the amount
deposited if one or more holders of the shares called for redemption do not
claim for redemption the amount deposited by the sixth anniversary of the
date of the deposit,  unless the certificate of formation provides
otherwise, after which the bank or trust company is relieved of all
responsibility to the holders with respect to the amount deposited.  

Sec. 21.307.  PAYMENT OF REDEEMED SHARES.  (a)  Requires payment of a
certificated share to be made only on the surrender of the respective share
certificate.  

(b)  Authorizes a corporation to give a transfer agent irrevocable
instructions to pay the redemptive price to the respective holders of the
shares, on or after the date set for redemption of redeemable shares, as
evidenced by a list of shareholders certified by an officer of the
corporation.  

Sec. 21.308.  PRIORITY OF DISTRIBUTIONS.  (a) Provides that a corporation's
indebtedness that arises as a result of the declaration of a distribution
and a corporation's indebtedness issued in a distribution are at parity
with the corporation's indebtedness to its general, unsecured creditors,
except as provided by Subsection (b) or (c). 
 
(b) Requires that the indebtedness described by Subsection (a) be
subordinated to the extent required by an agreement binding on the
corporation, with respect to indebtedness issued in a distribution, as
provided by the corporation.  

(c)  Requires that the indebtedness described by Subsection (a) be secured
to the extent required by an agreement binding on the corporation.  

Sec. 21.309.  RESERVES, DESIGNATIONS, AND ALLOCATIONS FROM SURPLUS. (a)
Authorizes a corporation, by resolution of the board of directors of the
corporation, to: 

(1)  create a reserve out of the surplus of the corporation; or
(2)  designate or allocate in any manner a part or all of the corporation's
surplus for a proper purpose.  

(b)  Authorizes a corporation to increase, decrease, or abolish a reserve,
designation, or allocation in the manner provided by Subsection (a).  

Sec. 21.310.  AUTHORITY FOR SHARE DISTRIBUTIONS.  Authorizes the board of
directors of a corporation to authorize a share distribution and the
corporation to pay a share distribution subject to Section 21.311.  

Sec. 21.311.  LIMITATIONS ON SHARE DISTRIBUTIONS.  Prohibits a corporation
from paying a share distribution in authorized but unissued shares of any
class if: 

(1)  the share distribution violates the corporation's certificate of
formation; 
 (2)  the surplus of the corporation is less than the amount required to be
transferred to stated capital at the time the share distribution is made;
or 

(3)  the share distribution will be made to a holder of shares of any other
class or series, unless the corporation's certificate of formation provides
for the distribution, or the share distributin is authorized by the holders
of at least a majority of the outstanding shares of the class or series in
which the share distribution is to be made. 
 
Sec. 21.312.  VALUE OF SHARES ISSUED AS SHARE DISTRIBUTIONS.  (a)  Requires
a share distribution payable in authorized but unissued shares with par
value to be issued at the par value of the respective share.  

(b)  Requires a share distribution payable in authorized but unissued
shares without par value to be issued at the value set by the board of
directors when the share distribution is authorized.  

Sec. 21.313.  TRANSFER OF SURPLUS FOR SHARE DISTRIBUTIONS.  (a) Requires an
amount of surplus designated by the corporation's board of directors that
is not less than the aggregate par value of the shares issued as a share
distribution to be transferred to stated capital, when a share distribution
payable in authorized but unissued shares with par value is made by a
corporation.  

(b)  Requires that an amount of surplus equal to the aggregate value set by
the corporation's board of directors with respect to shares under Section
21.312(b) be transferred to stated capital, when a share distribution
payable in authorized but unissued shares without par value is made by a
corporation.  

Sec. 21.314.  DETERMINATION OF SOLVENCY, NET ASSETS, STATED CAPITAL, AND
SURPLUS.  (a)  Provides that, for purposes of this subchapter, the
determination of whether a corporation is or would be insolvent and the
determination of the value of a corporation's net assets, stated capital,
or surplus and each of the components of net assets, stated capital, or
surplus may be based on certain enumerated standards. 
 
(b)  Provides that Subsection (a) does not apply to the computation of the
Texas franchise tax or any other tax imposed on a corporation under the
laws of this state.  

Sec. 21.315.  DATE OF DETERMINATION OF SOLVENCY, NET ASSETS, STATED
CAPITAL, AND SURPLUS.  Requires that a determination of whether a
corporation is or would be made insolvent by a distribution or share
distribution or a determination of the value of a corporation's net assets,
stated capital, or surplus, or each component of net assets, stated
capital, or surplus, be made at certain specified times, for purposes of
this subchapter. Sets forth the dates on which various distributions are
considered to have been made. 
 
Sec. 21.316.  LIABILITY OF DIRECTORS FOR WRONGFUL DISTRIBUTIONS.  (a)
Provides that the directors of a corporation who vote for or assent to a
distribution by the corporation that is prohibited by Section 21.303 are
liable to the corporation for the amount by which the distribution exceeds
the amount permitted by that section to be distributed.  

(b) Provides that a director is not liable for all or part of the excess
amount if a distribution of that amount would have been permitted by
Section 21.303 after the date the director authorized the distribution.  

(c) Provides that a director is not jointly and severally liable under
Subsection (a) if, in voting for or assenting to the distribution, the
director meets certain specified conditions. 

(d) Provides that the liability imposed under Subsection (a) is the only
liability of a director to the corporation or its creditors for authorizing
a distribution that is prohibited by Section 21.303.  

 (e)  Provides that this section and Sections 21.317 and 21.318 do not
limit any liability imposed under Chapter 24, Business & Commerce Code, or
the United States Bankruptcy Code.  

Sec. 21.317.  STATUTE OF LIMITATIONS ON ACTION FOR WRONGFUL DISTRIBUTION.
Prohibits an action from being brought against a director of a corporation
under Section 21.316 after the second anniversary of the date the alleged
act giving rise to the liability occurred.  

Sec. 21.318.  CONTRIBUTION FROM CERTAIN SHAREHOLDERS AND DIRECTORS. (a)
Provides that director who is held liable for a claim asserted under
Section 21.316 is entitled to receive contributions from shareholders who
accepted or received the wrongful distribution knowing that it was
prohibited by Section 21.303 in proportion to the amount received by the
shareholders.  

(b) Provides that a director who is liable for a claim asserted under
Section 21.316 is entitled to receive contributions from each of the other
directors who are liable with respect to that claim in an amount
appropriate to achieve equity.  

(c)  Provides that the liability provided by Subsection (a) is the only
liability of a shareholder to the corporation or a creditor of the
corporation for accepting or receiving a distribution by the corporation
that is prohibited by Section 21.303, except as provided by Chapter 7. 

SUBCHAPTER H.  SHAREHOLDER MEETINGS; VOTING AND QUORUM

Sec. 21.351.  ANNUAL MEETING.  (a) Requires that an annual meeting of the
shareholders of a corporation be held at a time that is stated in or set in
accordance with the corporation's bylaws.  

(b) Authorizes a court in the county in which the principal executive
office of the corporation is located, on the application of a shareholder
who has previously submitted a written request to the corporation that an
annual meeting be held, to order a meeting to be held if the annual meeting
is not held or written consent instead of the annual meeting is not
executed within any 13-month period, unless the meeting is not required to
be held under Section 21.655.  

(c) Provides that the failure to hold an annual meeting at the designated
time does not result in the winding up or termination of the corporation.  

Sec. 21.352.  SPECIAL MEETINGS.  (a)  Authorizes a special meeting of the
shareholders of a corporation to be called by the president, the board of
directors, or any other person authorized to call special meetings, or the
holders of a certain percentage of the shares of the corporation. 

(b) Provides that the record date for determining which shareholders of the
corporation are entitled to call a special meeting is the date the first
shareholder signs the notice of that meeting, unless stated in or set in
accordance with the bylaws.  

(c) Provides that the only business that may be conducted at a special
meeting of the shareholders is business that is within the purposes
described in the notice. 

Sec. 21.353.  NOTICE OF MEETING.  (a) Requires a written notice of a
meeting in to be given  to each shareholder entitled to vote at the meeting
not later than the 10th day and not earlier than the 60th day before the
date of the meeting, to be given at the direction of the president,
secretary, or other person calling the meeting. 

(b)  Provides that the notice of a special meeting must contain a statement
regarding the purpose or purposes of the meeting.  
 
Sec. 21.354.  INSPECTION OF VOTING LIST.  (a) Requires the list of
shareholders entitled to vote at the meeting to be subject to inspection by
a shareholder during regular business hours, and produced and kept open at
the meeting.  

(b)  Provides that the original share transfer records are prima facie
evidence of which shareholders are entitled to inspect the list. 

Sec. 21.355.  CLOSING OF SHARE TRANSFER RECORDS.  Requires share transfer
records that are closed for the purpose of determining which shareholders
are entitled to receive notice of a meeting of shareholders to remain
closed for at least 10 days immediately preceding the date of the meeting.  

Sec. 21.356.  RECORD DATE FOR WRITTEN CONSENT TO ACTION.  Provides that the
record date provided in accordance with Section 6.102(a) may not be more
than 10 days after the date on which the board of directors adopts the
resolution setting the record date.  

Sec. 21.357.  RECORD DATE FOR PURPOSE OTHER THAN WRITTEN CONSENT TO ACTION.
Provides that the record date provided by the directors in accordance with
Section 6.101 must be at least 10 days before the date on which the
particular action requiring the determination of shareholders is to be
taken.  

Sec. 21.358.  QUORUM.  (a) Provides that the holders of the majority of the
shares entitled to vote at a meeting of the shareholders of a corporation
that are present or represented by proxy at the meeting are a quorum for
the consideration of a matter to be presented at that meeting.  

(b)  Provides that the certificate of formation of a corporation may
provide that a quorum is present only if  the holders of a specified
portion of the shares that is greater than the majority of the shares
entitled to vote are represented at the meeting in person or by proxy, or
the holders of a specified portion of the shares that is less than the
majority but not less than one-third of the shares entitled to vote are
represented at the meeting in person or by proxy.  

(c) Authorizes the shareholders to conduct business properly brought before
the meeting until the meeting is adjourned, and provides that the
subsequent withdrawal from the meeting of a shareholder or the refusal of a
shareholder present at or represented by proxy at the meeting to vote does
not negate the presence of a quorum at the meeting.  

(d) Provides that the shareholders of the corporation at a meeting at which
a quorum is not present may adjourn the meeting until the time and to the
place as may be determined by a vote of the holders of the majority of the
shares who are present or represented by proxy at the meeting.  

Sec. 21.359.  VOTING IN ELECTION OF DIRECTORS.  (a) Requires the directors
of a corporation to be elected by a plurality of the votes cast by the
holders of shares entitled to vote in the election of directors at a
meeting of shareholders at which a quorum is present.  

(b)  Authorizes the certificate of formation or bylaws of a corporation to
provide that a director of a corporation shall be elected only if the
director receives: 

(1)  the vote of the holders of a specified portion, but not less than the
majority, of the shares entitled to vote in the election of directors; 
(2)  the vote of the holders of a specified portion, but not less than the
majority, of the shares entitled to vote in the election of directors and
represented in person or by proxy at a meeting of shareholders at which a
quorum is present; or 
(3)  the vote of the holders of a specified portion, but not less than the
majority, of the votes cast by the holders of shares entitled to vote in
the election of directors at a meeting of shareholders at which a quorum is
present.  
 
Sec. 21.360.  NO CUMULATIVE VOTING RIGHT UNLESS AUTHORIZED. Provides that
a shareholder does not have the right to cumulate the shareholder's vote in
the election of directors, except as provided by Section 21.361 or 21.362.  
 
Sec. 21.361.  CUMULATIVE VOTING IN ELECTION OF DIRECTORS.  (a) Provides
that under specified conditions at each election of directors of the
corporation each shareholder entitled to vote at the election is entitled
to vote the number of shares owned by the shareholder for as many
candidates as there are directors to be elected and for whose election the
shareholder is entitled to vote, or cumulate votes by giving one candidate
as many votes as the total of the number of the directors to be elected
multiplied by the shareholder's shares or distributing the votes among one
or more candidates using the same principle.  

(b)  Provides that cumulative voting permitted by the certificate of
formation is permitted only in an election of directors in which a
shareholder who intends to cumulate votes has given written notice of that
intention to the secretary of the corporation on or before the day
preceding the date of the election at which the shareholder intends to
cumulate votes. 

(c)  Authorizes all shareholders entitled to vote cumulatively to cumulate
their votes if a shareholder gives the notice required by Subsection (b).  

Sec. 21.362.  CUMULATIVE VOTING RIGHT IN CERTAIN CORPORATIONS.  Provides
that a shareholder of a corporation incorporated before the effective date
of this code has the right to cumulatively vote the number of shares the
shareholder owns in the election of directors to the extent permitted and
in the manner provided by Section 21.361.  Authorizes a corporation to
limit or deny a shareholder's right to cumulatively vote shares at any time
after the effective date of this code by amending its certificate of
formation.  

Sec. 21.363.  VOTING ON MATTERS OTHER THAN ELECTION OF DIRECTORS.  (a)
Provides that with respect to a matter other than the election of directors
or a matter for which the affirmative vote of the holders of a specified
portion of the shares entitled to vote is required by this code, the
affirmative vote of the holders of the majority of the shares entitled to
vote on, and who voted for, against, or expressly abstained with respect
to, the matter at a shareholders' meeting of a corporation at which a
quorum is present is the act of the shareholders.  

(b)  Provides that with respect to a matter other than the election of
directors or a matter for which the affirmative vote of the holders of a
specified portion of the shares entitled to vote is required by this code,
the certificate of formation or bylaws of a corporation may provide that
the act of the shareholders of the corporation is subject to certain
specified conditions. 

Sec. 21.364.  VOTE REQUIRED TO APPROVE FUNDAMENTAL ACTION.  (a)  Defines,
in this section, a "fundamental action" as an amendment of a certificate of
formation, voluntary winding up, a  revocation of a voluntary decision to
wind, a cancellation of an event requiring winding up, or a reinstatement. 

(b)  Provides that, except as otherwise provided by this code or the
certificate of formation or bylaws of a corporation in accordance with
Section 21.363, the vote required for approval of a fundamental action by
the shareholders is the affirmative vote of the holders of at least
two-thirds of the outstanding shares entitled to vote on the fundamental
action.  

(c)  Provides that if a class or series of shares is entitled to vote as a
class on a fundamental action, the vote required for approval of the action
by the shareholders is 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 action as a class and at least two-thirds of the
outstanding shares otherwise entitled to vote on the action.  Requires
shares entitled to vote as a class to be entitled to vote only as a class
unless otherwise entitled to vote on each matter submitted to the
shareholders generally or otherwise provided by the  certificate of
formation.  

(d)  Provides that unless an amendment to the certificate of formation is
undertaken by the board of directors under Section 21.155, separate voting
by a class or series of shares of a corporation is required for approval of
an amendment to the certificate of formation that would result in certain
changes in shares. 

(e)  Provides that the vote required under Subsection (d) by a class or
series of shares of a corporation is required notwithstanding shares of
that class or series do not otherwise have a right to vote under the
certificate of formation. 

(f)  Provides that unless otherwise provided by the certificate of
formation, if the holders of the outstanding shares of a class that is
divided into series are entitled to vote as a class on a proposed amendment
that would affect equally all series of the class, other than a series in
which no shares are outstanding or a series that is not affected by the
amendment, the holders of the separate series are not entitled to separate
class votes.  

(g)  Provides that the adoption of certain proposed amendments to the
certificate of formation do not require the approval of the holders of the
outstanding shares of a class or series. 

Sec. 21.365.  CHANGES IN VOTE REQUIRED FOR CERTAIN MATTERS.  (a) Authorizes
the certificate of formation, with respect to a matter for which the
affirmative vote of the holders of a specified portion of the shares
entitled to vote is required by this code, to provide that the affirmative
vote of the holders of a specified portion, but not less than the majority,
of the shares entitled to vote on that matter is required for shareholder
action on that matter. 
 
(b)  Authorizes the certificate of formation, with respect to a matter for
which the affirmative vote of the holders of a specified portion of the
shares of a class or series is required by this code, to provide that the
affirmative vote of the holders of a specified portion, but not less than
the majority, of the shares of that class or series is required for action
of the holders of shares of that class or series on that matter.  

(c)  Prohibits the provision, if a provision of the certificate of
formation provides that the affirmative vote of the holders of a specified
portion that is greater than the majority of the shares entitled to vote on
a matter is required for shareholder action on that matter, from being
amended, directly or indirectly, without the same affirmative vote unless
otherwise provided by the certificate of formation.  

(d)  Prohibits the provision, if a provision of the certificate of
formation provides that the affirmative vote of the holders of a specified
portion that is greater than the majority of the shares of a class or
series is required for shareholder action on a matter, from being amended,
directly or indirectly, without the same affirmative vote unless otherwise
provided by the certificate of formation.  

Sec. 21.366.  NUMBER OF VOTES PER SHARE.  (a) Requires each outstanding
share, regardless of class, except as provided by the certificate of
formation of a corporation or this code, to be entitled to one vote on each
matter submitted to a vote at a shareholders' meeting. 
 
(b)  Provides that each reference in this code, unless expressly stated
otherwise, to a specified portion of the shares with respect to that matter
refers to the portion of the votes entitled to be cast with respect to
those shares under the certificate of formation, if the certificate of
formation provides for more or less than one vote per share on a matter for
all of the outstanding shares or for the shares of a class or series.  

Sec. 21.367.  VOTING IN PERSON OR BY PROXY.   Authorizes a shareholder to
vote in person or by proxy executed in writing by the shareholder. Provides
that a telegram, telex, cablegram, electronic message, or similar
transmission by the shareholder, or a photographic,  photostatic,
facsimile, or similar reproduction of a writing executed by the
shareholder, is considered an execution in writing for purposes of this
section.  

Sec. 21.368.  TERM OF PROXY.  Provides that a proxy is not valid after 11
months after the date the proxy is executed unless otherwise provided by
the proxy.  

Sec. 21.369.  REVOCABILITY OF PROXY.  Sets forth that "proxy coupled with
an interst" includes the appointment of enumerated persons as proxy.
Provides that a  proxy is revocable unless the proxy form conspicuously
states that the proxy is irrevocable, and the proxy is coupled with an
interest.  

Sec. 21.370.  ENFORCEABILITY OF PROXY.  (a)  Provides that an irrevocable
proxy is specifically enforceable against the holder of shares or any
successor or transferee of the holder if  the proxy is noted conspicuously
on the certificate representing the shares subject to the proxy, or in the
case of uncertificated shares, notation of the proxy is contained in the
notice sent under Section 3.205 with respect to the shares subject to the
proxy.  

(b)  Provides that an irrevocable proxy that is otherwise enforceable is
ineffective against a transferee for value without actual knowledge of the
existence of the irrevocable proxy at the time of the transfer or against a
subsequent transferee, regardless of whether the transfer is for value,
unless the proxy is noted conspicuously on the certificate representing the
shares subject to the proxy, and, in the case of uncertificated shares,
notation of the proxy is contained in the notice sent under Section 3.205
with respect to the shares subject to the proxy.  

(c)  Requires an irrevocable proxy to be specifically enforceable against a
person who is not a transferee for value from the time the person acquires
actual knowledge of the existence of the irrevocable proxy. 
 
Sec. 21.371.  PROCEDURES IN BYLAWS RELATING TO PROXIES.  Authorizes a
corporation to establish in the corporation's bylaws procedures consistent
with this code for determining the validity of proxies and determining
whether shares that are held of record by a bank, broker, or other nominee
are represented at a meeting of shareholders.  Authorizes the procedures to
incorporate rules of and determinations made by a stock exchange or
self-regulatory organization regulating the corporation or that bank,
broker, or other nominee. 

Sec. 21.372.  ACTION BY LESS THAN UNANIMOUS WRITTEN CONSENT. Authorizes the
shareholders of a corporation to act with less than unanimous written
consent in the manner provided by Section 6.202 if action by less than
unanimous written consent is authorized by the corporation's certificate of
formation or a bylaw adopted by the corporation's shareholders.  

SUBCHAPTER I.  BOARD OF DIRECTORS

Sec. 21.401.  MANAGEMENT BY BOARD OF DIRECTORS.  Requires the board of
directors of a corporation, except as provided by Section 21.101 or
Subchapter O, to exercise or authorize the exercise of the powers of the
corporation, and manage the business and affairs of the corporation.
Authorizes a director, in discharging the duties of director under this
code or otherwise and in considering the best interests of the corporation,
to consider the long-term and short-term interests of the corporation and
the shareholders of the corporation, including the possibility that those
interests may be best served by the continued independence of the
corporation. 
 
Sec. 21.402.  BOARD MEMBER ELIGIBILITY REQUIREMENTS.  Provides that  a
person is not required to be a resident of this state or a shareholder of
the corporation to serve as a director, unless the certificate of formation
or bylaws of the corporation provide otherwise. Authorizes the certificate
of formation or bylaws to prescribe other qualifications for directors.  

 Sec. 21.403.  NUMBER OF DIRECTORS.  Authorizes the board of directors of a
corporation to consist of one or more directors.  Authorizes the
corporation's certificate of formation to set the number constituting the
initial board of directors if the corporation is to be managed by a board
of directors.  Requires the certificate of formation or bylaws of the
corporation to set the number constituting each subsequent board of
directors or provide for the manner in which the number of directors is
determined.  Authorizes the number of directors to be increased or
decreased by amendment to, or as provided by, the certificate of formation
or bylaws.  Prohibits a decrease in the number of directors from shortening
the term of an incumbent director.  Provides that, if the certificate of
formation or bylaws do not set the number constituting the board of
directors or provide for the manner in which the number of directors must
be determined, the number of directors is the same as the number
constituting the initial board of directors as set by the certificate of
formation.  

Sec. 21.404.  DESIGNATION OF INITIAL BOARD OF DIRECTORS.  Provides that the
certificate of formation of a corporation must state the names and
addresses of the persons constituting the initial board of directors of the
corporation if the corporation is to be managed by a board of directors.  

Sec. 21.405.  ELECTION OF BOARD OF DIRECTORS.  Requires the holders of
shares entitled to vote in the election of directors to elect directors for
the term provided under Section 21.407, except as provided by Section
21.408, at the first annual meeting of shareholders of a corporation and at
each subsequent annual meeting of shareholders.  Authorizes a corporation's
certificate of formation to provide that the holders of a class or series
of shares or a group of classes or series of shares are entitled to elect
one or more directors of the corporation.  

Sec. 21.406.  SPECIAL VOTING RIGHTS OF DIRECTORS.  Authorizes the
certificate of formation of a corporation to provide that directors elected
by the holders of a class or series of shares or by a group of classes or
series of shares entitled to elect one or more directors, as provided by
Section 21.405, are entitled to cast more or less than one vote on
specified matters.  Provides that unless expressly stated otherwise, each
reference in this code or in a corporation's certificate of formation or
bylaws to a specified portion of the directors means the portion of the
votes entitled to be cast by the directors to which the reference applies.  

Sec. 21.407.  TERM OF OFFICE.  Provides that a director's term of office
extends from the date the director is elected and qualified or named in the
corporation's certificate of formation until the next annual meeting of
shareholders and until the director's successor is elected and qualified,
unless otherwise provided by this subchapter or removed from office.  

Sec. 21.408.  SPECIAL TERMS OF OFFICE.  (a)  Authorizes the certificate of
formation or bylaws of a corporation to provide that all or some of the
board of directors may be divided into two or three classes.  Requires the
two or three classes to include the same or a similar number of directors
as each other class and have staggered terms of office.  

(b)  Sets forth the expiration of the terms of office of the initial
directors constituting the first, second, and third class. 

(c)  Requires the shareholders to elect a number of directors equal to the
number of the class of directors whose terms expire at the time of the
meeting, if the certificate of formation or bylaws provide for staggered
terms of directors.  Requires the directors elected at an annual meeting to
hold office until the second succeeding annual meeting, if there are two
classes, or until the third succeeding annual meeting, if there are three
classes.  

(d)  Provides that, unless provided by the certificate of formation or a
bylaw adopted by the shareholders, staggered terms for directors must be
effected at a meeting of shareholders at which directors are elected.
Prohibits staggered terms for directors from being effected if any
shareholder has the right to cumulate votes for the election of directors
and the board of directors consists of fewer than nine members.  
 
(e)  Requires the directors elected by the holders of a class or series of
shares or a group of classes or series of shares in accordance with the
certificate of formation to hold office for the terms specified by the
certificate of formation.  

Sec. 21.409.  REMOVAL OF DIRECTORS.  (a)  Authorizes the shareholders of
the corporation to remove a director or the entire board of directors of
the corporation, with or without cause, at a meeting called for that
purpose, by a vote of the holders of a specified portion, but not less than
the majority, of the shares entitled to vote at an election of directors.  

(b)   Authorizes only the holders of shares of that class, series, or group
to vote on the removal of a director elected by the holders of shares of
that class, series, or group, if the certificate of formation entitles the
holders to elect one or more directors. 

(c)  Prohibits a director from being removed if the votes cast against the
removal would be sufficient to elect the director if cumulatively voted at
an election of the entire board of directors, or if there are classes of
directors, at an election of the class of directors of which the director
is a part.  

(d)  Prohibits a director, in the case of a corporation the directors of
which serve staggered terms, from being removed except for cause unless the
certificate of formation provides otherwise.  

Sec. 21.410.  VACANCY.  (a)  Authorizes a vacancy occurring in the initial
board of directors before the issuance of shares to be filled by the
affirmative vote or written consent of the majority of the incorporators or
by the affirmative vote of the majority of the remaining directors, even if
the majority of the remaining directors constitutes less than a quorum of
the board of directors.  

(b)  Authorizes a vacancy occurring in the board of directors after the
issuance of shares to be filled by election at an annual or special meeting
of shareholders called for that purpose or by the affirmative vote of the
majority of the remaining directors, even if the majority of directors
constitutes less than a quorum of the board of directors.  

(c)  Provides that the term of a director elected to fill a vacancy
occurring in the board of directors, including the initial directors, is
the unexpired term of the director's predecessor in office.  

(d)  Authorizes a vacancy to be filled because of an increase in the number
of directors to be filled by election at an annual or special meeting of
shareholders called for that purpose or by the board of directors for a
term of office continuing only until the next election of one or more
directors by the shareholders, except as provided by Subchapter (e).
Prohibits the board of directors from filling more than two vacancies
created by an increase in the number of directors during a period between
two successive annual meetings of shareholders. 

(e)   Provides that a vacancy or a newly created vacancy in a director
position that the certificate of formation entitles the holders of a class
or series of shares or group of classes or series of shares to elect may
only be filled only by the affirmative vote of the majority of the
directors then in office elected by the class, series, or group, by the
sole remaining director elected in that manner, or by the affirmative vote
of the holders of the outstanding shares of the class, series, or group,
unless otherwise authorized by a corporation's certificate of formation  

Sec. 21.411.  NOTICE OF MEETING.  Authorizes regular meetings of the board
of directors of a corporation to be held with or without notice as
prescribed by the corporation's bylaws. Requires special meetings of the
board of directors to be held with notice as prescribed by the bylaws.
Provides that a notice of a board meeting is not required to specify the
business  to be transacted at the meeting or the purpose of the meeting,
unless required by the bylaws.  
 
Sec. 21.412.  WAIVER OF NOTICE.  Provides that if the bylaws of a
corporation require notice of a meeting to be given to a director, a
written waiver of the notice signed by the director entitled to the notice,
before or after the meeting, is equivalent to the giving of the notice.
Provides that the attendance of a director at a board meeting constitutes a
waiver of notice of the meeting, unless the director attends the meeting
for the express purpose of objecting to the transaction of business at the
meeting because the meeting has not been lawfully called or convened.
Provides that a waiver of notice of a board meeting is not required to
specify the business to be transacted at the meeting or the purpose of the
meeting unless required by the bylaws.  

Sec. 21.413.  QUORUM.  (a)  Provides that a quorum of the board of
directors is the majority of the number of directors set or established in
the manner provided by the certificate of formation or bylaws of a
corporation unless the laws of this state, the certificate of formation, or
the bylaws require a different number or portion.  Prohibits the
certificate of formation and the bylaws to provide that less than one-third
of the number of directors constitutes a quorum.  

Sec. 21.414.  DISSENT TO ACTION.  Sets forth the enumerated actions of a
director that otherwise presumes a director of a corporation who is present
at a meeting of the board of directors at which action has been taken is
presumed to have assented to the action taken. Prohibits a director who
voted in favor of an action to dissent to the action.  

Sec. 21.415.  ACTION BY DIRECTORS.  (a)  Provides that an act of a majority
of the directors present at a meeting at which a quorum is present is the
act of the board of directors of a corporation, unless the act of a greater
number is required by the certificate of formation or bylaws of the
corporation or by this code. 
 
(b) Provides that a written consent stating the action taken and signed by
all members of the board of directors also is an act of the board of
directors,unless otherwise provided by the certificate of formation or
bylaws. 

Sec. 21.416.  COMMITTEES OF BOARD OF DIRECTORS.  (a)  Authorizes the board
of directors of the corporation, by resolution adopted by the majority of
the entire board of directors, if authorized by the certificate of
formation or bylaws of a corporation, to designate: 

(1)  committees composed of one or more directors; or
(2)  directors as alternate members of committees to replace absent or
disqualified committee members at a committee meeting, subject to any
limitations imposed by the board of directors.  

(b)  Provides that the committee has the authority of the board of
directors, to the extent provided by the resolution designating a committee
or the certificate of formation or bylaws and subject to Subsection (c).  

(c)  Prohibits a committee of the board of directors from:

(1)  amending the certificate of formation, except as otherwise provided by
this subsection: 
(2)  proposing a reduction of stated capital under specified sections;
(3)  approving a plan of merger, share exchange, or conversion of the
corporation; 
(4)  recommending to shareholders the sale, lease, or exchange of all or
substantially all of the property and assets of the corporation not made in
the usual and regular course of its business; 
(5)  recommending to the shareholders a voluntary winding up and
termination or a revocation of a voluntary winding up and termination; 
(6)  amending, altering, or repealing the bylaws or adopt new bylaws;
 (7)  filling vacancies on the board of directors;
(8)  filling vacancies on or designate alternate members of a committee of
the board of directors; 
(9)  filling a vacancy to be filled because of an increase in the number of
directors; 
(10)  electing or removing officers of the corporation or members or
alternate members of a committee of the board of directors; 
(11)  setting the compensation of the members or alternate members of a
committee of the board of directors; or 
(12)  altering or repealing a resolution of the board of directors that
states that it may not be amended or repealed by a committee of the board
of directors.  

(d)  Authorizes a committee of the board of directors to authorize a
distribution or the issuance of shares  under certain conditions. 

(e)  Authorizes the board of directors to remove a member of a committee
appointed by the board if the board determines the removal is in the best
interests of the corporation. Provides that the removal of the member is
without prejudice to any contract rights of the person removed.  Specifies
that the appointment of a member of a committee does not create contract
rights.  

(f) Provides that the designation and delegation of authority to a
committee of the board of directors does not relieve the board of directors
or a director of responsibility imposed by law.  

Sec. 21.417.  ELECTION OF OFFICERS.  Requires the board of directors of a
corporation to elect a president and a secretary at the time and in the
manner prescribed by the corporation's bylaws.  Requires other officers of
the board of directors to be elected in accordance with Section 3.102.  

Sec. 21.418.  CONTRACTS OR TRANSACTIONS INVOLVING INTERESTED DIRECTORS AND
OFFICERS.  (a)  Applies this section only to a contract or transaction
between a corporation and: 

(1)  one or more of the corporation's directors or officers; or
(2)  an entity or other organization in which one or more of certain
corporation's directors or officers. 
   
(b)  Provides that an otherwise valid contract or transaction is valid,
notwithstanding that a director or officer of the corporation is present at
or participates in the meeting of board or directors, or a committee of the
board that authorizes the contract or transaction, or votes to authorize
the contract or transaction, if certain conditions exist. 
  
(c) Authorizes common or interested directors of a corporation to be
included in determining the presence of a quorum at a meeting of the
corporation's board of directors, or a committee of the board of directors,
that authorizes the contract or transaction.  

SUBCHAPTER J.  FUNDAMENTAL BUSINESS TRANSACTIONS

Sec. 21.451.  DEFINITIONS.  Defines  "participating shares," "shares," and
"voting shares."    
Sec.  21.452. APPROVAL OF MERGER. (a) Provides that a corporation that is a
party to the merger under Chapter 10 must approve the merger by complying
with this section.  

(b)  Requires the board of directors of the corporation to adopt a
resolution  as specified by this subsection. 

(c)  Requires the plan of merger, except as otherwise provided by this
subchapter or Chapter 10, to be submitted to the shareholders of the
corporation for approval as provided by this subchapter.  Authorizes the
board of directors to place conditions on the  submission of the plan of
merger to the shareholders.  

(d) Requires the board of directors,  if the board of directors approves a
plan of merger required to be approved by the shareholders of the
corporation but does not adopt a resolution recommending that the plan of
merger be approved by the shareholders, to communicate to the shareholders
the reason for the board's determination to submit the plan of merger
without a recommendation.  

(e)  Requires the shareholders of the corporation, except as provided by
Chapter 10 or Sections 21.457-21.459, to approve the plan of merger as
provided by this subchapter.  

Sec. 21.453.  APPROVAL OF CONVERSION.  (a)  Provides that a corporation
must approve a conversion under Chapter 10 by complying with this section.  

(b)  Requires the board of directors of the corporation to adopt a
resolution that approves the plan of conversion and: 

(1)  recommends that the plan of conversion be approved by the shareholders
of the corporation; or 
(2)  directs that the plan of conversion be submitted to the shareholders
for approval without recommendation if the board of directors determines
for any reason not to recommend approval of the plan of conversion.  

(c)  Requires the plan of conversion to be submitted to the shareholders of
the corporation for approval as provided by this subchapter.  Authorizes
the board of directors to place conditions on the submission of the plan of
conversion to the shareholders.  

(d)  Requires the board of directors, if the board of directors approves a
plan of conversion but does not adopt a resolution recommending that the
plan of conversion be approved by the shareholders of the corporation, to
communicate to the shareholders the reason for the board's determination to
submit the plan of conversion without a recommendation.  

(e)  Requires the shareholders of the corporation to approve the plan of
conversion as provided by this subchapter, except as provided by Sections
21.457-21.459.  

Sec. 21.454.  APPROVAL OF EXCHANGE.  (a)  Provides that a corporation the
shares of which are to be acquired in an exchange under Chapter 10 must
approve the interest exchange by complying with this section.  

(b)  Requires the board of directors to adopt a resolution that approves
the plan of exchange and: 

(1)  recommends that the plan of exchange be approved by the shareholders
of the corporation; or 
(2)  directs that the plan of exchange be submitted to the shareholders for
approval without recommendation if the board of directors determines for
any reason not to recommend approval of the plan of exchange.  

(c)  Requires the plan of exchange to be submitted to the shareholders of
the corporation for approval as provided by this subchapter.  Authorizes
the board of directors to place conditions on the submission of the plan of
exchange to the shareholders.  

(d)  Requires the board of directors to communicate to the shareholders the
reason for the board's determination to submit the plan of exchange to
shareholders without a recommendation, if the board of directors approves a
plan of exchange but does not adopt a resolution recommending that the plan
of exchange be approved by the shareholders of the corporation. 

 (e) Requires the shareholders of the corporation to approve the plan of
exchange as provided by this subchapter,  except as provided by Sections
21.457-21.459.  

Sec. 21.455.  APPROVAL OF SALE OF ALL OR SUBSTANTIALLY ALL OF ASSETS. (a)
Provides that 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, except as provided by
the certificate of formation of a domestic corporation.  

(b)  Provides that a corporation must approve the sale of all or
substantially all of its assets by complying with this section.  

(c)  Requires the board of directors of the corporation to 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) Requires the resolution proposing the sale of all or substantially all
of the assets of the corporation to be submitted to the shareholders of the
corporation for approval as provided by this subchapter. Authorizes  the
board of directors to place conditions on the submission of the proposed
sale to the shareholders.  

(e) Requires the board of directors to communicate to the shareholders the
reason for the board's determination to submit the proposed sale to
shareholders without a recommendation, 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.  

(f)  Requires the shareholders of the corporation to approve the sale of
all or substantially all of the assets of the corporation as provided by
this subchapter.  Authorizes the board of directors to 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, after the approval of the
sale by the shareholders..  

Sec. 21.456.  GENERAL PROCEDURE FOR SUBMISSION TO SHAREHOLDERS OF
FUNDAMENTAL BUSINESS TRANSACTION. (a) Requires a corporation, if a
fundamental business transaction involving the corporation is required to
be submitted to the shareholders of the corporation under this subchapter,
to notify each shareholder of the corporation that the fundamental business
transaction is being submitted to the shareholders for approval as required
by this subchapter, regardless of whether the shareholder is entitled to
vote on the matter.  

(b) Requires the notice required by Subsection (a) to contain or be
accompanied by a copy or summary of the plan of merger, conversion, or
interest exchange, as appropriate, if the fundamental business transaction
is a merger, conversion, or interest exchange.  

(c)  Provides that if the fundamental business transaction is to be
considered at a meeting of the shareholders of the corporation, 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.  

(d) Provides that if the fundamental business transaction is being
submitted to  shareholders by written consent, the notice required by
Subsection (a) must: 

(1) be given not later than the 21st day before the date the fundamental
business transaction takes effect; and 
(2)  state that the purpose, or one of the purposes, of the solicitation of
written consents from the shareholders is to receive approval for the
fundamental business transaction.  

Sec. 21.457.  GENERAL VOTE REQUIREMENT FOR APPROVAL OF FUNDAMENTAL BUSINESS
TRANSACTION.  (a) Provides that 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, except as provided by this code or the certificate of
formation or bylaws of a corporation in accordance with Section 21.365. 

(b) Establishes that shares of a class or series that are not otherwise
entitled to vote on matters submitted to shareholders generally will not be
entitled to vote for the approval of a fundamental business transaction,
unless provided by the certificate of formation or Section 21.458. 

(c) Provides that 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, 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.  Requires that shares entitled
to vote as a class or series 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) Specifies that, 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.  

Sec. 21.458.  CLASS VOTING REQUIREMENTS FOR CERTAIN FUNDAMENTAL BUSINESS
TRANSACTIONS.  (a)  Specifies that separate voting by a class or series of
shares of a corporation is required for approval of a plan of merger or
conversion under certain conditions described by this subsection.  

(b)  Specifies that separate voting by a class or series of shares of a
corporation is required for approval of a plan of exchange if shares of
that class or series are to be exchanged under the terms of the plan of
exchange, or  that class or series is entitled under the certificate of
formation to vote as a class on the plan of exchange.  

(c)  Specifies that 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 on the sale
of the corporation's assets.  Requires that shares entitled to vote as a
class or series 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. 
 
Sec. 21.459.  NO SHAREHOLDER VOTE REQUIREMENT FOR CERTAIN FUNDAMENTAL
BUSINESS TRANSACTIONS.  (a)  Provides that  a plan of merger is not
required to be approved by the shareholders of a corporation, unless
required by the corporation's certificate of formation, if : 

(1)  the corporation is the sole surviving corporation in the merger;
(2)  the certificate of formation of the corporation following the merger
will not differ from the corporation's certificate of formation before the
merger; 
 (3)  immediately after the effective date of the merger, each shareholder
of the corporation whose shares were outstanding immediately before the
effective date of the merger will hold the same number of shares, with
identical designations, preferences, limitations, and relative rights; 
(4)  the sum of the voting power of the number of voting shares outstanding
immediately after the merger and the voting power of securities that may be
acquired on the conversion or exercise of securities issued under the
merger does not exceed by more than 20 percent the voting power of the
total number of voting shares of the corporation that are outstanding
immediately before the merger; and 
(5)  the sum of the number of participating shares that are outstanding
immediately after the merger and the number of participating shares that
may be acquired on the conversion or exercise of securities issued under
the merger does not exceed by more than 20 percent the total number of
participating shares of the corporation that are outstanding immediately
before the merger.  

(b)  Provides that a plan of merger effected under Section 10.005 or 10.006
does not require the approval of the shareholders of the corporation,
unless required by the certificate of formation.  

Sec. 21.460.  RIGHTS OF DISSENT AND APPRAISAL.  Establishes that 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. 

SUBCHAPTER K.  WINDING UP AND TERMINATION

Sec. 21.501.  APPROVAL OF VOLUNTARY WINDING UP AND REINSTATEMENT OR
REVOCATION OF VOLUNTARY WINDING UP.  Requires a corporation to approve a
voluntary winding up in accordance with Chapter 11, a reinstatement in
accordance with Section 11.202, or revocation of a voluntary winding up in
accordance with Section 11.151 by complying with one of the procedures
prescribed by this subchapter.  

Sec. 21.502.  CERTAIN PROCEDURES RELATING TO WINDING UP.  Provides that a
corporation must follow one of the procedures set forth in this section, to
approve a voluntary winding up, a reinstatement, or a revocation of a
voluntary winding up. 
   
Sec. 21.503.  MEETING OF SHAREHOLDERS; NOTICE.  (a)  Provides that each
shareholder of record entitled to vote at a meeting described by Section
21.502 must be given written notice stating that the purpose or one of the
purposes of the meeting is to consider the winding up, reinstatement, or
revocation of the voluntary winding up of the corporation. Provides that
the notice must be given in the time and manner provided by this code for
the giving of notice of shareholders' meetings.  

(b)  Requires a vote of shareholders entitled to vote at the meeting to be
taken on the resolution to wind up, reinstate, or revoke the winding up of
the corporation.  Provides that the resolution must be approved on receipt
of the affirmative vote required by Section 21.364.  

Sec. 21.504.  RESPONSIBILITY FOR WINDING UP.  Requires the directors of the
corporation to manage the process of winding up the business or affairs of
the corporation if a corporation determines or is required to wind up. 

SUBCHAPTER L.  DERIVATIVE PROCEEDINGS 

Sec. 21.551.  DEFINITIONS.  Defines "derivative proceeding" and
"shareholder." 

Sec. 21.552.  STANDING TO BRING PROCEEDING.  Prohibits a shareholder from
instituting or maintaining a derivative proceeding unless: 

(1) the shareholder was a shareholder of the corporation at the time of the
act or  omission complained of, or  became a shareholder by operation of
law 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. 

Sec. 21.553.  DEMAND.  Prohibits a shareholder from instituting a
derivative proceeding until the 91st day after the date a written demand is
filed with the corporation requesting that the corporation take suitable
action.  Provides three exceptions to the 90-day period that allows a
derivative proceeding to go forward. 

Sec. 21.554.  DETERMINATION BY DIRECTORS OR INDEPENDENT PERSONS. Provides
that the 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: 

 _the independent and disinterested directors present at a meeting of the
board at which interested directors are not present at the time of the vote
if the independent and disinterested directors constitute a quorum of the
board; 

 _a committee consisting of two or more independent and disinterested
directors appointed by an affirmative vote of the majority of one or more
independent and disinterested directors present at a meeting of the board,
regardless of whether the independent and disinterested directors
constitute a quorum of the board; or 

 _a panel of one or more independent and disinterested persons appointed by
the court on a motion by the limited liability company listing the names of
the persons to be appointed and stating that, to the best of the limited
liability company's knowledge, the persons to be appointed are
disinterested and qualified to make the determinations contemplated by
Section 101.458. 

(b) Requires the court to appoint the panel if it finds that the persons
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 it under the
circumstances to make the determinations.  Prohibits a person appointed by
the court to the panel from being held liable to the corporation or its
shareholders for an action taken or omission made by the person in that
capacity, except for acts or omissions constituting fraud or wilful
misconduct. 
 
Sec. 21.555.  STAY OF PROCEEDING.  (a) Requires the court to stay a
derivative proceeding, if the domestic or foreign 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, 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) Requires the domestic or foreign corporation, in order to obtain a
stay, to 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. Authorizes the review, on
motion, of a stay every 60 days for the continued necessity of the stay.  

(c) Authorizes the renewal of the stay, if the review and determination
made by the person or group is not completed before the 61st day after the
date on which the court orders the stay, for one or more additional 60-day
periods if the domestic or foreign corporation provides the court and the
shareholder with a written statement of the status of the review and the
reasons why a continued extension of the stay is necessary. 

Sec. 21.556.  DISCOVERY.  (a) Requires the discovery conducted by a
shareholder after the filing of the derivative proceeding, if a domestic or
foreign corporation proposes to dismiss  a derivative proceeding under
Section 21.558, to be limited to facts relating to whether the person or
group of persons described by Section 21.558 is independent and
disinterested, the good faith of the inquiry and review by the person or
group, and the reasonableness of the procedures followed by the person or
group in conducting the review. 

(b) Prohibits the expansion of this type of discovery from including a fact
or substantive matter regarding the act, omission, or other matter that is
the subject matter of the derivative proceeding.  Authorizes the expansion
of the scope of discovery if the court determines after notice and hearing
that a good faith review of the allegations for purposes of Section 21.558
has not been made by an independent and disinterested person or group in
accordance with that section. 

Sec. 21.557.  TOLLING OF STATUTE OF LIMITATIONS.  Provides that filing a
written demand with the corporation under Section 21.553 tolls the statute
of limitations on the claim until the earlier of the 91st day after the
date of the demand or the 31st day after the date the corporation advises
the shareholder that the demand has been rejected or the review has been
completed. 

Sec. 21.558.  DISMISSAL OF DERIVATIVE PROCEEDING.  (a)  Requires a court to
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 that continuation of the derivative proceeding is not in the best
interests of the corporation.  

(b) Requires the burden of proof, in determining whether the requirements
of Subsection (a) have been met, to fall on either the plaintiff
shareholder under three circumstances or the corporation in any other
circumstance. 
 
Sec. 21.559.  PROCEEDING INSTITUTED AFTER DEMAND REJECTED.  Provides that
in the case where a derivative proceeding is instituted after a demand is
rejected the petition must allege with particularity the facts that
establish that the rejection was not made in accordance with the
requirements of Sections 21.554 and 21.558. 
 
Sec. 21.560.  DISCONTINUANCE OR SETTLEMENT.  Prohibits the discontinuation
or settlement of a derivative proceeding without court approval.  Requires
the court to direct that notice be given to the affected shareholders if it
determines that a proposed discontinuance or settlement may substantially
affect the interests of other shareholders. 
 
Sec. 21.561.  PAYMENT OF EXPENSES.  Defines "expenses" for purposes of this
section. Authorizes the court, on termination of a derivative proceeding,
to order either the domestic or foreign company or the plaintiff  to pay
the expenses of its adversary, depending on which party the court finds has
benefitted from the proceeding.  Authorizes the court, on termination of a
derivative proceeding, to order a party to pay the 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 legally
insufficient in fact or law or if used for an improper purpose. 

Sec. 21.562.  APPLICATION TO FOREIGN CORPORATIONS.  Provides that 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 foreign
corporation's place of organization, 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.  Provides that in the case of
matters relating to a foreign corporation under Section 21.554, a reference
to a person or group of persons described by that section refers to a
person or group entitled under the laws of the foreign corporation's place
of organization to review and dispose of a derivative proceeding. Requires
the governance of the standard of review of a decision made by the person
or group to dismiss the derivative proceeding by the laws of the foreign
corporation's place of organization. 

Sec. 21.563.  CLOSELY HELD CORPORATION.  Defines "closely held corporation"
for  purposes of this section.  Specifies that Sections 21.552-21.559 do
not apply to a closely held corporation, except that a court is authorized
to treat a derivative proceeding brought by a shareholder of a closely held
corporation as a direct action brought by the shareholder for the
shareholder's own benefit, and that a recovery in a direct or derivative
proceeding by a shareholder is authorized to be paid directly to the
plaintiff or to the corporation if necessary to protect the interests of
creditors or other shareholders of the corporation. 

SUBCHAPTER M.  AFFILIATED BUSINESS COMBINATIONS

Sec. 21.601.  DEFINITIONS.  Defines "issuing public corporation," "person,"
"share acquisition date," "subsidiary," and "voting share" for purposes of
this subchapter. 

Sec. 21.602.  AFFILIATED SHAREHOLDER.  (a)  Defines an "affiliated
shareholder" for purposes of this subchapter. 

Sec. 21.603.  BENEFICIAL OWNER OF SHARES OR SIMILAR SECURITIES.  Defines an
"beneficial owner of shares or similar securities" for purposes of this
section. 

Sec. 21.604.  BUSINESS COMBINATION.  Sets forth the activities the results
of which constitute a business combination. 

Sec. 21.605.  CONTROL.  Establishes the definition of "control of another
person." 

Sec. 21.606.  THREE-YEAR MORATORIUM ON CERTAIN BUSINESS COMBINATIONS.
Establishes a three-year moratorium on business combinations between an
issuing public corporation and an affiliated shareholder unless the
combination is approved by the board of directors of the issuing public
corporation before the affiliated shareholder's acquisition date or by
two-thirds of the shareholders of the issuing public corporation not less
than six months after the acquisition date. 

Sec. 21.607.  APPLICATION OF MORATORIUM.  Sets forth the circumstances
under which the three-year moratorium imposed by Section 21.606 is
inapplicable. 

Sec. 21.608.  EFFECT ON OTHER ACTIONS.  Provides that Subchapter M does not
affect the validity of or prevent any action other than  a business
combination and that the board of directors does not have any liability
based on whether an election is made or not made under Subchapter M. 

Sec. 21.609.  CONFLICTING PROVISIONS.  Provides that Subchapter M controls
over any conflicting provision elsewhere in this code. 

SUBCHAPTER N.  PROVISIONS RELATING TO INVESTMENT COMPANIES

Sec. 21.651.  DEFINITION.  Defines "investment company."


Sec. 21.652.  ESTABLISHING CLASS OR SERIES OF SHARES; CHANGE IN NUMBER OF
SHARES.  Authorizes the board of directors of an investment company to take
certain actions with respect to creating classes and series of shares and
increasing and decreasing the number of shares within a class or series
that are in addition to those permitted elsewhere in this code.  Sets forth
procedures and requirements for doing so. 

Sec. 21.653.  REQUIRED STATEMENT RELATING TO SHARES.  Requires the
investment company to file a statement concerning a modification of any
class or series of shares by the board of directors of an investment
company.  Sets forth the information the statement must contain. 

Sec. 21.654.  TERM OF OFFICE OF DIRECTORS.  Requires the director of an
investment company to serve the term for which the director is elected
until a successor is elected and qualified. 
 
Sec. 21.655.  MEETINGS OF SHAREHOLDERS.  Provides that, if provided in the
certificate of formation or bylaws, an investment company is not required
to hold annual meetings of shareholders or elect directors in a year in
which an election is not required by the Investment Company Act. 

SUBCHAPTER O. CLOSE CORPORATION

Sec. 21.701.  DEFINITIONS.  Defines "close corporation," "close corporation
provision," "ordinary corporation," and "shareholders' agreement." 

Sec. 21.702.  APPLICABILITY OF SUBCHAPTER.  Provides that Subchapter O
applies only to close corporations and that the remaining provisions of
this chapter apply to close corporations to the extent not inconsistent
with Subchapter O. 

Sec. 21.703.  FORMATION OF CLOSE CORPORATIONS.  Requires that a close
corporation be formed in accordance with Chapter 3 and Sections 21.051 and
21.704. 

Sec. 21.704.  SUPPLEMENTAL PROVISION FOR CERTIFICATE OF FORMATION. Provides
that, in addition to other provisions required or permitted in a close
corporation's certificate of formation, its original, amended, or restated
certificate of formation must contain the words "This corporation is a
close corporation."  

Sec. 21.705.  ADOPTION OF AMENDMENT FOR CLOSE CORPORATION STATUS.
Authorizes an ordinary corporation to become a close corporation and
provides that  an amendment adopting close corporation status must be
approved by all of the shareholders. 

Sec. 21.706.  ADOPTION OF CLOSE CORPORATION STATUS THROUGH MERGER,
EXCHANGE, OR CONVERSION.  Authorizes a surviving or new corporation
resulting from a merger or conversion, or a corporation that acquires a
corporation in an interest exchange, to become a close corporation if the
certificate of formation conforms with Section 21.704.  Provides that a
plan of merger, exchange, or conversion adopting close corporation status
to be approved by the holders of all outstanding ownership or membership
interests. 

Sec. 21.707.  EXISTING CLOSE CORPORATION.  Makes this section applicable to
an existing corporation that elected to become a close corporation before
the effective date of this code, and provides that the existing agreement
among the shareholders is considered to be a shareholders' agreement.
Provides that any share certificate representing shares of the close
corporation issued or delivered after the effective date of this code must
conform with Section 21.732.   

Sec. 21.708.  TERMINATION OF CLOSE CORPORATION STATUS.  Authorizes a close
corporation to terminate its status by filing a statement of termination,
amending the certificate of formation to delete the statement that it is a
close corporation, engaging in a merger, interest exchange, or conversion
unless the plan provides that the surviving or new corporation will
continue as or become a close corporation, or instituting a judicial
proceeding to enforce a provision providing for termination. 

Sec. 21.709.  STATEMENT TERMINATING CLOSE CORPORATION STATUS; FILING;
NOTICE.  Provides that a time or event specified in a close corporation
provision requiring termination of close corporation status will have the
effect of terminating that status. Provides that after the time or
occurrence of the event, a statement of termination of close corporation
status must be signed by an officer on behalf of the close corporation and
filed with the secretary of state.  Sets forth the information which a
statement terminating close corporation status must contain.  Requires the
corporation to deliver or mail a copy of the statement to each shareholder. 

Sec. 21.710.  EFFECT OF TERMINATION OF CLOSE CORPORATION STATUS.  Sets
forth the effects of termination of close corporation status on the
corporation. 
 
Sec. 21.711.  SHAREHOLDERS' MEETING TO ELECT DIRECTORS.  Requires a
shareholders' meeting to be called promptly after termination of a close
corporation status for the purpose of electing directors. 

Sec. 21.712.  TERM OF OFFICE OF DIRECTORS.  Requires a director succeeding
to the management of the corporation to have a term of office as set forth
in Section 21.408. Requires the shareholders to act as directors until
directors are elected. 

Sec. 21.713.  MANAGEMENT.  Requires a close corporation to be managed by a
board of directors in the same manner an ordinary corporation would be
managed or in the manner provided by the close corporation's certificate of
formation or by a shareholders' agreement of the close corporation. 

Sec. 21.714.  SHAREHOLDERS' AGREEMENT.  Authorizes the shareholders to
enter into one or more shareholders' agreements, which may regulate certain
affairs of a close corporation or the relationships among the shareholders. 

Sec. 21.715.  EXECUTION OF SHAREHOLDERS' AGREEMENT.  Requires a
shareholders' agreement to be executed by each shareholder at the time of
execution, whether or not the shareholder has voting power, in an existing
close or ordinary corporation, and by each subscriber to the corporation's
shares in a close corporation that is being formed. 

Sec. 21.716.  ADOPTION OF AMENDMENT OF SHAREHOLDERS' AGREEMENT. Authorizes
the adoption of an amendment to the shareholders' agreement of a close
corporation only by the written consent of each person who would be
required to execute the shareholders' agreement if it were being executed
originally at the time of adoption of the amendment, whether or not the
person has voting power in the close corporation. 

Sec. 21.717.  DELIVERY OF SHAREHOLDERS' AGREEMENT.  Requires the close
corporation to deliver a complete copy of a shareholders' agreement to
certain affected persons and provides that failure to deliver the agreement
does not invalidate the shareholders' agreement. 

Sec. 21.718.  STATEMENT OF OPERATION AS CLOSE CORPORATION.  Requires a
close corporation that conducts its business and affairs under a
shareholders' agreement to file a statement of operation with the secretary
of state.  Sets forth the information which the statement must contain.
Requires the statement to be executed by an officer on behalf of the
corporation.  Provides that the fact that the close corporation conducts
its business and affairs under a shareholders' agreement becomes a matter
of public record on the filing of the statement. 

Sec. 21.719.  VALIDITY AND ENFORCEABILITY OF SHAREHOLDERS' AGREEMENT.
Provides that a shareholders' agreement is enforceable and valid despite
the fact that it eliminates the board of directors, imposes restrictions on
the authority of the board of directors, or treats the affairs of the close
corporation as if it were a partnership. Authorizes a close corporation,
any of its shareholders, or any party to a shareholders' agreement to seek
to enforce the shareholders' agreement.   

Sec. 21.720.  PERSONS BOUND BY SHAREHOLDERS' AGREEMENT.  Provides that a
shareholders' agreement that is executed as provided in Section 21.715 is
binding on all shareholders and assignees of shares, regardless of whether
such shareholder or assignee had knowledge of the shareholders' agreement. 


Sec. 21.721.  DELIVERY OF COPY OF SHAREHOLDERS' AGREEMENT TO TRANSFEREE.
Requires a shareholder of a close corporation to deliver a copy of the
shareholders' agreement before making a transfer of shares but makes clear
that the failure to do so does not invalidate the enforceability of the
shareholders' agreement. 

 Sec. 21.722.  EFFECT OF REQUIRED STATEMENT ON SHARE CERTIFICATE AND
DELIVERY OF SHAREHOLDERS' AGREEMENT.  Provides that each holder of or other
person claiming an interest in shares of a close corporation is presumed to
have knowledge of a close corporation provision that exists at the time of
transfer if a certificate representing those shares contains the statement
required by Section 21.732 and the shareholders' agreement was delivered as
required by Section 21.717. 

Sec. 21.723.  PARTY NOT BOUND BY SHAREHOLDERS' AGREEMENT ON CESSATION;
LIABILITY.  Provides that a person ceases to be a party to and bound by a
shareholders agreement when the person ceases to be a shareholder unless
the person's attempted cessation was in violation of Section 21.721 of the
shareholders' agreement or the shareholders' agreement provides to the
contrary.  Provides that cessation as a party to the agreement or as a
shareholder does not relieve a person of the liability the person may have
incurred for breach of the shareholders' agreement. 

Sec. 21.724.  TERMINATION OF SHAREHOLDERS' AGREEMENT.  Provides that a
shareholders' agreement terminates when the close corporation terminates
its status as a close corporation.  Provides that all or part of the
agreement is valid and enforceable to the extent permitted for an ordinary
corporation by this chapter or other law if provided by the shareholders'
agreement. 

Sec. 21.725.  CONSEQUENCES OF MANAGEMENT BY PERSONS OTHER THAN BOARD OF
DIRECTORS.  Makes Sections 21.726-21.729 applicable only to close
corporations that are not managed solely by the board of directors but are
instead at least partly managed by shareholders or other persons.  

Sec. 21.726.  SHAREHOLDERS CONSIDERED DIRECTORS.  Provides that
shareholders of a corporation described by Section 21.725 are considered to
be directors for purposes of applying a provision of this chapter, other
than a provision relating to the election and removal of directors.
Provides that a requirement that an instrument filed with a governmental
agency contain a statement that a specified action has been taken by the
board of directors is satisfied by a statement that the corporation is a
close corporation with no board of directors and the action was approved by
the shareholders or the person empowered to manage the business and affairs
under an agreement. 

Sec. 21.727.  LIABILITY OF SHAREHOLDERS.  Provides that the shareholders of
a corporation described by Section 21.725 are subject to any liability
imposed on a director of a corporation, in connection with the exercise of
managerial acts or omissions by the shareholders or other persons who
manage the close corporation. 

Sec. 21.728.  MODE AND EFFECT OF TAKING ACTION BY SHAREHOLDERS AND OTHERS.
Provides that actions normally taken by the board of directors of a
corporation may or shall be taken by the shareholders of a corporation
described in Sec. 21.725 at a meeting or without a meeting as permitted by
the shareholders's agreement, Subchapter O, or Chapter 21.   Provides that
an action is binding on a close corporation if the action is taken after a
majority vote or unanimous consent. 

Sec. 21.729.  LIMITATION OF SHAREHOLDER'S LIABILITY.  Provides that a
shareholder of a close corporation described by Section 21.725 is not
liable with respect to any matter approved by the shareholders or other
persons who manage the corporation pursuant to the shareholders' agreement
if the shareholder did not have the right to vote on the matter or
dissented from and did not vote for such matter. 

Sec. 21.730.  LACK OF FORMALITIES; TREATMENT AS PARTNERSHIP.  Prohibits the
fact that a close corporation fails to follow the normal formalities
observed by most corporations from being used to impose personal liability
on the shareholders, invalidate the shareholders' agreement, or affect the
status of the close corporation as a corporation.  

Sec. 21.731.  OTHER AGREEMENTS AMONG SHAREHOLDERS PERMITTED.  Provides that
Sections 21.713-21.730 do not prohibit or impair any other agreement
between shareholders of an ordinary corporation permitted by law. 

Sec. 21.732.  CLOSE CORPORATION SHARE CERTIFICATES.  Sets forth
supplemental information which must be included on certificates that
represent shares of a close corporation and provides that the failure to
include such information does not affect the close corporation's status as
such. 

Sec. 21.733.  BYLAWS OF CLOSE CORPORATION.  Provides that a close
corporation does not need to adopt bylaws if provisions required by law to
be contained in the bylaws are contained in the certificate of formation or
a shareholders' agreement.  Requires a close corporation that does not have
bylaws when it terminates its status as a close corporation to immediately
adopt bylaws. 

SUBCHAPTER P.  JUDICIAL PROCEEDINGS RELATING TO CLOSE CORPORATION

Sec. 21.751.   DEFINITIONS.  Defines "court," "custodian," "provisional
director," and "shareholder." 

Sec. 21.752.   PROCEEDINGS AUTHORIZED.  Authorizes a close corporation to
institute a proceeding intended to enforce a close corporation provision,
appoint a provisional director, or appoint a custodian for the corporation,
in addition to any other judicial proceedings that may be brought by a
corporation. 

Sec. 21.753.  NOTICE; INTERVENTION.  Requires that notice of the
institution of a proceeding be give to the close corporation, if the
corporation is not a plaintiff, and to each shareholder who is not a
plaintiff in the manner prescribed by law and consistent with due process
of law as directed by the court.  Authorizes the close corporation or a
shareholder of the close corporation to intervene in the proceeding. 

Sec. 21.754.  PROCEEDING NONEXCLUSIVE.  Provides that the right of a close
corporation or a shareholder thereof to institute a judicial proceeding is
in addition to any other lawful right or remedy available to the plaintiff. 

Sec. 21.755.  UNAVAILABILITY OF JUDICIAL PROCEEDING.  Prohibits a
shareholder of a close corporation from instituting a judicial proceeding
before exhausting any non-judicial remedy set forth in a close corporation
provision regarding dispute resolution unless irreparable harm will result
before a non-judicial remedy is exhausted. Prohibits a shareholder of a
close corporation from instituting a proceeding seeking damages or other
monetary relief if the shareholder is entitled to dissent and receive the
fair value of the shares under this code or a shareholders' agreement. 

Sec. 21.756.  JUDICIAL PROCEEDING TO ENFORCE CLOSE CORPORATION PROVISION.
Requires a court to enforce a provision of a close corporation provision
without regard to whether there is an adequate remedy at law.   Authorizes
the court to enforce the provision by any fair and equitable means,
including damages, specific performance, the appointment of a provisional
director, custodian, or receiver, the liquidation of the assets of the
corporation, and the termination of close corporation status. Prohibits the
court from ordering termination of close corporation status unless no other
remedy at law is adequate and the size, nature of the business, or number
of or relationship between the shareholders is such as to make the
continuation of close corporation status wholly impractical. 

Sec. 21.757.  LIQUIDATION; INVOLUNTARY WINDING UP AND TERMINATION;
RECEIVERSHIP.  Prohibits a court from ordering liquidation, involuntary
termination, or receivership when a shareholder is entitled to wind up and
terminate a close corporation under a shareholders' agreement, unless no
other remedy at law is adequate. 

 Sec. 21.758.  APPOINTMENT OF PROVISIONAL DIRECTOR.  Requires a court to
appoint a provisional director for the corporation upon presentation of
proof that the persons empowered to manage the corporation are so divided,
with respect to the management of the business and affairs of the
corporation, that the business and affairs are not being conducted in a
manner that is to the general advantage of the shareholders.  Requires the
provisional director to be an impartial person and authorizes the court to
determine any further qualifications.   Requires the provisional director
to serve until removed by court order or by a vote of the requisite
majority of directors or shareholders as provided in the relevant close
corporation provisions. 

Sec. 21.759. RIGHTS AND POWERS OF PROVISIONAL DIRECTOR.  Provides that a
provisional director has all the rights and powers of a duly elected
director or a shareholder, if the shareholders have been empowered to
manage the business under a shareholders' agreement. 

Sec. 21.760.  COMPENSATION OF PROVISIONAL DIRECTOR.  Requires that the
compensation of a provisional  director be determined by agreement between
the director and the close corporation. Authorizes the court to set the
compensation in the absence of agreement or in the case of a disagreement
between the director and the corporation. 

Sec. 21.761.  APPOINTMENT OF CUSTODIAN.  Requires the court to appoint a
custodian for the corporation upon presentation of proof that the
shareholders are so divided as not to be able to elect successor directors
to replace those whose terms have expired or would have expired upon
qualification of a successor, that the business of the corporation is so
divided with respect to their views on the management of the business and
affairs of the corporation that the votes or consents required to take
action on behalf of the corporation cannot be obtained and any deadlock
remedy provision has failed, or that the plaintiff or intervenor has the
right to wind up and terminate the corporation under a shareholders'
agreement. Provides that the custodian must comply with the qualifications
required to serve as a receiver under Section 11.406. 

Sec. 21.762.  POWERS AND DUTIES OF CUSTODIAN.  Provides that a custodian
has the same powers and duties as granted to a receiver appointed under
Sections 11.404-11.406 of this code.  Requires the custodian to continue
the business of the corporation and prohibits the custodian to liquidate
the corporation except as provided by court order or Section 21.761(a)(3). 

Sec. 21.763.  TERMINATION OF CUSTODIANSHIP.  Requires that the
custodianship be immediately terminated and management of the corporation
be returned to the shareholders, directors, or other persons empowered to
manage the corporation's business, as appropriate, if the condition
requiring the appointment of the custodian is remedied through means other
than winding up and termination. 

SUBCHAPTER Q.  MISCELLANEOUS PROVISIONS

Sec. 21.801.  SHARES AND OTHER SECURITIES ARE PERSONAL PROPERTY. Provides
that shares and other securities of a corporation are personal property,
except as otherwise provided by this code. 

Sec. 21.802.  DELINQUENT TAX.  Prohibits a corporation that is delinquent
in the payment of any tax owed under Chapter 171, Tax Code, from being
awarded a contract by the state or granted a license or permit by the
state. 

Sec. 21.803.  SUPPLEMENTAL INFORMATION FOR APPLICATION FOR REGISTRATION BY
FOREIGN CORPORATIONS.   Set forth the information which must be stated in a
foreign corporation's application for registration to be filed with the
secretary of state in addition to the information required by Section
9.004. 

CHAPTER 22.  NONPROFIT CORPORATIONS
 
SUBCHAPTER A.  GENERAL PROVISIONS

Sec. 22.001.  DEFINITIONS.  Defines "board of directors," "bylaws,"
"corporation," "foreign corporation," "nonprofit corporation," and
"ordinary care." 


Sec. 22.002.  APPLICABILITY TO CERTAIN INSURANCE ASSOCIATIONS AND
COMPANIES.  Makes this chapter applicable to a local mutual aid
association, statewide mutual assessment company, burial association, and
county mutual insurance company, to the extent consistent with the
Insurance Code, with certain exceptions. 

SUBCHAPTER B.  PURPOSES AND POWERS

Sec. 22.051.  GENERAL PURPOSES.  Authorizes a nonprofit corporation to be
formed for any lawful purpose. 

Sec. 22.052.  ORGANIZED LABOR.  Authorizes a nonprofit corporation to be
formed to organize laborers, workers, or wage earners. 

Sec. 22.053.  DENTAL HEALTH SERVICE CORPORATION.  Authorizes a charitable
corporation to be formed to operate a dental health service corporation.
Sets forth the information which must be attached as an exhibit to an
application for a charter under this section.  Provides that a dental
health service corporation must have a certain number of licensed dentists
as directors.  Requires a dental health service corporation to maintain at
least 30 percent of the dentists engaged in the practice of dentistry in
this state as participating or contracting dentists.  Requires the
corporation to file the names and addresses of each participating or
contracting dentist annually in September with the State Board of Dental
Examiners.  Prohibits a dental health service corporation from  engaging in
certain activities.  Authorizes a dental health service corporation to
provide a description of the service provided to determine benefits or
provide proof of treatment.  Authorizes a corporation to request but not
require diagnostic aids used in the course of treatment. 

Sec. 22.054.  PROHIBITED ACTIVITIES.  Prohibits a corporation from being
organized or registered under this chapter to engage in or operate as a
group hospital service, rural credit union, agricultural and livestock
pool, mutual loan corporation, co-operative credit association, farmers'
co-operative society, co-operative marketing corporation, rural electric
co-operative corporation, telephone co-operative corporation, fraternal
organization under the lodge system, and water supply corporations. 

Sec. 22.055.  DIVIDENDS PROHIBITED.  Prohibits a corporation created under
this chapter from paying dividends or distributing income to its members,
directors, or officers. 

Sec. 22.056.  AUTHORIZED BENEFITS AND DISTRIBUTIONS.  Authorizes a
corporation to pay reasonable compensation for services rendered, confer
benefits upon its members in conformity with its purposes, and make
distributions to members as permitted under this chapter upon winding up
and termination. 

Sec. 22.057.  POWER TO ASSIST EMPLOYEE OR OFFICER.  Prohibits a corporation
from making loans to its directors and restricts the authority of the
corporation to make loans to officers to specified circumstances and
amounts. 

Sec. 22.058.  POWER OF CERTAIN CORPORATIONS TO SERVE AS TRUSTEE. Authorizes
the corporation described Section 501(c) or(3)170(c), Internal Revenue
Code, in limited circumstances, to serve as the trustee of a trust of which
the corporation is a beneficiary, or which benefits another similar
organization. 

Sec. 22.059.  STANDARD TAX PROVISIONS FOR CERTAIN CHARITABLE CORPORATIONS;
POWER TO EXCLUDE.  Provides that the certificate of formation of each
corporation that is a private foundation is considered to contain certain
language  regarding distributions, self-dealing, excess business holdings
and investments in accordance with the Internal Revenue Code unless the
certificate is amended to exclude the language. 

SUBCHAPTER C.  FORMATION AND GOVERNING DOCUMENTS

Sec. 22.101.  INCORPORATION OF CERTAIN ORGANIZATIONS.  Authorizes a
religious society, a charitable, benevolent, literary, or social
association, or a church to incorporate with the consent of a majority of
its members. 

Sec. 22.102.  SUPPLEMENTAL PROVISIONS REQUIRED IN CERTIFICATE OF FORMATION.
Sets forth the information which must be included in a certification of
incorporation, in addition to the information required by Section 3.005. 

Sec. 22.103.  BYLAWS.  Requires the corporation's board of directors, or
members if the corporation is member-managed, to adopt bylaws for the
regulation of management of the affairs of the corporation not inconsistent
with law of the certificate of formation. Authorizes the board of directors
to amend or repeal they bylaws unless the certificate of formation or this
chapter reserves the power to the members, management is vested in the
members, or the bylaws expressly provide that the directors may not amend
or repeal the bylaws. 

Sec. 22.104.  INCONSISTENCY BETWEEN CERTIFICATE OF FORMATION AND BYLAW.
Provides that a provision of a certificate of formation of a corporation
that is inconsistent with a bylaw controls over the bylaw, except for a
change in the number of directors, unless the certificate of formation
provides that such a change may be made only by amendment to the
certificate. 

Sec. 22.105.  ORGANIZATION MEETING.  Requires the incorporators or
directors to call and send notice of an organizational meeting of the board
of directors for the purpose of adopting bylaws, electing officers, and
such other purposes as may come before the meeting by the third day before
the date of the meeting.  Requires the incorporators to call and send
notice of an organizational meeting of the members if the corporation is
member-managed by the third day before the date of the meeting. 

Sec. 22.106.  RESTATED CERTIFICATE OF FORMATION FOR CERTAIN CHURCHES.
Provides that any restated certificate of formation for a church with
management of the church vested in the membership must include that
information regardless of whether it was required to be included in
original certificate of formation. 

Sec. 22.107.  PROCEDURES TO ADOPT AMENDMENT TO CERTIFICATE OF FORMATION BY
MEMBERS HAVING VOTING RIGHTS.  Sets forth the procedure for amending the
certificate of formation when there are members having voting rights. 

Sec. 22.108.  PROCEDURES TO ADOPT AMENDMENT TO CERTIFICATE OF FORMATION BY
MANAGING MEMBERS.  Sets forth the procedure for amendment when the
management of the affairs of the corporation is vested in the corporation's
members under Section 22.202.   

Sec. 22.109.  PROCEDURES TO ADOPT AMENDMENT TO CERTIFICATE OF FORMATION BY
BOARD OF DIRECTORS.  Sets forth the procedure for amendment by the board of
directors when the corporation has no members or no members having voting
rights, or for limited purposes without membership approval.  Sets forth
the types of amendments which may be made. 

Sec. 22.110.  NUMBER OF AMENDMENTS SUBJECT TO VOTE AT MEETING. Authorizes
any number of amendments to the corporation's certificate of formation to
be submitted to and voted on by a corporation's members at any one meeting
of the members. 

SUBCHAPTER D.  MEMBERS
 
Sec. 22.151.  MEMBERS.  Authorizes a nonprofit corporation to have one or
more classes of members or no members.  Provides that such designation of
classes must be included in the certificate of formation or bylaws.
Authorizes a nonprofit corporation to issue instruments evidencing
membership, voting or ownership rights. 

Sec. 22.152.  IMMUNITY FROM LIABILITY.  Provides that the members are not
personally liable for the debts, liabilities, or obligations of the
corporation. 

Sec. 22.153.  ANNUAL MEETING.  Requires a corporation to have an annual
meeting of the members as fixed in the bylaws unless the bylaws require
more than one regular meeting of members each year. 


Sec. 22.154.  FAILURE TO CALL ANNUAL MEETING.  Authorizes a member to
demand the corporation to hold an annual meeting, and authorizes legal
action to compel the holding of such annual meeting.  Provides that the
failure to hold an annual meeting does not result in a winding up and
termination of the corporation. 

Sec. 22.155.  SPECIAL MEETINGS OF MEMBERS.  Authorizes special meetings of
the corporation to be called by the president, board of directors, by
members having not less than one-tenth of the voting rights, and other
officers or persons as authorized in the certificate of formation or
bylaws. 

Sec. 22.156.  NOTICE OF MEETING.  Requires a corporation, other than a
church, to provide written or printed notice of a meeting to each member
entitled to vote stating the time and place of the meeting, and in the case
of a special meeting, the purpose of the meeting.  Provides that notice of
members of a church is considered sufficient if announced at a regularly
scheduled worship service or as otherwise provided in the certificate of
formation or bylaws. 

Sec. 22.157.  SPECIAL BYLAWS AFFECTING NOTICE.  Authorizes a corporation to
adopt a bylaw that provides that notice of an annual or regular meeting is
not required. Authorizes a corporation with more than 1,000 members, if
permitted by the bylaws, to provide notice of the meeting through
publication.  

Sec. 22.158.  PREPARATION AND INSPECTION OF LIST OF VOTING MEMBERS.
Requires a corporation, after fixing a record date for a meeting, to
prepare a list of voting members identifying those members entitled to
notice and those members not entitled to notice of the meeting.  Provides
that the list must be available for inspection and copying by any member
entitled to vote not later than two business days after notice is given,
and must also be available at the meeting. 

Sec. 22.159.  QUORUM OF MEMBERS.  Provides that, unless otherwise provided
in the certificate of formation or bylaws, members holding one-tenth of the
votes constitute a quorum.  Provides that a vote of the majority of the
votes entitled to be cast is an act of the members unless a greater vote is
required by law, the certificate of formation, or the bylaws. Provides
that, in the case of a church formed prior to May 12, 1959, the members
present at a meeting shall constitute a quorum. 

Sec. 22.160.  VOTING OF MEMBERS.  Entitles each member to one vote except
to the extent that voting rights are limited, denied, or enlarged by the
certificate of formation or bylaws.  Authorizes members to vote by proxy
unless the certificate of formation or bylaws otherwise provide.  Provides
that a proxy is revocable and expires 11 month after the date of its
execution.  Prohibits a proxy from being irrevocable for longer than 11
months. 

Sec. 22.161.  ELECTION OF OFFICERS OR DIRECTORS.  Sets forth procedures for
electing directors and officers of the corporation. 

Sec. 22.162.  GREATER VOTING REQUIREMENTS UNDER CERTIFICATE OF  FORMATION.
Provides that, if  a greater voting requirement for actions of members is
required in the corporation's certificate of formation than is required by
this chapter with respect to an action to be taken by the members, the
certificate of formation controls. 

Sec. 22.163.  RECORD DATE FOR DETERMINATION OF MEMBERS.  Sets forth the
procedures for fixing the record date for determining members entitled to
vote at a meeting. 

SUBCHAPTER E.  MANAGEMENT

Sec. 22.201.  MANAGEMENT BY BOARD OF DIRECTORS.  Provides that the affairs
of a corporation are managed by a board of directors and authorizes the
board to be designated by any name, except as provided by Section 22.202. 

Sec. 22.202.  MANAGEMENT BY MEMBERS.  Authorizes a corporation to vest
management in its members.  Authorizes the certificate of formation or
bylaws to limit the authority of the board.  Provides that a corporation is
considered to have vested management in its board of directors in the
absence of a provision in the certificate of formation, unless the
corporation is a church operating under a congregational system
incorporated before January 1, 1994, and is member-managed. 

Sec. 22.203.  BOARD MEMBER ELIGIBILITY REQUIREMENTS.  Provides that a
director is not required to be a resident of this state or a member of the
corporation unless the certificate or bylaws of the corporation imposes
that requirement.  Authorizes the certificate or bylaws to prescribe other
qualifications for directors. 

Sec. 22.204.  NUMBER OF DIRECTORS.  Prohibits a corporation from having
less than three directors if the corporation has a board of directors.
Requires the number of directors to be set and otherwise fixed in the
manner provided in the certificate of formation or bylaws. Provides that
the number of the initial board of directors be set by the certificate of
formation.  Authorizes the number of directors to be increased or decreased
by amendment to the certificate of formation or bylaws. 

 Sec. 22.205.  DESIGNATION OF INITIAL BOARD OF DIRECTORS.  Provides that
the certificate of formation must name the initial directors if the
corporation is to be managed by a board of directors. 

Sec. 22.206.  ELECTION OR APPOINTMENT OF BOARD OF DIRECTORS.  Provides that
directors, other than the initial directors, are elected, appointed, or
designated in the manner and for the terms specified in the certificate of
formation or bylaws.  

Sec. 22.207.  ELECTION AND CONTROL BY CERTAIN ENTITIES.  Authorizes the
board of directors of a religious, charitable, educational, or eleemosynary
corporation to be affiliated with, elected, and controlled by an
incorporated or unincorporated convention, conference, or association
organized under the law of this or another state.  Authorizes the board of
directors of a corporation to be wholly or partly elected by one or more
association or corporations organized under the law of this or another
state if the certificate of formation or bylaws of the corporation provide
for that election and the corporation has no members with voting rights. 

Sec. 22.208.  TERM OF OFFICE.  Provides that the term of the initial
directors is until the first annual election of directors or for the period
specified in the certificate of formation or bylaws.  Provides that other
directors hold office for the term provided in the certificate of formation
or bylaws.  Provides that a director holds office until a successor is
elected, appointed, or designated and qualified, unless otherwise provided. 

Sec. 22.209.  CLASSIFICATION OF DIRECTORS.  Authorizes a corporation to
divide directors into classes.  Provides that the terms of office of each
class are not required to be uniform. 

 Sec. 22.210.  EX OFFICIO MEMBER OF BOARD.  Authorizes a corporation to
have ex officio members of the board.  Entitles such members to notice of
board meetings and to attend meetings but not to have voting rights unless
entitled under the certificate of formation or bylaws.  Provides that, if
the member does not have voting rights, the member does not have the duties
or liabilities of a director. 

Sec. 22.211.  REMOVAL OF DIRECTOR.  Authorizes a corporation to remove an
director from office in the manner provided in the certificate of formation
or bylaws.  Provides that, in the absence of a provision for removal, a
director may be removed from office, with or without cause, by the persons
entitled to elect, designate, or appoint the director. 

Sec. 22.212.  VACANCY.  Requires a corporation to fill a vacancy in the
board of directors by affirmative vote of a majority of the remaining
directors.  Authorizes a directorship created by reason of an increase in
the number of directors to be filled at an election at an annual or special
meeting of the members, or, if no members have voting rights, in the manner
provided in the certificate of formation or bylaws. 

Sec. 22.213.  QUORUM.  Provides that a quorum of directors is a majority of
the directors fixed by the bylaws, stated in the certificate of formation,
or three, whichever is less. Prohibits directors present by proxy from
being counted toward a quorum. 

Sec. 22.214.  ACTION BY DIRECTORS.  Provides that the act of the majority
of the directors at a meeting at which a quorum is present is the act of
the board of directors unless the certificate of formation requires the
vote or concurrence of a greater number. 

Sec. 22.215.  VOTING IN PERSON OR BY PROXY.  Authorizes a director to vote
by proxy if authorized in the certificate of formation or bylaws and the
proxy is executed in writing. 

Sec. 22.216.  TERM AND REVOCABILITY OF PROXY.  Provides that a proxy
expires three months after the date the proxy is signed and is revocable
unless otherwise provided by the proxy or made irrevocable by law. 

Sec. 22.217.  VOTING REQUIREMENTS UNDER CERTIFICATE OF FORMATION. Provides
that if the certificate of formation requires the vote or concurrence of a
greater proportion of directors than is required by this chapter, the
certificate of formation controls. 

Sec. 22.218.  NOTICE OF MEETING; WAIVER OF NOTICE.  Sets forth the
requirements for notice for a directors' meeting. 

Sec. 22.219.  MANAGEMENT COMMITTEE.  Authorizes a corporation by resolution
of the board of directors to designate one or more committees consisting of
at least two members to have and exercise the authority of the board of
directors in the management of the corporation.  Provides that the majority
of the persons on the committee must be directors.  Provides that
designation of a committee does not relieve the board or an individual
member of the board from any responsibility imposed by law.  Provides that
a committee member who is not a director has the same responsibility with
respect to the committee as a member who is also a director. 

Sec. 22.220.  OTHER COMMITTEES.  Authorizes the establishment of committees
for purposes other than exercising the authority of the board of directors.
Provides that committee membership may be limited to directors. 

Sec. 22.221.  ACTION WITHOUT MEETING OF DIRECTORS OR COMMITTEE. Authorizes
action by directors or committees without a meeting if consent is signed by
a sufficient number of directors or committee members as would be necessary
to take action at a meeting and meets other requirements for consent. 

Sec. 22.222.  GENERAL STANDARDS FOR DIRECTORS.  Requires a director to
discharge the director's duties in good faith, with ordinary care, and in a
manner that the director reasonably believes to be in the best interest of
the corporation, and puts the burden of proof on any person seeking to
establish otherwise. 

Sec. 22.223.  DIRECTOR'S GOOD FAITH RELIANCE ON CERTAIN INFORMATION.
Authorizes a director of a religious corporation to rely in good faith on
information presented by a religious authority, or a minister, priest,
rabbi or other person whose position or duties in the corporation justifies
reliance or confidence. 

Sec. 22.224.  ROLE AS TRUSTEE.  Provides that a director does not have the
duties of a trustee of a trust with respect to the corporation or property
held or administered by the corporation. 

Sec. 22.225.  DELEGATION OF INVESTMENT AUTHORITY.  Authorizes the directors
to delegate investment authority. 

Sec. 22.226.  LOAN TO DIRECTOR PROHIBITED.  Prohibits a corporation from
making a loan to a director and provides that a director or officer who
participates in making the loan is jointly and severally liable to the
corporation for the amount of the loan until the loan is repaid. 

Sec. 22.227.  DIRECTOR LIABILITY FOR CERTAIN DISTRIBUTIONS OF ASSETS.
Provides that the directors who vote for or assent to a distribution of
assets other than in payment of the corporation's debts in certain
circumstances are jointly and severally liable to the corporation for the
value of the assets distributed, to the extent that the debt, obligation,
or liability is not paid and discharged.  Provides that the director is not
liable if the director relied in good faith and with ordinary care on
information under Section 3.101 of this code. 

Sec. 22.228.  DISSENT TO ACTION.  Provides that a director who is present
at a meeting is assumed to have assented to the action unless the
director's dissent is entered in the minutes, the director files a written
dissent with the secretary at the meeting, or sends the dissent to the
secretary immediately following the meeting. 

Sec. 22.229.  RELIANCE ON WRITTEN OPINION OF ATTORNEY.  Provides that a
director is not liable under Section 22.225 or 22.226 if, in the exercise
of ordinary care, the director acted in good faith and in reliance on the
written opinion of an attorney. 

Sec. 22.230.  RIGHT TO CONTRIBUTION.  Entitles a director to seek
contributions if held liable on a claim from those persons who accepted or
received the distribution knowing the distribution to have been made in
violation of Section 22.225 or 22.226. 

Sec. 22.231.  CONTRACTS OR TRANSACTIONS INVOLVING INTERESTED DIRECTORS,
OFFICERS, AND MEMBERS.  Makes this section applicable to contracts or
transactions between a corporation and a director, officer, or member of
the corporation, as well as between an organization in which a director,
officer, or member of the corporation is also a director, officer, or
member of the organization or has a financial interest in the organization.
Provides that an otherwise valid contract or transaction between a
corporation and an interested party is valid if certain disclosure and
approval procedures are followed. 

Sec. 22.232.  OFFICERS.  Requires that the officers of a corporation
consist of a president and secretary and such other officers as deemed
necessary by the directors, or prescribed in the certificate of formation
or bylaws.  Prohibits the offices of president and secretary from being
held by the same person and authorizes a properly designated committee to
perform the functions of an officer. 

Sec. 22.233.  ELECTION OF APPOINTMENT OF OFFICERS.  Requires the officers
of a corporation to be elected or appointed in the manner and for the terms
prescribed by the certificate of formation or bylaws.  Prohibits the term
of an officer from exceeding three  years.  Provides that  the officers are
elected or appointed by the board of directors, or the members if
management is vested in the members, in the absence of a provision to the
contrary in the certificate or bylaws. 

Sec. 22.234.  APPLICATION TO CHURCH.  Provides that a church is not
required to have officers as provided by this subchapter and authorizes the
duties and responsibilities of the officers to be vested in the board of
directors or other designated body in the manner provided in the
certificate of formation or bylaws. 

Sec. 22.235.  OFFICER'S GOOD FAITH RELIANCE ON CERTAIN INFORMATION.
Authorizes an officer of a religious corporation to rely in good faith on
information presented by a religious authority, or a minister, priest,
rabbi, or other person whose position or duties in the corporation
justifies reliance or confidence. 

SUBCHAPTER F.  FUNDAMENTAL BUSINESS TRANSACTIONS

Sec. 22.251.  APPROVAL OF MERGER BY MEMBERS HAVING VOTING RIGHTS. Provides
that a plan of merger, after approval of a resolution to merge by the board
of directors, must be adopted at a meeting of members having voting rights
and receive at least two-thirds of the votes of the members present in
person or by proxy at the meeting. 

Sec. 22.252.  APPROVAL OF MERGER BY MANAGING MEMBERS.  Provides that a plan
of merger must be adopted at an annual, regular, or special meeting of the
members when management of the affairs of the corporation is vested in its
members.  Provides that the merger must receive at least two-thirds of the
votes of the members present in person or by proxy at the meeting. 

Sec. 22.253.  APPROVAL OF MERGER BY BOARD OF DIRECTORS.  Requires the board
of directors to approve the plan of merger if the corporation has no
members or no members entitled to vote.  Requires the plan of merger to be
adopted by a vote of the majority of the directors in office. 

Sec. 22.254.  APPROVAL OF SALE OF ALL OR SUBSTANTIALLY ALL OF ASSETS BY
MEMBERS HAVING VOTING RIGHTS.  Provides that the board, to approve a sale
of the corporation's assets with members having voting rights, must adopt a
resolution recommending the sale and directing that the resolution be
submitted to a vote at an annual or special meeting of the members having
voting rights.  Requires written notice that informs the members that a
purpose of the meeting is to consider the sale of the corporation's assets
to be given to each member entitled to vote at the meeting.  Authorizes the
members, at the meeting, to authorize the sale and to set, or authorize the
board to set, the terms and conditions, including the price, of the sale.
Specifies that at least two-thirds of the votes entitled to be cast are
required to authorize the sale, except that if any class of members is
entitled to vote on the recommendation as a class, the authorization also
requires at least two-thirds of the votes entitled to be cast by those
members present.  Authorizes the board to abandon the sale after the
members authorize a sale, subject to the rights of third parties under any
contracts relating to the sale, without further action or approval by
members. 

Sec. 22.255.  APPROVAL OF SALE OF ALL OR SUBSTANTIALLY ALL OF ASSETS BY
MANAGING MEMBERS.  Provides that a resolution authorizing a sale of the
assets of a corporation that is managed by its members must be submitted to
a vote at an annual, regular, or special meeting of the members to be
adopted.  Requires notice that informs the members that a purpose of the
meeting is to consider the sale of the corporation's assets to be given to
each member entitled to vote at the meeting, except as otherwise provided
by the certificate or bylaws of the corporation.  Authorizes the members,
at the meeting, to authorize the sale and to set, or authorize one or more
members to set, the terms and conditions, including the price, of the sale.
Provides that the authorization requires at least two-thirds of the votes
of members present at the meeting. 

Sec. 22.256.  APPROVAL OF SALE OF ALL OR SUBSTANTIALLY ALL OF ASSETS  BY
BOARD OF DIRECTORS.  Authorizes the sale of the assets of a corporation
that has no members or has no members with voting rights to be permitted to
proceed on receiving the affirmative vote of the majority of the directors
in office, unless otherwise provided by the corporation's certificate.
Authorizes the sale of the assets of an insolvent corporation to proceed on
receiving the affirmative vote of the majority of the directors in office. 

Sec. 22.257.  PLEDGE, MORTGAGE, DEED OF TRUST, OR TRUST INDENTURE.  (a)
Authorizes the board, except as otherwise provided by Subsection (b) or by
the corporation's certificate, to authorize a pledge, mortgage, deed of
trust, or trust indenture, and provides that an authorization or consent of
members is not required for the validity of the transaction or for any sale
under the terms of the transaction 
 
(b) Authorizes the members of a corporation that they manage to authorize a
pledge, mortgage, deed of trust, or trust indenture for a sale of the
corporation's assets, and provides that an authorization by the board is
not required for the validity of the transaction or for any sale under the
terms of the transaction. 

SUBCHAPTER G.  WINDING UP AND TERMINATION

Sec. 22.301.  APPROVAL OF VOLUNTARY WINDING UP AND TERMINATION BY MEMBERS
HAVING VOTING RIGHTS.  Provides that, to approve a voluntary winding up and
termination of a corporation with members having voting rights, a
corporation's board must adopt a resolution recommending that the
corporation be wound up and terminated and directing that the question be
submitted to a vote at an annual or special meeting of the members having
voting rights.  Requires written notice that informs the members that a
purpose of the meeting is to consider the advisability of winding up and
terminating the corporation to be given to each member entitled to vote at
the meeting. Requires the adoption of a resolution to wind up and terminate
the corporation to take effect on receiving at least two-thirds of the
votes entitled to be cast by those members present, except that if any
class of members is entitled to vote on the resolution as a class by the
certificate or bylaws of the corporation, the resolution may be adopted
only on also receiving at least two-thirds of the class members' votes
entitled to be cast. 

Sec. 22.302.  APPROVAL OF VOLUNTARY WINDING UP AND TERMINATION BY MANAGING
MEMBERS.  Provides that, to approve a voluntary winding up and termination
of a corporation with members that manage the corporation, a resolution to
voluntarily wind up and terminate the corporation must be submitted to a
vote at an annual, regular, or special meeting of members.  Requires notice
that informs the members that a purpose of the meeting is to consider the
advisability of winding up and terminating the corporation to be given to
each member.  Requires the adoption of a resolution to wind up and
terminate the corporation on receiving at least two-thirds of the votes of
members present at the meeting.  

Sec. 22.303.  APPROVAL OF VOLUNTARY WINDING UP AND TERMINATION BY BOARD OF
DIRECTORS.  Requires that the winding up and termination of the
corporation, if a corporation has no members or has no members with voting
rights, be authorized at a meeting of the corporation's board of directors
on the adoption of a resolution to wind up and terminate by the affirmative
vote of the majority of the directors in office. 

Sec. 22.304.  APPLICATION AND DISTRIBUTION OF PROPERTY.  (a)  Requires the
application  and distribution of all property remaining after all
liabilities and obligations are paid, satisfied, and discharged to proceed
in the following order: 

 _property held by the corporation on a condition requiring return,
transfer, or conveyance because of the winding up or termination is
required to be returned, transferred, or conveyed in accordance with that
requirement; and 

 _unless otherwise provided by the corporation's certificate, the remaining
property of the corporation to be distributed only for tax-exempt purposes
to one or more  organizations that are exempt under federal law, under a
plan of distribution. 

(b) Requires a district court of the county in which the corporation's
principal office is located to distribute to one or more organizations
exempt under federal law, the property of the corporation remaining after a
distribution of property under the plan of distribution. 

Sec. 22.305.  DISTRIBUTION PLAN.  Authorizes a corporation in the process
of winding up to adopt a plan for distribution of property.  Requires a
corporation to adopt a plan for distribution of property to authorize a
transfer or conveyance of assets for which this chapter requires a plan of
distribution. 
 
Sec. 22.306.  APPROVAL OF DISTRIBUTION PLAN BY MEMBERS HAVING VOTING
RIGHTS.  Provides that, to adopt a plan providing for the distribution of
property of a corporation with members having voting rights, a
corporation's board must adopt a resolution recommending a plan of
distribution and directing that the proposed plan be submitted to a vote at
an annual or special meeting of the members.  Requires written notice that
informs the members that the proposed plan of distribution or a summary of
the plan to be given to each member entitled to vote at the meeting.
Requires the adoption of the proposed plan of distribution to take effect
on receiving at least two-thirds of the votes entitled to be cast by those
members present, except that if any class of members is entitled to vote on
the resolution as a class by the certificate or bylaws of the corporation,
the proposed plan may be adopted only on also receiving at least two-thirds
of the class members' votes entitled to be cast. 
 
Sec. 22.307.  APPROVAL OF DISTRIBUTION PLAN BY MANAGING MEMBERS. Provides
that, to adopt a proposed plan providing for the distribution of property
of a corporation with members that manage the corporation, the plan must be
submitted to a vote at an annual, regular, or special meeting of the
members.  Requires notice that informs the members that the proposed plan
of distribution or a summary of the plan to be given to each member.
Requires the adoption of the  proposed plan of distribution on receiving at
least two-thirds of the votes of members present at the meeting.  

Sec. 22.308.  APPROVAL OF DISTRIBUTION PLAN BY BOARD OF DIRECTORS. Requires
that a plan of distribution, if a corporation has no members or has no
members with voting rights, be authorized at a meeting of the corporation's
board on receiving the affirmative vote of the majority of the directors in
office. 

Sec. 22.309.  APPROVAL OF REINSTATEMENT OR REVOCATION OF VOLUNTARY WINDING
UP BY MEMBERS HAVING VOTING RIGHTS.  Provides that, approve a reinstatement
or a revocation of the voluntary winding up of a corporation with members
having voting rights under Section 11.151 or 11.201, a corporation's board
must adopt a resolution recommending the reinstatement or the revocation of
the voluntary winding up and directing that the question be submitted to a
vote at an annual or special meeting of the members of the corporation
having voting rights.  Requires written notice that informs the members
that a purpose of the meeting is to consider the advisability of the
reinstatement or the revocation of the voluntary winding up to be given to
each member entitled to vote at the meeting.  Requires the adoption of the
resolution to reinstate or to revoke the voluntary winding up to take
effect on receiving at least two-thirds of the votes entitled to be cast by
those members present, except that if any class of members is entitled to
vote on the resolution as a class by the certificate or bylaws of the
corporation, the proposed plan may be adopted only on also receiving at
least two-thirds of the class members' votes entitled to be cast. 

Sec. 22.310.  APPROVAL OF REINSTATEMENT OR REVOCATION OF VOLUNTARY WINDING
UP BY MANAGING MEMBERS.  Provides that, to adopt a resolution approving the
reinstatement or the revocation of the voluntary winding up of a
corporation with members that manage the corporation, a resolution
approving the reinstatement or the revocation of the voluntary winding up
of a corporation must be submitted to a vote at an annual, regular, or
special meeting of members.  Requires notice that informs the members  that
a purpose of the meeting is to consider the reinstatement or the revocation
of the voluntary winding up to be given to each member.  Requires the
adoption of the resolution on receiving at least two-thirds of the votes of
members present at the meeting.  

Sec. 22.311.  APPROVAL OF REINSTATEMENT OR REVOCATION OF VOLUNTARY WINDING
UP BY BOARD OF DIRECTORS.  Requires that a resolution to reinstate or to
revoke the voluntary winding up of the corporation, if a corporation has no
members or has no members with voting rights, be authorized at a meeting of
the corporation's board on receiving the affirmative vote of the majority
of the directors in office. 

Sec. 22.312.  CERTIFICATE OF TERMINATION.  Sets forth the statements
required to be contained in a corporation's certificate of termination. 
  
Sec. 22.313.  SUPPLEMENTAL PROVISIONS FOR JURISDICTION OF COURT TO
LIQUIDATE PROPERTY AND BUSINESS OF CORPORATION AND RECEIVERSHIPS. Sets
forth the supplemental provisions that apply to nonprofit corporations when
a court has ordered distribution of property. 

Sec. 22.314.  LIMITED SURVIVAL AFTER NATURAL EXPIRATION.  Authorizes a
corporation that was terminated by the expiration of the period of its
duration, during the three-year period following the date of termination,
to amend the corporation's certificate of formation.  Provides that an act
or contract of a terminated corporation during a period within which the
corporation could have extended the corporation's existence under this
section is not invalidated by the expiration of the period of duration. 

Sec. 22.315.  RESPONSIBILITY FOR WINDING UP.    Requires the winding up of
a corporation's affairs to be managed by the directors if management of the
affairs is not vested in the corporation's members or by the members if the
management is vested in them. 

SUBCHAPTER H.  FOREIGN CORPORATIONS

Sec. 22.351.  SUPPLEMENTAL INFORMATION REQUIRED IN APPLICATION FOR
REGISTRATION.  Specifies the information needed to be stated on a foreign
corporation's application for registration filed with the secretary of
state. 

SUBCHAPTER I.  RECORDS AND REPORTS

Sec. 22.401.  MEMBER'S RIGHT TO INSPECT BOOKS AND RECORDS.  Entitles a
member of a corporation to examine and copy the books and records of the
corporation relevant to that purpose on written demand stating the purpose
of the demand. 

Sec. 22.402.  FINANCIAL RECORDS AND ANNUAL REPORTS.  Requires a corporation
to maintain current and accurate financial records in accordance with
generally accepted accounting practices.  Requires the board to annually
prepare or approve a financial report for the corporation for the preceding
year based on the financial records.  Specifies that the report must
conform to accounting standards as adopted by the American Institute of
Certified Public Accountants and enumerates the information needed to be
included in the report. 

Sec. 22.403.  AVAILABILITY OF FINANCIAL INFORMATION FOR PUBLIC INSPECTION.
Requires a corporation to keep records, books, and annual reports at the
corporation's registered or principal office in this state for at least
three years after the close of the fiscal year.  Requires the corporation
to make these documents available to the public for inspection and copying
at the corporation's registered or principal office.  Authorizes the
corporation to charge a reasonable fee for preparing a copy of a record or
report. 
 
Sec. 22.404.  FAILURE TO MAINTAIN FINANCIAL RECORD OR PREPARE ANNUAL
REPORT; OFFENSE.  Creates an offense punishable as a Class B misdemeanor if
a corporation fails to maintain a financial record, prepare an annual
report, or make the record  or report available to the public. 

Sec. 22.405.  EXEMPTIONS FROM CERTAIN REQUIREMENTS RELATING TO FINANCIAL
RECORDS AND ANNUAL REPORTS.  Provides that Sections 22.402, 22.403, and
22.404 do not apply to the enumerated organizations. 

Sec. 22.406.  CORPORATIONS ASSISTING STATE AGENCIES.  Defines "state
agency" for purposes of this section. Provides that the books and records
of a corporation designed to assist a state agency are subject to audit at
the discretion of the state auditor.  Requires these types of corporations
to file with the secretary of state a copy of the report of financial
activity if no board member, officer, or employee of the dedicated state
agency sits on the corporation's borad in other than an ex officio
capacity. 
 
Sec. 22.407.  REPORT OF DOMESTIC AND FOREIGN CORPORATIONS.  Authorizes the
secretary of state to require a domestic corporation or a foreign
corporation registered to conduct affairs in this state to file a report
not more than once every four years, and sets forth the information to be
contained in the report and the required form to be used. Requires an
officer, or trustee, if applicable, to sign the report. 

Sec. 22.408.  NOTICE REGARDING REPORT.  Requires the secretary of state to
send written notice that the four-year report is due.  Sets forth the
information to be contained in the report.  Requires the secretary of state
to include with the notice a report form to be prepared and filed.  

Sec. 22.409.  FILING OF REPORT.  Provides that a copy of the report must be
filed with the secretary of state by the 30th day after the notice is
mailed. 
 
Sec. 22.410.  FAILURE TO FILE REPORT.  Provides that a domestic or foreign
corporation that fails to file a report when the report is due forfeits its
right to conduct affairs in this state. Provides that the forfeiture takes
effect, without judicial action, when the secretary of state enters on the
record of the corporation the words "right to conduct affairs forfeited"
and the date of forfeiture. 
 
Sec. 22.411.  NOTICE OF FORFEITURE.  Requires that the notice of forfeiture
be mailed to the corporation's registered agent at the registered office or
to the corporation. 

Sec. 22.412.  EFFECT OF FORFEITURE.  Prohibits the corporation from
maintaining an action, suit, or proceeding in a court of this state and a
successor or assignee of the corporation from maintaining an action, suit,
or proceeding in a court of this state on a right, claim, or demand arising
from the conduct of affairs by the corporation in this state, unless the
right of the corporation to conduct affairs in this state is revived.
Provides that this section does not affect the right of an assignee of the
corporation.  Provides that the forfeiture of the right to conduct affairs
in this state does not impair the validity of a contract or act of the
corporation or prevent the corporation from defending an action, suit, or
proceeding in a court of this state.  

Sec. 22.413.  REVIVAL OF RIGHT TO CONDUCT AFFAIRS.  Authorizes a
corporation to relieve itself from a forfeiture by filing the required
report, accompanied by the revival fee, by the 120th day after mailing the
forfeiture notice.  Requires the secretary of state, if the corporation
timely files the form, accompanied by the fee, to revive the right of the
corporation to conduct affairs in this state, cancel the words regarding
the forfeiture on the corporation's record, and endorse on that record the
word "revived" and the date of revival. 

Sec. 22.414.  FAILURE TO REVIVE; TERMINATION OR REVOCATION.  Provides that
the failure of a corporation that has forfeited its right to conduct
affairs in this state to revive that right is grounds for the involuntary
termination of the domestic corporation or for the revocation of the
foreign corporation's registration to transact business in this state.
Provides that the termination or revocation takes effect, without judicial
action, when the secretary of state enters on the corporation's record
filed in the office of the secretary of state the word  "forfeited" and the
date of forfeiture, and cites this chapter as authority for that
forfeiture. 

Sec. 22.415.  REINSTATEMENT.  Authorizes the relief of a corporation that
has been terminated or the registration of which has been revoked by filing
the required report, accompanied by the filing fee for the report, if the
corporation has paid all required fees, taxes, penalties, and interest due.
Requires the secretary of state to reinstate the certificate of formation
or registration without judicial action, cancel the word "forfeited" on the
record, and endorse on the record kept in the secretary's office relating
to the corporation the words "set aside" and the date of the reinstatement
when the report is filed and the filing fee is paid to the secretary of
state. 

SUBCHAPTER J.  CHURCH BENEFITS BOARDS

Sec. 22.451.  DEFINITION. Defines "church benefits board" for purposes of
this section. 

Sec. 22.452.  PENSIONS AND BENEFITS.   Authorizes a domestic or foreign
nonprofit corporation formed for a religious purpose to provide for the
support and payment of benefits and pensions to the ministers, teachers,
employees, trustees, directors, or other functionaries of the corporation
or organizations controlled by or affiliated with the corporation and the
spouse, children, dependents, or other beneficiaries of those persons. 

Sec. 22.453.  CONTRIBUTIONS.  Authorizes a church benefits board to provide
for the collection of contributions and other payments to assist in
providing pensions and benefits, and the creation, maintenance, investment,
management, and disbursement of necessary annuities, endowments, reserves,
or other funds for the collection of contributions and other payments to
assist in providing pensions and benefits. 

Sec. 22.454.  POWER TO ACT AS TRUSTEE.  Authorizes a church benefits board
to act as a trustee and agent.  

Sec. 22.455.  DOCUMENTS AND AGREEMENTS.  Authorizes a church benefits board
to provide to a program participant a certificate or agreement of
participation, a debenture, or an indemnification agreement.  

Sec. 22.456.  INDEMNIFICATION.  Authorizes a church benefits board, or an
affiliate wholly owned by the board, to agree to indemnify against damage
or risk of loss a minister, teacher, employee, trustee, functionary, or
director affiliated with the board or a family member, dependent, or
beneficiary of one of those persons, as well as a church or a convention,
conference, or association of churches or an organization that is
controlled by or affiliated with the board or with a church or a
convention, conference, or association of churches.  

Sec. 22.457.  PROTECTION OF BENEFITS.  Provides that money or other
benefits provided to a participant or a beneficiary under a plan or program
provided by or through a church benefits board are not subject to
execution, attachment, garnishment, or other process. Prohibits the
appropriation or application as part of a judicial, legal, or equitable
process or operation of a law of money or other benefits provided to a
participant or a beneficiary under a plan or program provided by or through
a church benefits board.  

Sec. 22.458.  ASSIGNMENT OF BENEFITS.  Provides that an assignment or
transfer or an attempt to make an assignment or transfer by a beneficiary
of money, benefits, or other rights under a plan or program is void if the
plan or program contains a provision prohibiting the assignment or other
transfer without the written consent of the church benefits board and the
beneficiary assigns or transfers or attempts to make an assignment or
transfer without that consent.  

Sec. 22.459.  INSURANCE CODE NOT APPLICABLE.  Specifies that the Insurance
Code does not apply to a church benefits board or a program, plan, benefit,
or activity of the board or a person affiliated with the board.  
 
CHAPTER 23.  SPECIAL-PURPOSE CORPORATIONS

SUBCHAPTER A.  GENERAL PROVISIONS

Sec. 23.001.  DETERMINATION OF APPLICABLE LAW.  Provides that a corporation
created under this chapter or under a special statute outside this code is
governed by Title 1 and Chapter 21, if the corporation is organized for
profit, and Title 1 and Chapter 22, if the corporation is organized not for
profit. 

Sec. 23.002.  APPLICABILITY OF FILING REQUIREMENTS.  Requires that a
document to be filed with the secretary of state under a special statute be
executed and filed in accordance with Chapter 4, except as otherwise
provided by the special statute 

Sec. 23.003.  DOMESTIC CORPORATION ORGANIZED UNDER SPECIAL STATUTE.
Provides that a corporation organized under a special statute is not
considered to be a "domestic corporation" formed under this code. 

SUBCHAPTER B.  BUSINESS DEVELOPMENT CORPORATIONS

Sec. 23.051.  DEFINITIONS.  Defines "corporation," "financial institution,"
"loan limit," and "member." 

Sec. 23.052.  INCORPORATORS.  Authorizes 25 or more persons, the majority
of whom must be residents of this state, to form a business development
corporation to promote, develop, and advance the prosperity and economic
welfare of this state. 

Sec. 23.053.  PURPOSES.  Authorizes the organization of a business
development corporation as a for-profit corporation under Chapter 21 or
nonprofit corporation under Chapter 22.   Specifies the purposes for which
a business development corporation must be organized. 

Sec. 23.054.  POWERS.  Enumerates the powers conferred upon a business
development corporation. 

Sec. 23.055.  STATEWIDE OPERATION.  Specifies that a business development
corporation organized is a state development company as defined by federal
law.  Authorizes a business development corporation to operate on a
statewide basis. 

Sec. 23.056.  CERTIFICATE OF FORMATION.  Sets forth the requirements of a
business development corporation's certificate of formation.  Provides that
the name of a corporation must include the words "Business Development
Corporation."  

Sec. 23.057.  MANAGEMENT BY BOARD OF DIRECTORS; NUMBER OF DIRECTORS.
Provides that the organization, control, and management of a corporation
are vested in a board of directors.  Provides that the board must consist
of not less than 15 and not more than 21 directors.  Authorizes the board
to exercise any power of the corporation not conferred on the shareholders
or members by law or by the corporation's bylaws.  

Sec. 23.058.  ELECTION OR APPOINTMENT OF DIRECTORS.  Requires the
incorporators to name the directors constituting the initial board.
Requires directors other than the initial directors to be elected at each
annual meeting of the corporation.  Requires the directors, if an annual
meeting is not held at the time designated by the bylaws, to be elected at
a special meeting held in lieu of the annual meeting.  Requires the members
of the corporation to elect two-thirds of the directors and the
shareholders to elect the remaining directors at an annual meeting or
special meeting held in lieu of the annual meeting. 

Sec. 23.059.  TERM OF OFFICE; VACANCY.  Provides that a director holds
office until the next annual election of directors and until a successor is
elected and qualified, unless the  director is removed at an earlier date
in accordance with the corporation's bylaws.  Requires directors elected by
the members to fill a vacancy in the office of a director elected by the
member.  Requires directors elected by the shareholders to fill a vacancy
in the office of a director elected by shareholders. 

Sec. 23.060.  OFFICERS.  Requires the board to appoint a president, a
treasurer, and any other agent or officer of the corporation and to fill
each vacancy other than a vacancy on the board. 
 
Sec. 23.061.  PARTICIPATION AS OWNER.  Authorizes an individual,
corporation, or other organization authorized to conduct business in this
state to acquire, purchase, hold, sell, assign, transfer, mortgage, pledge,
or otherwise dispose of a bond, security, or other evidence of indebtedness
created by, or shares of, the corporation.  Authorizes an owner of shares
to exercise any right, power, or privilege stemming from the ownership of
shares, including the right to vote. 

Sec. 23.062.  FINANCIAL INSTITUTION AS MEMBER OF CORPORATION.  (a)
Authorizes a financial institution to become a member of a corporation and
to make loans to the corporation as provided by this chapter. 

(b) Authorizes a financial institution to request membership in the
corporation by applying to the corporation's board in the manner prescribed
by the board.  Provides that membership takes effect on the board's
acceptance of the application. 
 
(c)  Authorizes a financial institution that is a member of the corporation
to acquire, purchase, hold, sell, assign, transfer, mortgage, pledge, or
otherwise dispose of a bond, security, or other evidence of indebtedness
created by, or a share of, the corporation. Authorizes a financial
institution, as owner of shares, to exercise any right, power, or privilege
of that ownership, including the right to vote.  Prohibits a member from
acquiring shares in an amount greater than 10 percent of the member's loan
limit. Provides that the amount of shares that a member may acquire is in
addition to the amount of shares of corporations that the member may
otherwise acquire. 

(d)  Prohibits a financial institution that is not a member of the
corporation from acquiring any of its shares. 

Sec. 23.063.  WITHDRAWAL OF MEMBER.  Authorizes a member, on written notice
to the corporation's board, to withdraw from a corporation on the date
stated in the notice. Provides that the withdrawal date must be at least
six months after the date notice is given under this subsection.  Provides
that a member is not obligated to make a loan to the corporation in
conformance to a call made after the member's withdrawal from the
corporation, but requires a member to fulfill any obligation that has
accrued or for which a commitment has been made before the withdrawal date. 
 
Sec. 23.064.  POWERS OF SHAREHOLDERS AND MEMBERS.  Enumerates the powers of
shareholders and members, authorizing them to 

 _determine the number of directors and elect the directors as provided by
Section 23.058; 
 _make, amend, and repeal bylaws of the corporation; or
 _exercise any other power of the corporation that is conferred on the
shareholders and members by the bylaws. 

Sec. 23.065.  VOTING BY SHAREHOLDER OR MEMBER.  Provides that each
shareholder has one vote, in person or by proxy, for each share held by the
shareholder. Provides that each member has one vote in person or by proxy.
Provides that a member with a loan limit that exceeds $1,000 has one
additional vote, in person or by proxy, for each additional $1,000 the
member may have outstanding on loans to the corporation at any one time as
determined under Section 23.068. 
  
Sec. 23.066.  LOAN TO CORPORATION.  Requires a member to make a loan to a
corporation, when called on by the corporation to do so, on those terms and
conditions periodically approved by the board of directors. Requires that
loan to be evidenced by a bond, debenture, note, or other evidence of
indebtedness of the corporation that is freely transferable at any time and
accrues interest at a minimum rate of one-fourth of one percent more than
the interest rate determined by the board to be the prime rate prevailing
on the date of issuance on unsecured commercial loans. 

Sec. 23.067.  PROHIBITED LOAN.  Prohibits a member from making a loan to a
corporation if, immediately after the loan would be made, the total amount
of the corporation's  obligations would exceed 50 times its capital.
Provides that the corporation's capital includes the amount of its
outstanding shares, whether common or preferred, and its earned or paid-in
surplus, for purposes of this section. 
 
Sec. 23.068.  LOAN LIMITS.  (a)  Requires the establishment of a loan limit
at the $1,000 amount nearest to the amount computed in accordance with this
section. 

(b) Prohibits the total amount outstanding on loans made to a corporation
by a member at any one time, when added to the amount of the investment in
the shares then held by the member, from exceeding: 

  _20 percent of the total amount then outstanding on loans to the
corporation by all members, including outstanding amounts validly called
for a loan but not yet loaned; or 
  _an amount equal to the lesser of $750,000 or two percent of a commercial
bank's or trust company's capital and surplus;  
  _an amount equal to one percent of the total outstanding loans made by a
savings and loan association;  
  _an amount equal to one percent of the capital and unassigned surplus of
a stock insurance company other than a fire insurance company; 
  _an amount equal to one percent of the unassigned surplus of a mutual
insurance company other than a fire insurance company; 
  _an amount equal to one-tenth of one percent of a fire insurance
company's assets; or 
  _the limits approved by the board for a government pension fund or other
financial institution. 

(c) Requires each call made by the corporation to be prorated among its
members in substantially the same proportion that the adjusted loan limit
of each member bears to the aggregate of the adjusted loan limits of all
members, subject to Subsection (b). 

(d) Provides that a member' adjusted loan limit is the amount of the
member's loan limit, reduced by the balance of outstanding loans made by
the member to the corporation and the investment in shares held by the
member at the time of the call, for purposes of Subsection (c). 
  
Sec. 23.069.  SURPLUS.  Requires a corporation to set apart as earned
surplus a minimum of 10 percent of its net earnings each year until the
surplus, with any unimpaired surplus paid in, is equal to one-half of the
amount paid in on the shares then outstanding.  Requires the surplus to be
kept to secure against losses and contingencies.  Requires the surplus, if
it becomes impaired, to be reimbursed in the manner provided for its
accumulation.  Requires the board to determine net earnings and surplus
after providing for the required reserves as the directors consider
advisable.  Provides that a good faith determination of net earnings and
surplus by the directors under this section is conclusive. 

Sec. 23.070.  DEPOSITORY.  Authorizes a corporation to deposit its funds in
a banking institution that has been designated as a depository by a vote of
the majority of the directors present at an authorized meeting of the
board, excluding a director who is an officer or  director of the
designated depository.  Prohibits the corporation from receiving money on
deposit. 

Sec. 23.071.  ANNUAL REPORT; PROVISION OF REQUIRED INFORMATION. Requires a
corporation to annually report its condition to the banking commissioner
and the Texas Department of Insurance.  Requires a corporation to provide
any information that is required by the secretary of state. 

SUBCHAPTER C.  GRAND LODGES

Sec. 23.101.  FORMATION.  (a)  Authorizes an institution or order, by
resolution or other consent of its members, to incorporate under this
subchapter if the institution or order is: 

 _the grand lodge of Texas, Ancient, Free and Accepted Masons;
 _the Grand Royal Arch Chapter of Texas;
 _the Grand Commandery of Knights Templars of Texas;
 _the grand lodge of the Independent Order of Odd Fellows of Texas; or
 _another similar institution or order organized for charitable or
benevolent purposes. 
 
(b)  Requires a corporation formed under this subchapter to file a
certificate in accordance with Chapter 4 that complies with this
subchapter. 
 
Sec. 23.102.  APPLICABILITY OF CHAPTER 22.  Provides that Chapter 22
applies to a corporation formed under this subchapter if this subchapter
does not contain any provision regarding a matter provided for in Chapter
22. 

Sec. 23.103.  DURATION.  Authorizes a grand body that incorporates under
this subchapter to provide in its certificate for the expiration of its
corporate powers at the end of a stated number of years.  Provides that the
grand body has perpetual existence if its certificate does not provide for
its duration.  Authorizes the grand body, by its corporate name, to have
perpetual succession of its officers and members. 

Sec. 23.104.  SUBORDINATE LODGES.  Provides that the incorporation of a
grand body includes each of its subordinate lodges or bodies holding a
warrant or charter under the grand body.  Provides that a subordinate body
has all of the rights of other corporations under and by the name given to
the grand body in the warrant or charter issued to the grand body. Requires
the charter of the grand body to provide for those rights.  Provides that a
subordinate body is subject to the jurisdiction and control of its
respective grand body, and authorizes the revocation of the subordinate
body's warrant or charter by the grand body. 
 
Sec. 23.105.  TRUSTEES AND DIRECTORS.  Authorizes a grand body and its
subordinate to elect trustees and directors or to appoint trustees or
directors from among their officers. 

Sec. 23.106.  FRANCHISE TAXES.  Provides that a corporation formed under
this subchapter is not subject to or required to pay a franchise tax,
except that a corporation is exempt from the franchise tax imposed by
Chapter 171, Tax Code, only if it is exempted by that chapter. 

Sec. 23.107.  GENERAL POWERS.  Authorizes a grand body and its subordinate
to take action as directed or provided by law in the case of other
corporations and to make constitutions and bylaws to govern their affairs. 

Sec. 23.108.  AUTHORITY REGARDING PROPERTY.  Authorizes a grand body or
subordinate body to acquire and hold property as necessary or convenient
for a site on which to erect a building for the use and occupancy of the
body and to erect homes and schools for members' widows or orphans or
elderly, disabled, or indigent members.  Authorizes a grand body or
subordinate body to sell or mortgage the property.  Provides that a
conveyance must be executed by the presiding officer and attested to by the
secretary with the seal. Provides that  a subordinate body's authority to
sell or to mortgage property is subject to the  conditions periodically
prescribed or established by its grand body. 

Sec. 23.109.  AUTHORITY REGARDING LOANS.  Authorizes a grand body
incorporated under this subchapter to loan money held and owned by the
grand body for charitable purposes, for the endowment of any of its
institutions, or otherwise, and to secure loans by taking and receiving
liens on real property or by another method elected by it.  Authorizes a
grand body to become a purchaser of real property and hold title to
property if the real property is secured by a lien and sold. 

Sec. 23.110.  WINDING UP AND TERMINATION OF SUBORDINATE BODY.  Provides
that all property and rights existing in the subordinate body pass to and
vest in its grand body on the winding up and termination of the subordinate
body, subject to the payment of any debt owed by the subordinate body.
Provides that the grand body is not liable for an amount greater than the
actual cash value of the subordinate body's effects or authority,
notwithstanding a grand body's liability for the debt of a subordinate body
under this section. 

TITLE 3.  LIMITED LIABILITY COMPANIES

CHAPTER 101.  LIMITED LIABILITY COMPANIES

SUBCHAPTER A.  GENERAL PROVISIONS

Sec. 101.001.  DEFINITIONS.  Defines "assignee,"  "company agreement,"
"foreign limited liability company" or "foreign company," and "limited
liability company" or "company" for purposes of this title. 

SUBCHAPTER B.  FORMATION AND GOVERNING DOCUMENTS

Sec. 101.051.  SUPPLEMENTAL PROVISIONS REQUIRED IN CERTIFICATE OF
FORMATION.  Provides that, in addition to the statements required by
Section 3.005, the certificate of formation of a limited liability company
(LLC) must state whether the company will or will not have managers and, if
the company will have managers, the name and address of each initial
manager.  Provides that, if the company will not have managers, the name
and address of each initial member of the company must be included. 

Sec. 101.052.  CERTAIN PROVISIONS CONTAINED IN CERTIFICATE OF FORMATION.
Authorizes the alternative inclusion, as provided by Section 3.005(b), in
an LLC's certificate of any provision that may be contained in its company
agreement.  Provides that a reference in this title to the company
agreement of an LLC includes any provision contained in its certificate
instead of the company agreement as provided by this section.  

Sec. 101.053.  COMPANY AGREEMENT.  Provides that an LLC's company agreement
governs the relations among its members, managers, and officers, assignees
of its membership interests, the company itself, and other internal affairs
of the company, except as provided by Section 101.054.  Provides that this
title and the provisions of Title 1 applicable to an LLC govern the
internal affairs of the company to the extent that its agreement does not
otherwise provide.  Authorizes the waiver or modification, in an LLC's
agreement, of a provision of this title or Title 1 that is applicable to a
limited liability company, except as provided by Section 101.054. 

Sec. 101.054.  WAIVER OR MODIFICATION OF CERTAIN STATUTORY PROVISIONS
PROHIBITED; EXCEPTIONS.  (a) Prohibits the waiver or modification, in an
LLC's agreement, of the following provisions, except as provided by this
section: 

 _this section;
 _Section 101.051, 101.101(b), 101.206, 101.501, 101.502, or 101.551;
 _Chapter 1, if the provision is used to interpret a provision or define a
word or phrase contained in a section listed in this subsection; 
 _Chapter 2, except authorizes Section 2.104(c)(2), 2.104(c)(3), or 2.106
to be waived  or modified in the company agreement; 
 _Chapter 3, except authorizes Subchapters C and E to be waived or modified
in the company agreement; or 
 _Chapter 4, 5, 7, 10, 11, or 12.

(b) Authorizes the waiver or modification, in an LLC's agreement, of a
provision listed in Subsection (a) if the provision that is waived or
modified authorizes the LLC to waive or modify the provision in its
governing documents. 

(c) Authorizes the modification, in an LLC's agreement, of a provision
listed in Subsection (a) if the provision that is modified specifies the
person or group of persons entitled to approve a modification or the vote
or other method by which a modification is required to be approved. 

(d) Authorizes the waiver or modification, in an LLC's agreement, of a
provision in this title or in that part of Title 1 applicable to an LLC
that grants a right to a person, other than a member, manager, officer, or
assignee of a membership interest in an LLC, only if the person consents in
writing to the waiver or modification. 

Sec. 101.055.  AMENDMENT OF COMPANY AGREEMENT.  Authorizes the amendment of
an LLC's agreement only if each member of the company consents to the
amendment. 

Sec. 101.056.  ADDITIONAL POWERS OF CERTAIN PIPELINE BUSINESSES.  Provides
that an LLC engaged as a common carrier in the pipeline business for the
purpose of transporting oil, oil products, gas, carbon dioxide, salt brine,
fuller's earth, sand, clay, liquefied mineral, or other mineral solutions
has all the rights and powers conferred on a common carrier by Sections
111.019-111.022 (Right of Eminent Domain; Costs of Relocation of Property;
Limitations on the Powers of Eminent Domain in Certain Situations;
Restoration of Property; Pipeline Easements; Pipeline on Public Stream or
Highway; Pipeline Under Railroad, Street Railroad, or Canal; Right to Use
Street or Alley in City or Town), Natural Resources Code. 

SUBCHAPTER C.  MEMBERSHIP

Sec. 101.101.  MEMBERS REQUIRED.  Authorizes an LLC to have one or more
members. Provides that an LLC must have at least one member, except as
provided by this section. Provides that an LLC that has managers is not
required to have any members during a reasonable period between the date
the company is formed and the date the first member is admitted to the
company.  Provides that an LLC is not required to have any members during
the period between the date the continued membership of the last remaining
member of the company is terminated and the date the agreement to continue
the company described by Section 101.551 is executed. 

Sec. 101.102.  QUALIFICATION FOR MEMBERSHIP.  Authorizes a person to be a
member of or acquire a membership interest in an LLC unless the person
lacks capacity apart from this code.  Provides that a person is not
required, as a condition to becoming a member of or acquiring a membership
interest in an LLC, to make a contribution to the company, otherwise pay
cash or transfer property to the  company, or assume an obligation to make
a contribution or otherwise pay cash or transfer property to the company. 

Sec. 101.103.  EFFECTIVE DATE OF MEMBERSHIP.  Provides that a person who
acquires a membership interest in an LLC in connection with its formation
becomes a member on the date the company is formed if the person is named
as an initial member in the company's certificate.  Provides that a person
who acquires a membership interest in an LLC during its formation but who
is not named as an initial member in the company's certificate becomes a
member on the latest of the date the company is formed, the date stated in
the company's records as the date the person becomes a member, or, if the
company's records do not state the date the person becomes a member, the
date that person's admission to the company is first reflected in its
records.  Provides that a person who, after the  formation of an LLC,
acquires directly or is assigned a membership interest in the company
becomes a member on approval of the company's governing authority. 

Sec. 101.104.  CLASSES OR GROUPS OF MEMBERS OR MEMBERSHIP INTERESTS. (a)
Authorizes an LLC's agreement to establish within the company classes or
groups of one or more members or membership interests each of which has
certain expressed relative rights, powers, and duties, including voting
rights, and to provide for the manner of establishing within the company
additional classes or groups of one or more members or membership interests
each of which has certain expressed relative rights, powers, and duties,
including voting rights. 
 
(b) Authorizes the statement, in the LLC agreement, of the rights, powers,
and duties of additional classes or groups of one or more members or
membership interests each of which has certain expressed relative rights,
powers, and duties, including voting rights. Authorizes the statement, at
the time the class or group is established, of the rights, powers, and
duties of additional classes or groups of one or more members or membership
interests each of which has certain expressed relative rights, powers, and
duties, including voting rights. 

(c) Authorizes the establishment of additional classes or groups of members
or membership interests only by the adoption of an amendment to the company
agreement if the LLC agreement does not provide for the manner of
establishing classes or groups of members or membership interests each of
which has certain expressed relative rights, powers, and duties, including
voting rights. 

(d)  Authorizes the seniority of the rights, powers, or duties of any class
or group of members or membership interests of an LLC to the rights,
powers, or duties of any other class or group of members or membership
interests in the company, including a previously established class or
group. 
 
Sec. 101.105.  ISSUANCE OF MEMBERSHIP INTERESTS AFTER FORMATION OF COMPANY.
Authorizes an LLC, after its formation, to issue membership interests to
any person, including an existing member of the company, with the approval
of the governing authority of the company, and, if the issuance of a
membership interest requires the establishment of a new class or group of
members or membership interests, establish a new class or group. 

Sec. 101.106.  NATURE OF MEMBERSHIP INTEREST.  (a) Provides that a
membership interest in an LLC is personal property.  Provides that a member
or an assignee of a membership interest does not have an interest in any
specific property of the company. 

Sec. 101.107.  WITHDRAWAL OR EXPULSION OF MEMBER PROHIBITED.  Prohibits a
member from withdrawing or being expelled from the company. 

Sec. 101.108.  ASSIGNMENT OF MEMBERSHIP INTEREST.  Authorizes the
assignment, in whole or in part, of a membership interest.  Provides that
an assignment of a membership interest is not an event requiring the
winding up of the company and does not entitle the assignee to participate
in the management and affairs of the company, become a member of the
company, or exercise any rights of a member of the company. 
 
Sec. 101.109.  RIGHTS AND DUTIES OF ASSIGNEE OF MEMBERSHIP INTEREST BEFORE
MEMBERSHIP.  (a)  Entitles a person who is assigned a membership interest
to: 

 _receive any allocation of income, gain, loss, deduction, credit, or a
similar item that the assignor is entitled to receive if the allocation of
the item is assigned; 
 _receive any distribution the assignor is entitled to receive if the
distribution is assigned; 
 _require, for any proper purpose, reasonable information or a reasonable
account of the transactions of the company; and 
  _make, for any proper purpose, reasonable inspections of the books and
records of the company. 

(b) Entitles an assignee of a membership interest to become a member on the
approval of the company's governing authority.  

(c)  Provides that an assignee is not liable as a member of the company
until the assignee becomes a member. 

Sec. 101.110.  RIGHTS AND LIABILITIES OF ASSIGNEE OF MEMBERSHIP INTEREST
AFTER BECOMING MEMBER.  (a)  Provides that an assignee, after becoming a
member of the company, is: 

 _entitled, to the extent assigned, to the same rights and powers granted
or provided to a member by the company agreement or this code; 
 _subject to the same restrictions and liabilities placed or imposed on a
member by the company agreement or this code; and 
 _except as provided by Subsection (b), liable for the assignor's
obligation to make contributions to the company. 
 
(b)  Provides that an assignee, after becoming a member, is not obligated
for a liability of the assignor that the assignee did not have knowledge of
on the date the assignee became a member and could not be ascertained from
the company agreement. 
 
Sec. 101.111.  RIGHTS AND DUTIES OF ASSIGNOR OF MEMBERSHIP INTEREST.
Provides that an assignor of a membership interest continues to be a
member.  Entitles an assignor of a membership interest to exercise any
unassigned rights or powers of a member until the assignee becomes a member
of the company.  Provides that an assignor of a membership interest is not
released from the assignor's liability to the company, regardless of
whether the assignee becomes a member of the company. 

Sec. 101.112.  JUDGMENT CREDITOR; CHARGE OF MEMBERSHIP INTEREST. (a)
Authorizes a court, on application by a judgment creditor of a member of an
LLC or an assignee of a membership interest in an LLC, to charge the
membership interest of the member or assignee, as appropriate, with payment
of the unsatisfied amount of the judgment.  Provides that the judgment
creditor has only the rights of an assignee if a court charges a membership
interest with payment of a judgment.  Prohibits the construction of this
section to deprive a member of an LLC or an assignee of a membership
interest in an LLC of the benefit of any exemption laws applicable to the
membership interest of the member or assignee. 

Sec. 101.113.  PARTIES TO ACTIONS.  Authorizes a member to be named as a
party only in an action brought to enforce a right or liability of the
member relating to the company. 

Sec. 101.114.  REQUIREMENTS FOR ENFORCEABLE SUBSCRIPTION.  Provides that a
subscription to purchase a membership interest is enforceable only if the
subscription is in writing and signed by the person making the
subscription. 

SUBCHAPTER D.  CONTRIBUTIONS

Sec. 101.151.  REQUIREMENTS FOR ENFORCEABLE PROMISE.  Provides that a
promise to make a contribution or otherwise pay cash or transfer property
to an LLC is enforceable only if the promise is in writing and signed by
the person making the promise. 
 
Sec. 101.152.  ENFORCEABLE PROMISE NOT AFFECTED BY CHANGE IN CIRCUMSTANCES.
Obligates a member to perform an enforceable promise to make a contribution
or otherwise pay cash or transfer property to the company without regard to
the member's death, disability, or other change in circumstances. 

 Sec. 101.153.  FAILURE TO PERFORM ENFORCEABLE PROMISE; CONSEQUENCES. (a)
Obligates a member, or the member's legal representative or successor, who
does not perform an enforceable promise to make a contribution, or to
otherwise pay cash or transfer property to the company, at the request of
the company, to pay in cash the agreed value of the contribution, as stated
in the company agreement or its records required under Section 3.151, less
any amount already paid for the contribution and the value of any property
already transferred.  

(b) Authorizes the LLC agreement to provide that a member who fails to
perform an enforceable promise to make a payment of cash or transfer
property to the company, whether as a contribution or in connection with a
previously made contribution, may have the member's membership interest
reduced; subordinated to other membership interests of nondefaulting
members; redeemed or sold at a value determined by appraisal or other
formula; or made the subject of a forced sale, forfeiture, a loan from
other members in an amount necessary to satisfy the enforceable promise, or
another penalty or consequence. 
 
Sec. 101.154.  CONSENT REQUIRED TO RELEASE ENFORCEABLE OBLIGATION.
Authorizes the release or settlement of  a member's obligation, or of the
member's legal representative's or successor's obligation, to make a
contribution or otherwise pay cash or transfer property to the company, or
to return cash or property to the company paid or distributed to the member
in violation of this code or the company agreement, only by consent of each
member of the company. 
 
Sec. 101.155.  CREDITOR'S RIGHT TO ENFORCE CERTAIN OBLIGATIONS. Authorizes
a creditor of an LLC who extends credit or otherwise acts in reasonable
reliance on an enforceable obligation of a member that is released or
settled to enforce the original obligation if the obligation is stated in a
document that is signed by the member and not amended or canceled to
evidence the release or settlement of the obligation. 
 
Sec. 101.156.  REQUIREMENTS TO ENFORCE CONDITIONAL OBLIGATION. Authorizes
the enforcement by an LLC or its creditor of a member's obligation that is
subject to a condition. Provides that  a member's conditional obligation
under this section includes a contribution payable on a discretionary call
of the LLC before the time the call occurs. 

SUBCHAPTER E.  ALLOCATIONS AND DISTRIBUTIONS

Sec. 101.201.  ALLOCATION OF PROFITS AND LOSSES.  Requires the allocation
of an LLC's profits and losses to be made to each member according to the
member's percentage or other interest in the company on the date of the
allocation as stated in the company's records required under Sections 3.151
and 101.501. 

Sec. 101.202.  DISTRIBUTION IN KIND.  Entitles a member to receive or
demand a distribution from the company only in the form of cash, regardless
of the form of the member's contribution to the company. 

Sec. 101.203.  SHARING OF DISTRIBUTIONS.  Requires the distributions of an
LLC's cash and other assets to be made to each member according to the
agreed value of the member's contribution to the company as stated in the
company's records required under Sections 3.151 and 101.501. 

Sec. 101.204.  INTERIM DISTRIBUTIONS.  Provides that a member, before the
winding up of the company, is not entitled to receive a distribution from
the company until its governing authority declares a distribution to each
member or a class or group of members that includes the member.   Prohibits
a member, before the winding up of the company, from demanding a
distribution from the company until its governing authority declares a
distribution to each member or a class or group of members that includes
the member. 

Sec. 101.205.  DISTRIBUTION ON WITHDRAWAL.  Entitles a member who validly
exercises the member's right to withdraw from the company granted under the
company  agreement to receive, within a reasonable time after the
withdrawal, the fair value of the member's interest in the company as
determined on the date of withdrawal. 

Sec. 101.206.  PROHIBITED DISTRIBUTION; DUTY TO RETURN.  (a) Prohibits an
LLC from making a distribution to a member if, immediately after making the
distribution, the company's total liabilities, other than liabilities
described by Subsection (b), exceed the fair value of its total assets.  

(b) Provides that, for purposes of Subsection (a), an LLC's liabilities do
not include a liability related to the member's membership interest or,
except as provided by Subsection (c), a liability for which the recourse of
creditors is limited to specified property of the company.  

(c) Provides that, for purposes of Subsection (a), an LLC's assets include
the fair value of property subject to a liability for which recourse of
creditors is limited to specified property of the company only if the fair
value of that property exceeds the liability.  

(d) Requires a member who receives a distribution from the company in
violation of this section to return the distribution to the company if the
member had knowledge of the violation. 
 
(e) Prohibits the construction of this section to affect the obligation of
a member to return a distribution to the company under the company
agreement or other state or federal law. 
 
Sec. 101.207.  CREDITOR STATUS WITH RESPECT TO DISTRIBUTION.  Provides that
when a member is entitled to receive a distribution from the company, the
member, with respect to the distribution, has the same status as a creditor
of the company and is entitled to any remedy available to the creditor,
subject to Sections 11.053 and 101.206. 

SUBCHAPTER F.  MANAGEMENT

Sec. 101.251.  MEMBERSHIP.  Provides that the governing authority of an LLC
consists of the managers of the company, if the company's certificate of
formation states that it will have one or more managers, or the members of
the company, if the company's certificate states that it will not have
managers. 
 
Sec. 101.252.  MANAGEMENT BY GOVERNING AUTHORITY.  Requires the governing
authority to manage the business and affairs of the company as provided by
the company agreement and this title and the provisions of Title 1
applicable to an LLC to the extent that the company agreement does not
provide for the management of the company. 
 
Sec. 101.253.  DESIGNATION OF COMMITTEES; DELEGATION OF AUTHORITY.
Authorizes the governing authority, by resolution, to designate one or more
committees of the governing authority consisting of one or more governing
persons of the company, and, subject to any limitation imposed by the
governing authority, a governing person to serve as an alternate member of
a committee at a committee meeting from which a member of the committee is
absent or disqualified.  Authorizes a committee of the governing authority
to exercise the authority of the governing authority as provided by the
resolution designating the committee.  Provides that the designation of a
committee under this section does not relieve the governing authority of
any responsibility imposed by law. 

Sec. 101.254.  DESIGNATION OF AGENTS; BINDING ACTS.  Provides that each
governing person of an LLC and each officer or agent of an LLC vested with
actual or apparent authority by the governing authority is an agent of the
company for purposes of carrying out the company's business, except as
provided by this title and Title 1.  Provides that an act committed by an
LLC's agent for the purpose of apparently carrying out the ordinary course
of business of the company binds the company unless the agent does not have
actual authority to act for the company and the person with whom the agent
is dealing has knowledge of the agent's lack of actual authority. Provides
that an act committed by an  agent of a limited liability company that is
not apparently for carrying out the ordinary course of business of the
company binds the company only if the act is authorized in accordance with
this title. 

Sec. 101.255.  CONTRACTS OR TRANSACTIONS INVOLVING INTERESTED GOVERNING
PERSONS OR OFFICERS.  (a)  Provides that this section applies only to a
contract or transaction between an LLC and one or more of its governing
persons or officers, or an entity or other organization in which one or
more of its governing persons or officers is a managerial official or has a
financial interest. 

(b)  Provides that an otherwise valid contract or transaction is valid if
the material facts as to the relationship or interest and as to the
contract or transaction are disclosed to or known by: 

  _the company's governing authority or a committee of the governing
authority and the governing authority or committee in good faith authorizes
the contract or transaction by the affirmative vote of the majority of the
disinterested governing persons or committee members, regardless of whether
the disinterested governing persons or committee members constitute a
quorum; or 

  _if the company has managers, the members of the company, and the members
in good faith approve the contract or transaction by a majority vote of all
of the members; or 

  _if the contract or transaction is fair to the company when the contract
or transaction is authorized, approved, or ratified by the governing
authority, a committee of the governing authority, or the members of the
company. 
 
(c) Authorizes the inclusion of common or interested governing persons of
an LLC  to determine the presence of a quorum at a meeting of the company's
governing authority, or of a committee of the governing authority that
authorizes the contract or transaction. 

SUBCHAPTER G.  MANAGERS

Sec. 101.301.  APPLICABILITY OF SUBCHAPTER.  Provides that this subchapter
applies only to an LLC that has one or more managers.  

Sec. 101.302.  NUMBER AND QUALIFICATIONS.  (a) Provides that an LLC's
managers may consist of one or more persons.  Provides that the number of
managers consists of the number of initial managers listed in the company's
certificate of formation, but authorizes an amendment to, or as provided
by, the company agreement to, increase or decrease the number of managers
of a limited liability company, except that a decrease in the number of
managers may not shorten the term of an incumbent manager.  Provides that a
manager is not required to be a resident of this state or member of the
company.  

Sec. 101.303.  TERM.  Sets forth that a manager serves for the term, if
any, for which the manager is elected and until the manager's successor is
elected or until the resignation, removal, or death of the manager. 

Sec. 101.304.  REMOVAL.  Authorizes the removal of a manager, with or
without cause, at a meeting of the company's members called for that
purpose, subject to Section 101.306(a). 

Sec. 101.305.  MANAGER VACANCY.  Authorizes the filling of a managerial
vacancy by the affirmative vote of the majority of the remaining managers,
without regard to whether the remaining managers constitute a quorum, or,
if the vacancy is a result of an increase in the number of managers, by an
election at an annual or special meeting of the company's members called
for that purpose, subject to Section 101.306(b).  Provides that a person
elected to fill a vacancy serves for the unexpired term of the person's
predecessor. 
 
Sec. 101.306.  REMOVAL AND REPLACEMENT OF MANAGER ELECTED BY CLASS OR
GROUP.  (a) Authorizes the removal of a manager from office only by the
class or group that elected the manager if the company agreement entitles a
class or group of members to elect one or more managers. 
 
(b)  Provides that a vacancy in the position of a manager elected as
provided by Subsection (a) may be filled only by a majority vote of the
managers serving on the date the vacancy occurs who were elected by the
class or group of members, or by a majority vote of the members of the
class or group. 

Sec. 101.307.  METHODS OF CLASSIFYING MANAGERS.  Authorizes the
establishment of other methods of classifying managers, including providing
for managers who serve for staggered terms of office or terms that are not
uniform, in the company agreement. 

SUBCHAPTER H.  MEETINGS AND VOTING

Sec. 101.351.  APPLICABILITY OF SUBCHAPTER.  Provides that this subchapter
applies only to a meeting of and voting by an LLC's governing authority, an
LLC's members if the members do not constitute the governing authority of
the company, and a governing authority's committee. 
 
Sec. 101.352.  GENERAL NOTICE REQUIREMENTS.  (a)  Requires that notice of a
regular or special meeting of the governing authority or members, or a
committee of the company's governing authority, be given in writing to each
governing person, member, or committee member, as appropriate, and as
provided by Section 6.051, except as provided by Subsection (b). 

(b) Requires that the notice provided by Subsection (a) be given by or at
the direction of the governing authority not later than the 10th day or
earlier than the 60th day before the date of the meeting if the members do
not constitute the governing authority of the company.  Provides that
notice of a meeting required under this subsection must state the business
to be transacted at the meeting or the purpose of the meeting if the
meeting is a special meeting or a purpose of the meeting is to consider a
matter described by Section 101.356. 
 
Sec. 101.353.  QUORUM.  Provides that a majority of all of the governing
persons, members, or committee members of an LLC constitutes a quorum for
the purpose of transacting business at a meeting of the governing
authority, members, or committee of the company, as appropriate. 
 
Sec. 101.354.  EQUAL VOTING RIGHTS.  Provides that each governing person,
member, or committee member has an equal vote at a meeting of the governing
authority, members, or committee of the company, as appropriate. 

Sec. 101.355.  ACT OF GOVERNING AUTHORITY, MEMBERS, OR COMMITTEE. Provides
that the affirmative vote of the majority of the governing persons,
members, or committee members present at a meeting at which a quorum is
present constitutes an act of the governing authority, members, or
committee of the company, as appropriate, except as provided by this title
or Title 1. 

Sec. 101.356.  VOTES REQUIRED TO APPROVE CERTAIN ACTIONS.  (a) Authorizes
an LLC's governing authority to approve an action of the company as
provided by Section 101.355, except as provided by this section or any
other section in this title 
 
(b) Provides that an LLC's action taken apparently not for carrying out the
ordinary course of business of the company must be approved by the
affirmative vote of the majority of  the company's governing persons,
except as provided by Subsections (c), (d), or (e) or any other section in
this title. 

(c) Provides that a fundamental business transaction of an LLC, or an
action that would make it impossible for an LLC to carry out its ordinary
business, must be approved by the affirmative vote of the majority of all
of the company's governing persons or, if the company has no managers, the
company's members, except as provided by Subsections (d) and (e) or other
sections in this title. 
  
(d) Provides that an amendment to an LLC's certificate of formation must be
approved by an affirmative vote of all of the company's governing persons
and, if the company has no managers, the company's members, except as
provided by Subsection (e) and other sections of this title. 

(e) Provides that a requirement that an LLC's action must be approved by
the company's members does not apply during a reasonable period between the
date the company is formed and the date the first member is admitted to the
company. 
 
Sec. 101.357.  MANNER OF VOTING.  Authorizes a member of an LLC to vote in
person or by a proxy executed in writing by the member.  Authorizes a
manager or committee member of an LLC, if authorized by the company
agreement, to vote in person or by a proxy executed in writing by the
manager or committee member, as appropriate. 

Sec. 101.358.  ACTION BY LESS THAN UNANIMOUS WRITTEN CONSENT.  Provides
that this section applies only to an action required or authorized to be
taken at an annual or special meeting of the governing authority, the
members, or a committee of the governing authority of an LLC under this
title, Title 1, or the governing documents of the company.  Authorizes the
taking of action without holding a meeting, providing notice, or taking a
vote if a written consent or consents stating the action to be taken is
signed by the number of governing persons, members, or committee members,
as appropriate, necessary to have at least the minimum number of votes that
would be necessary to take the action at a meeting at which each governing
person, member, or committee member, as appropriate, entitled to vote on
the action is present and votes. 

Sec. 101.359.  RIGHTS OF DISSENT AND APPRAISAL.  (a) Provides that an LLC
is not a domestic entity subject to dissenters' rights, and that its
members are not entitled to the rights of dissent and appraisal provided by
Subchapter H, Chapter 10, with respect to an action of the company
described by this title or Title 1, except as provided by Subsection (b). 

(b) Provides that an LLC is a domestic entity subject to dissenters' rights
and its members are entitled to the rights of dissent and appraisal
provided by Subchapter H, Chapter 10, if the rights of dissent and
appraisal are conferred by a company agreement. 

SUBCHAPTER I.  MODIFICATION OF DUTIES; INDEMNIFICATION

Sec. 101.401.  EXPANSION OR RESTRICTION OF DUTIES AND LIABILITIES.
Authorizes the expansion or restriction of duties, including fiduciary
duties, and liabilities of a person relating to the company or to a member,
manager, or officer of the company or an assignee of a membership interest
in the company to be made by an LLC's company agreement. 
 
Sec. 101.402.  PERMISSIVE INDEMNIFICATION, ADVANCEMENT OF EXPENSES, AND
INSURANCE OR OTHER ARRANGEMENTS.  Authorizes an LLC to indemnify a person,
pay in advance or reimburse expenses incurred by a person and purchase or
procure or establish and maintain insurance or another arrangement to
indemnify or hold harmless a person.  Defines "persons" for purposes of
this section. 

SUBCHAPTER J.  DERIVATIVE PROCEEDINGS

 Sec. 101.451.  DEFINITIONS.  Defines "derivative proceeding" and "member"
for purposes of this subchapter: 
  
Sec. 101.452.  STANDING TO BRING PROCEEDING.  Prohibits a member of an LLC
from instituting or maintaining a derivative proceeding unless: 

 _the member was a member at the time of the act or omission complained of,
or became a member by operation of law from a person that was a member at
the time of the act or omission complained of; and 

 _the member fairly and adequately represents the interests of the LLC in
enforcing the right of the company. 
 
Sec. 101.453.  DEMAND.  (a) Prohibits a member from instituting a
derivative proceeding until the 91st day after the date a written demand is
filed with the LLC stating with particularity the act, omission, or other
matter that is the subject of the claim or challenge and requesting that
the company take suitable action. 

(b)  Provides that the waiting period required by Subsection (a) before a
derivative proceeding may be instituted is not required if the member has
been previously notified that the demand has been rejected by the company,
the company is suffering irreparable injury, or irreparable injury to the
company would result by waiting for the expiration of the 90-day period. 

Sec. 101.454.  DETERMINATION BY GOVERNING OR INDEPENDENT PERSONS. (a)
Provides that the 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: 

 _the independent and disinterested governing persons present at a meeting
of the governing authority at which interested governing persons are not
present at the time of the vote if the independent and disinterested
governing persons constitute a quorum of the governing authority; 

 _a committee consisting of two or more independent and disinterested
governing persons appointed by an affirmative vote of the majority of one
or more independent and disinterested governing persons present at a
meeting of the governing authority, regardless of whether the independent
and disinterested governing persons constitute a quorum of the governing
authority; or 

 _a panel of one or more independent and disinterested persons appointed by
the court on a motion by the limited liability company listing the names of
the persons to be appointed and stating that, to the best of the limited
liability company's knowledge, the persons to be appointed are
disinterested and qualified to make the determinations contemplated by
Section 101.458. 

(b) Requires the court to appoint the panel if it finds that the persons
recommended by the LLC are independent and disinterested and are otherwise
qualified with respect to expertise, experience, independent judgment, and
other factors considered appropriate by it under the circumstances to make
the determinations.  Prohibits a person appointed by the court to the panel
from being held liable to the LLC or its members for an action taken or
omission made by the person in that capacity, except for acts or omissions
constituting fraud or wilful misconduct. 
 
Sec. 101.455.  STAY OF PROCEEDING.  (a) Requires the court to stay a
derivative proceeding, if the domestic or foreign LLC 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 101.454 is conducting an active review of the allegations in good
faith, 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) Requires the domestic or foreign LLC, in order to obtain a stay, to
provide the court with a written statement agreeing to advise the court and
the member making the demand of the determination promptly on the
completion of the review of the matter.  Authorizes the review, on motion,
of a stay every 60 days for the continued necessity of the stay.  

(c) Authorizes the renewal of the stay, if the review and determination
made by the person or group is not completed before the 61st day after the
date on which the court orders the stay, for one or more additional 60-day
periods if the domestic or foreign LLC provides the court and the member
with a written statement of the status of the review and the reasons why a
continued extension of the stay is necessary. 

Sec. 101.456.  DISCOVERY.  (a) Requires the discovery conducted by a member
after the filing of the derivative proceeding, if a domestic or foreign LLC
proposes to dismiss a derivative proceeding under Section 101.458, to be
limited to facts relating to whether the person or group of persons
described by Section 101.458 is independent and disinterested, the good
faith of the inquiry and review by the person or group, and the
reasonableness of the procedures followed by the person or group in
conducting the review. 

(b) Prohibits the expansion of this type of discovery from including a fact
or substantive matter regarding the act, omission, or other matter that is
the subject matter of the derivative proceeding.  Authorizes the expansion
of the scope of discovery if the court determines after notice and hearing
that a good faith review of the allegations for purposes of Section 101.458
has not been made by an independent and disinterested person or group in
accordance with that section. 

Sec. 101.457.  TOLLING OF STATUTE OF LIMITATIONS.  Provides that filing a
written demand with the LLC under Section 101.453 tolls the statute of
limitations on the claim until the earlier of the 91st day after the date
of the demand or the 31st day after the date the LLC advises the member
that the demand has been rejected or the review has been completed. 

Sec. 101.458.  DISMISSAL OF DERIVATIVE PROCEEDING.  (a)  Requires a court
to dismiss a derivative proceeding on a motion by the LLC if the person or
group of persons described by Section 101.454 determines in good faith that
continuation of the derivative proceeding is not in the best interests of
the LLC.  

(b) Requires the burden of proof, in determining whether the requirements
of Subsection (a) have been met, to fall on either the plaintiff member
under three specified circumstances or the LLC in any other circumstance. 
 
Sec. 101.459.  ALLEGATIONS IF DEMAND REJECTED.  Provides that in a case
where 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 of Sections
101.454 and 101.458. 
 
Sec. 101.460.  DISCONTINUANCE OR SETTLEMENT.  Prohibits the discontinuation
or settlement of a derivative proceeding without court approval.  Requires
the court to direct that notice be given to the affected members if it
determines that a proposed discontinuance or settlement may substantially
affect the interests of other members. 
 
Sec. 101.461.  PAYMENT OF EXPENSES.  Defines "expenses" for purposes of
this section. Authorizes the court, on termination of a derivative
proceeding, to order either the domestic or foreign LLC or the plaintiff
to pay the expenses of its adversary, depending on which party the court
finds has benefitted from the proceeding.  Authorizes the court, on
termination of a derivative proceeding, to order a party to pay the
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 legally insufficient in fact or law or if used for an improper
purpose. 
 
Sec. 101.462.  APPLICATION TO FOREIGN LIMITED LIABILITY COMPANIES. Provides
that in a derivative proceeding brought in the right of a foreign LLC the
matters covered by this subchapter are governed by the laws of the foreign
LLC's place of organization, except for Sections 101.455, 101.460, and
101.461, which are procedural provisions and do not relate to the internal
affairs of the foreign LLC.  Provides that in the case of matters relating
to a foreign LLC under Section 101.454, a reference to a person or group of
persons described by that section refers to a person or group entitled
under the laws of the foreign LLC's place of organization to review and
dispose of a derivative proceeding. Requires the governance of the standard
of review of a decision made by the person or group to dismiss the
derivative proceeding by the laws of the foreign LLC's place of
organization. 

Sec. 101.463.  CLOSELY HELD LIMITED LIABILITY COMPANY.  Defines "closely
held limited liability company" for purposes of this section.  Specifies
that Sections 101.452-101.459 do not apply to a closely held LLC, except
that a court is authorized to treat a derivative proceeding brought by a
member of a closely held LLC as a direct action brought by the member for
the member's own benefit, and that a recovery in a direct or derivative
proceeding by a member is authorized to be paid directly to the plaintiff
or to the LLC if necessary to protect the interests of creditors or other
members of the LLC. 

SUBCHAPTER K.  SUPPLEMENTAL RECORDKEEPING REQUIREMENTS

Sec. 101.501.  ADDITIONAL RECORDS REQUIRED.  Enumerates the records
required to be kept by an LLC at its principal office in the United States
or to be made available, at that office, to a person who submits a written
request to examine the books and records of the company.  Provides for an
exception to the information required to be kept or made available at the
office in the United States. Specifies the information required to be kept
by an LLC and made available to a member of the company at the LLC's
registered office located in this state. 

Sec. 101.502.  RIGHT TO EXAMINE RECORDS AND CERTAIN OTHER INFORMATION.  (a)
Authorizes a member or an assignee of a membership interest, or a
representative of the member or assignee, on written request and for a
proper purpose, to examine and copy at any reasonable time and at the
member's or assignee's expense records required under Sections 3.151 and
101.501 and other business information. 
 
(b)  Enumerates the documents that an LLC is required to provide to a
member or an assignee of a membership interest, on written request by the
member or assignee. 

SUBCHAPTER L.  SUPPLEMENTAL WINDING UP AND TERMINATION PROVISIONS

Sec. 101.551.  ADDITIONAL EVENT REQUIRING WINDING UP.  Provides that the
termination of the continued membership of the last remaining member of an
LLC is an event that requires the winding up of a domestic entity unless,
by the 90th day after the termination, the legal representative or
successor of the last remaining member agrees to continue the company and,
from the date of the termination, to become a member of the company or
nominate or delegate another person to become a member of the company. 

Sec. 101.552.  PERSONS ELIGIBLE TO WIND UP COMPANY.  Provides that the
winding up of the company, unless a revocation as provided by Section
11.151 or a cancellation as provided by Section 11.152 occurs, must be
carried out by the company's governing authority or one or more persons
designated by the governing authority, if the event requiring the winding
up is the termination of the continued membership of the last remaining
member, the legal representative or successor of the last remaining member
or one or more persons designated by the legal representative or successor,
or a person appointed by the court to carry out the winding up. 

Sec. 101.553.  APPROVAL OF VOLUNTARY WINDING UP, REVOCATION,  CANCELLATION,
OR REINSTATEMENT.  Provides that a majority vote of all of the governing
persons of an LLC and, if the LLC has managers, a majority vote of all of
the members is required to approve a voluntary winding up of the company, a
revocation of a voluntary decision to wind up, a cancellation of an event
requiring the winding up of the company, or a reinstatement of a terminated
company. 

TITLE 4.  PARTNERSHIPS

CHAPTER 151.  GENERAL PROVISIONS

Sec. 151.001.  DEFINITIONS.  Defines "capital account," "foreign limited
partnership," "majority-in-interest," and "partnership agreement." 

Sec. 151.002.  KNOWLEDGE OF FACT.  Provides that a person has knowledge of
a fact only if the person has actual knowledge of the fact. 

Sec. 151.003.  NOTICE OF FACT.  Specifies when a person has notice of a
fact. 

CHAPTER 152.  GENERAL PARTNERSHIPS

SUBCHAPTER A. GENERAL PROVISIONS

Sec. 152.001.  DEFINITIONS. Defines "event of withdrawal," "withdrawal,"
"event requiring winding up," "foreign limited liability partnership,"
"other partnership provisions," "transfer," and "withdrawn partner." 

Sec. 152.002. EFFECT OF PARTNERSHIP AGREEMENT; NONWAIVABLE AND VARIABLE
PROVISIONS.  Provides that a partnership agreement governs the relations of
the partners and between the partners and the partnership.  Provides that
this chapter and the other partnership provisions govern the relationship
of the partners and between the partners and the partnership.  Prohibits a
partnership agreement from containing specified provisions and the partners
from taking certain actions.  Prohibits one of the above prohibited
provisions from being waived or modified in a partnership agreement if the
provision that is waived or modified authorizes the partnership to waive or
modify the provision in the partnership's governing documents, unless the
provision that is modified specifies the person or group of person entitled
to approve a modification or the vote or other method by which a
modification is required to be approved. 

Sec.  152.003.  SUPPLEMENTAL PRINCIPLES OF LAW.  Provides that the
principles of law and equity and the other partnership provisions
supplement this chapter, unless otherwise provided by this chapter or the
other partnership provisions.  

Sec. 152.004.  RULE OF STATUTORY CONSTRUCTION NOT APPLICABLE.  Provides
that the rule that a statute in derogation of the common law is to be
strictly construed does not apply to this chapter or the other partnership
provisions.  

Sec. 152.005. APPLICABLE INTEREST RATE. Provides that if an obligation to
pay interest arises under this chapter and the rate is not specified, the
interest rate is the rate specified by Section 302.002, Finance Code.  

SUBCHAPTER B.  NATURE AND CREATION OF PARTNERSHIP

Sec. 152.051.  PARTNERSHIP DEFINED.  Provides that in this section,
"association" does not have the meaning of the term "association" under
Section 1.002.  Provides that except as provided by Subsection (c) and
Section 152.053(a), an association of two or more persons to carry on a
business for profit as owners creates a partnership, regardless of whether
the persons intend to create a partnership or the association is called a
"partnership," "joint venture," or other name. Establishes that an
association or organization is not a partnership if it was created under a
statue other than this title and the provisions of Title 1 applicable  to
partnerships and limited partnerships, a predecessor to those statutes, or
a comparable statute of another jurisdiction.  

(d)  Provides that the provisions of this chapter govern limited
partnerships only to the extent provided by Sections 153.003 and 153.152
and Subchapter H, Chapter 153. 

Sec. 152.052.  RULES FOR DETERMINING IF PARTNERSHIP IS CREATED.  Specifies
the factors indicating that persons have created a partnership. Specifies
the circumstances, by themselves, that do not indicate that a person is a
partner in the business.  Provides that an agreement by the owners of a
business to share losses is not necessary to create a partnership. 

Sec. 152.053.  QUALIFICATIONS TO BE PARTNER; NONPARTNER'S LIABILITY TO
THIRD PERSON.  Authorizes a person to be a partner unless the person lacks
capacity apart from this chapter.  Provides that a person who is not a
partner in a  a third person under this chapter, except as provided by
Sections 152.054, 152.307, 152.505, and 152.506.  

Sec. 152.054.  FALSE REPRESENTATION OF PARTNERSHIP OR PARTNER.   Provides
that a false representation or conduct falsely indicating that a person is
a partner with another person does not by itself create a partnership.
Provides that a representation or other conduct indicating that a person is
a partner in an existing partnership does not by itself make that person a
partner in the partnership, if that person is not a partner in that
existing partnership.  

SUBCHAPTER C.  PARTNERSHIP PROPERTY

Sec. 152.101. NATURE OF PARTNERSHIP PROPERTY. Provides that partnership
property is not property of the partners.  Provides that a partner or a
partner's spouse does not have an interest in partnership property.  

Sec. 152.102.  CLASSIFICATION AS PARTNERSHIP PROPERTY.  (a) Establishes
that property is partnership property if acquired in the name of the
partnership, or in the name of one or more partners, regardless of whether
the name of the partnership is indicated, if the instrument transferring
title indicates the person's capacity as a partner or the existence of a
partnership.  

(b)  Establishes that property is presumed to be partnership property if it
is acquired with partnership property, regardless of whether the property
is acquired as provided by Subsection (a).  

(c)  Establishes that property acquired in the name of one or more partners
is presumed to be the partner's property, regardless of whether the
property is used for partnership purposes, if the instrument transferring
title to the property does not indicate the person's capacity as a partner
or the existence of a partnership and if the property is not acquired with
partnership property.  

(d) Provides that for purposes of this section, property is acquired in the
name of the partnership by a transferring it to the partnership in its name
or to one or more partners in the partners' capacity in the partnership if
the name of the partnership is indicated in the instrument transferring
title to the property.  

SUBCHAPTER D.  RELATIONSHIP BETWEEN PARTNERS AND BETWEEN
PARTNERS AND PARTNERSHIPS

Sec. 152.201.  ADMISSION AS PARTNER.  Provides that a person may become a
partner only with the consent of all partners.  

Sec. 152.202.  CREDITS OF AND CHARGES TO PARTNER.  Provides that a partner
is credited with an amount equal to the cash and the value of property that
the partner contributes to a partnership and the partner's share of the
partnership's profits. Provides that  a partner is charged with an amount
equal to the cash and the value of property distributed by the partnership
to the partner and the partner's share of the partnership's losses.
Entitles a partner to be credited with an equal share of the partnership's
profits and to be chargeable with a share of the partnership's capital or
operating losses in proportion to the partner's share of the profits.  

Sec. 152.203.  RIGHTS AND DUTIES OF PARTNER.  (a) Provides that a partner
has equal rights in the management and conduct of the business of a
partnership.  Establishes that a partner's right to participate in the
management and conduct of the business is not community property.  

(b)  Authorizes a partner to use or possess partnership property on behalf
of the partnership only.  

(c)  Provides that a partner is not entitled to receive compensation for
services performed for a partnership, except for reasonable compensation
for services rendered in winding up partnership business.  

(d)  Entitles a partner acting in the proper conduct of the business of the
partnership or for the preservation of its business or property, who
reasonably makes a payment or advance above the amount that the partner
agreed to contribute or who reasonably incurs a liability, to be repaid and
to receive interest from the date of the payment or advance or incurrence
of the liability.  

Sec. 152.204.  GENERAL STANDARDS OF PARTNER'S CONDUCT.  (a) Sets forth that
a partner owes to the partnership and the other partners a duty of loyalty
and a duty of care. 
 
(b)  Requires a partner to act in good faith and in a manner that the
partner reasonably believes is in the best interest of the partnership in
discharging duties to the partnership and the other partners under this
code or under the partnership agreement and in exercising rights and powers
in the conduct or winding up of the partnership business. 
 
(c)  Provides that a partner does not violate a duty or obligation under
this chapter or under the partnership agreement merely because the
partner's conduct furthers the partner's own interest.  

(d)  Establishes that a partner, in the capacity as partner, is not a
trustee and is not held to the standards of a trustee.  

Sec. 152.205.  PARTNER'S DUTY OF LOYALTY.  Sets forth the elements of a
partner's duty of loyalty to the partnership and the other partners.  

Sec. 152.206.  PARTNER'S DUTY OF CARE.  Sets forth the elements of a
partner's duty of care to the partnership and the other partners. 

Sec. 152.207.  STANDARDS OF CONDUCT APPLICABLE TO PERSON WINDING UP
PARTNERSHIP BUSINESS.  Provides that Sections 152.204-152.206 apply to a
person who is winding up the partnership business as the personal or legal
representative of the last surviving partner to the same extent as those
sections apply to a partner.  

Sec. 152.208.  AMENDMENT TO PARTNERSHIP AGREEMENT.  Provides that a
partnership agreement may be amended with the consent of all of the
partners.  

Sec. 152.209.  DECISION-MAKING REQUIREMENT.   Provides that a difference
arising in a matter in the ordinary course of the partnership business may
be decided by a majority-in-interest of the partners. Provides that an act
that is outside the partnership's ordinary course of business may be
undertaken with the consent of all partners.  

Sec. 152.210.  PARTNER'S LIABILITY TO PARTNERSHIP AND OTHER PARTNERS.
Establishes that a partner is liable to a partnership and the other
partners for  breaching the partnership agreement or violating a duty owed
to the partnership or other partners which harms  the partnership or the
partners.  

Sec. 152.211.  REMEDIES OF PARTNERSHIP AND PARTNERS. Authorizes a
partnership to maintain an action against a partner for breaching the
partnership agreement or for  violating a duty to the partnership which
causes harm to the partnership. Authorizes a partner to maintain an action
against the partnership or another partner for legal or equitable relief,
including an accounting of partnership business, to enforce a right under
the partnership agreement, enforce a specified right under this chapter, or
enforce the rights and protect the interests of the partner, including
rights and interests independent of the partnership relationship.  Provides
that the accrual of and a time limitation on a right of action for a remedy
under this section is governed by other applicable law. Provides that a
right to an accounting does not revive a claim barred by law.  

Sec. 152.212.  BOOKS AND RECORDS OF PARTNERSHIP. Provides that in this
section, "access" includes the opportunity to inspect and copy books and
records during ordinary business hours.  Requires a partnership to keep its
books and records at its chief executive office. Requires a partnership to
provide access to its books and records to a partner or a partner's agent
or attorney. Requires the partnership to provide a former partner or a
former partner's agent or attorney access to books and records of the
period during which the former partner was a partner or for any other
proper purpose with respect to another period. Authorizes a  partnership to
impose a reasonable charge to cover the costs of labor and materials for
copies of furnished documents. 

Sec. 152.213.  INFORMATION REGARDING PARTNERSHIP.  Requires each partner
and the partnership to furnish information concerning the partnership to
specified individuals, upon request and to the extent just and reasonable.
Provides that a legal representative of a deceased partner or of a partner
who has a legal disability and an assignee are subject to the duties of a
partner with respect to information made available.  

Sec. 152.214.  CERTAIN THIRD-PARTY OBLIGATIONS NOT AFFECTED.  Provides that
Sections 152.201-152.203, 152.208, 152.209, 154.101-154.103, and 154.201 do
not limit a partnership's obligations to another person under Sections
152.301 and 152.302.  
 
SUBCHAPTER E.  RELATIONSHIP BETWEEN PARTNERS
AND OTHER PERSONS

Sec. 152.301.  PARTNER AS AGENT.  Provides that a partner is an agent of
the partnership for business purposes.  

Sec. 152.302.  BINDING EFFECT OF PARTNER'S ACTION.  (a) Provides that an
act of a  partner, including executing an instrument in the partnership
name, binds the partnership if the act is for apparently carrying on in the
ordinary course the partnership business or the kind of business carried on
by the partnership, unless a partner is not authorized to act for the
partnership in a particular matter and the person with whom the partner is
dealing knows that the partner lacks authority. 

(b)  Provides that an act of a partner that is not apparently for carrying
on in the ordinary course a business described by Subsection (a) binds the
partnership only if authorized by the other partners.  

(c)  Provides that a partner's conveyance of real property on behalf of the
partnership, which is not otherwise binding on the partnership, binds the
partnership if the property has been subsequently conveyed by the grantee
or a person claiming through the grantee to be a holder for value without
knowledge that the partner exceeded that partner's authority in making the
conveyance.  

Sec. 152.303.  LIABILITY OF PARTNERSHIP FOR CONDUCT OF PARTNER.   Provides
that a partnership is liable for loss or injury to a person, including a
partner, or for a penalty caused by or incurred as a result of a wrongful
act or omission or other actionable conduct of a partner while acting in
the ordinary course of  partnership business or with the partnership's
authority.  Provides that a partnership is liable for the loss of money or
property of a person who is not a partner which is received in the course
of the partnership's business and misapplied by a partner while in the
custody of the partnership.  

Sec. 152.304.  NATURE OF PARTNER'S LIABILITY. Provides that all partners
are jointly and severally liable for a partnership debt or obligation
unless otherwise agreed by the claimant or provided by law, except as
otherwise provided by this section or Section 152.801(b).  Provides that a
person who is admitted as a partner into an existing partnership does not
have personal liability for a partnership obligation that arises before the
partner's admission, relates to an action taken or omission occurring
before the partner's admission, or arises under a contract or commitment
entered into before the partner's admission.  

Sec. 152.305.  REMEDY.  Provides that an action may be brought against a
partnership and any or all of the partners in the same action or in
separate actions.  

Sec. 152.306.  ENFORCEMENT OF REMEDY. (a) Provides that a judgment against
a partnership is not by itself a judgment against a partner. Authorizes the
entering of a judgment against a partner who has been served with process
in a suit against the partnership. 

(b) Authorizes a creditor to proceed against one or more partners or the
partners' property to satisfy a judgment based on a claim against the
partnership if certain conditions are met, except as provided by Subsection
(c). 
   
(c)  Provides that a creditor is not prohibited from proceeding directly
against one or more partners or the partners' property without first
seeking satisfaction from partnership property in specified circumstances. 
     
(d)  Provides that this section does not limit the effect of Section
152.801 with respect to a registered limited liability partnership.  

Sec. 152.307. EXTENSION OF CREDIT IN RELIANCE ON FALSE REPRESENTATION.
Provides that the rights of a person who extends credit in reliance on a
representation described by Section 152.054 are not determined by this
chapter and the other partnership provisions, and is determined by
applicable law, including the law of estoppel, agency, negligence, fraud,
and unjust enrichment. Provides that the rights and duties of a person who
is held liable under Subsection (a) are determined by law other than the
law described by Subsection (a).  

SUBCHAPTER F.   TRANSFER OF PARTNERSHIP INTERESTS

Sec. 152.401. TRANSFER OF PARTNERSHIP INTEREST.  Authorizes a partner to
transfer all or part of the partner's partnership interest.  

Sec. 152.402.  GENERAL EFFECT OF TRANSFER.  Provides that a transfer of all
or part of a partner's partnership interest is not an event of withdrawal,
does not by itself cause a winding up of the partnership business, and does
not entitle the transferee to participate in the management or conduct of
partnership business.  
   
Sec. 152.403. EFFECT OF TRANSFER ON TRANSFEROR. Provides that after the
transfer, the transferor continues to have a partner's rights and duties
which are not transferred. 
 
Sec. 152.404.  RIGHTS AND DUTIES OF TRANSFEREE.  (a) Entitles a transferee
of a partner's partnership interest to receive, to the extent transferred,
distributions to which the transferor would be entitled.  

 (b) Entitles a transferee, in the event of winding up partnership business
under Subchapter I, to receive to the extent transferred, the net amount
otherwise distributable to the transferor. 

(c)  Provides that the transferee is not liable as a partner solely as a
result of the transfer, until the transferee becomes a partner. 
  
(d)  Authorizes the transferee, for a proper purpose, to require reasonable
information or an account of a partnership transaction and to make
reasonable inspection of the partnership books.  Authorizes a transferee,
in the winding up of partnership business, to require an accounting from
the date of the latest accounting agreed to by all of the partners. 

(e)  Provides that a partnership is not required to give effect to a
transferee's rights under this section and Sections 152.401, 152.402,
and152.403 until it receives notice of the transfer.  

Sec. 152.405. POWER TO EFFECT TRANSFER OR GRANT OF SECURITY INTEREST.
Provides that a partnership is not required to give effect to a transfer
prohibited by a partnership agreement.  

Sec. 152.406.  EFFECT OF DEATH OR DIVORCE ON PARTNERSHIP INTEREST. (a)
Provides, for purposes of this code, that: 

(1)  on the divorce of a partner, the partner's spouse is a transferee of
the partnership interest from the partner to the extent of the spouse's
partnership interest; 

(2)  on the death of a partner, the partner's surviving spouse, heir,
legatee, or personal representative is a transferee of the partnership
interest from the partner to the extent of their respective partnership
interest; and 

(3)  on the death of a partner's spouse, an heir, legatee, or personal
representative of the spouse is a transferee of the partnership interest
from the partner to the extent of their respective partnership interest. 

(b) Provides that an event described under Section 152.501 that occurs with
respect to a partner's spouse is not an event of withdrawal. 

(c) Provides that this chapter does not impair an agreement for the
purchase or sale of a partnership interest, including the death of an owner
of the partnership interest.  
 
SUBCHAPTER G.  WITHDRAWAL OF PARTNER

Sec. 152.501.  EVENTS OF WITHDRAWAL.  Provides that person ceases to be a
partner on the occurrence of an event of withdrawal.  Establishes that an
event of withdrawal of a partner occurs on specified dates, occurrences,
and under specified circumstances. 

Sec. 152.502.  EFFECT OF EVENT OF WITHDRAWAL ON PARTNERSHIP AND OTHER
PARTNERS.  Provides that a partnership continues after an event of
withdrawal and affects the relationships among the withdrawn partner, the
partnership, and the continuing partners as provided by specified sections.

Sec. 152.503. WRONGFUL WITHDRAWAL; LIABILITY. Authorizes a partner to
withdraw from the partnership and cease being a partner pursuant Section
152.501 any time before the occurrence of an event requiring a winding up
of partnership business.  Specifies the circumstances under which a
partner's withdrawal is wrongful. 
     
Sec. 152.504.  WITHDRAWN PARTNER'S POWER TO BIND PARTNERSHIP.  Provides
that an action of a withdrawn partner binds the partnership, if the
transaction would bind the  partnership before the person's withdrawal; the
transaction occurs no later than the first anniversary of the date of the
withdrawal; and the other party to the transaction does not have notice of
the withdrawal, conducted business with the partnership within one year
prior to the withdrawal date, and reasonably believed the withdrawn partner
was a partner at the time of the transaction.  Establishes that a withdrawn
partner is liable to the partnership for a loss to the partnership that is
incurred by the withdrawn partner and for which the partnership is liable
under Subsection (a).  

Sec. 152.505.  EFFECT OF WITHDRAWAL ON PARTNER'S EXISTING LIABILITY. (a)
Specifies that the withdrawal of a partner does not discharge the partner's
liability for an partnership obligation before withdrawal.  

(b)  Provides that a deceased partner's estate is liable for an partnership
obligation incurred while the deceased was a partner.   

(c)  Provides that a withdrawn partner's liability that is incurred before
withdrawal is discharged if agreed by the partner and a partnership
creditor.  

(d)  Provides that a withdrawn partner is discharged from a partnership
obligation incurred before withdrawal if a creditor of the partnership has
notice of a partner's withdrawal and agrees to a material alteration in the
nature or time of payment of the obligation without the withdrawn partner's
consent.  

Sec. 152.506.  LIABILITY OF WITHDRAWN PARTNER TO THIRD PARTY.  Provides
that in the event that a partner withdraws in a circumstance that is not a
winding up of partnership business, and a transaction was entered into by
the partnership or a surviving partnership under Section 10.001 no later
than the second anniversary of the date of the withdrawal, the withdrawn
partner is liable to another party as a partner if the other party to the
transaction: 

(1)  does not have notice of the partner's withdrawal; and

(2)  reasonably believed that the withdrawn partner was a partner at the
time of the transaction.  

SUBCHAPTER H.  REDEMPTION OF WITHDRAWING PARTNER OR
TRANSFEREE'S INTEREST

Sec. 152.601.  REDEMPTION IF PARTNERSHIP NOT WOUND UP.  Provides that a
withdrawn partner's partnership interest is automatically redeemed by the
partnership as of the date of withdrawal in accordance with this subchapter
if the withdrawal occurs under specified circumstances. 
   
Sec. 152.602.  REDEMPTION PRICE.  Establishes that the redemption price of
a withdrawn partner's partnership interest is the fair value of the
interest on the date of withdrawal. Specifies the redemption price of the
partnership interest of a partner who wrongfully withdraws before the
expiration of a definite term, the completion of a particular undertaking,
or the occurrence of a specified event requiring a winding up of
partnership business.  Provides that interest is payable on the amount owed
under this section.  

Sec. 152.603.  CONTRIBUTION OBLIGATION.  Provides that if a wrongfully
withdrawing partner would have been required to make contributions to the
partnership under Section 152.708 or 152.709 if an event requiring winding
up of the partnership business had occurred at the time of withdrawal, the
withdrawn partner is liable to the partnership to make contributions to the
partnership in that amount and pay interest on the amount owed.  

Sec. 152.604.  SETOFF FOR CERTAIN DAMAGES.  Authorizes the partnership to
offset damages for wrongfully withdrawing and all amounts owed by the
withdrawn partner to the partnership, including interest, against the
redemption price that is payable to the withdrawn  partner. 

Sec. 152.605.  ACCRUAL OF INTEREST.  Provides that interest payable under
Sections 152.602-152.604 accrues from the withdrawal date to the payment
date.  

Sec. 152.606. INDEMNIFICATION FOR CERTAIN LIABILITY. Requires a partnership
to indemnify a withdrawn partner against a partnership liability incurred
before the date of withdrawal, except for a liability that is unknown to
the partnership at the time or incurred by an act of the withdrawn partner
under Sections 152.504.  Provides that, for purposes of this section, a
liability is unknown to the partnership if it is not known to a partner
other than the withdrawn partner.  

Sec. 152.607.  DEMAND OR PAYMENT OF ESTIMATED REDEMPTION.  (a) Requires the
partnership, if a deferred payment is not authorized under Section 152.608
and no agreement on the redemption price of a withdrawn partner's interest
is reached before the 121st day after written demand for payment by either
party, to take specified actions relating to the payment of the redemption
amount to the withdrawn partner and written demand for payment, within 30
days after the expiration of the period. 

(b)  Authorizes the partnership, if a deferred payment is authorized or a
contribution or other amount is owed by the withdrawn partner to the
partnership, to make a written offer to pay, or deliver a written statement
of demand for, the amount it estimates to be the net amount owed which
includes other terms of the obligation. 

(c)  Provides that, upon request of the other party, the payment, tender,
offer, or demand must be accompanied or followed promptly by specified
action. 

(d)  Provides that the terms of a payment, tender, offer, or demand govern
a redemption in certain circumstances. 
   
Sec. 152.608.  DEFERRED PAYMENT ON WRONGFUL WITHDRAWAL.  Provides that a
partner who wrongfully withdraws before a definite term, the completion of
an undertaking, or the occurrence of a specified event requiring a winding
up, is not entitled to receive any portion of the redemption price until
such conditions are met, unless the partner satisfies a court that earlier
payment will not cause undue hardship to the partnership.  Provides that
deferred payment accrues interest. Authorizes the withdrawn partner to seek
to demonstrate to the court that security for a deferred payment is
appropriate.  

Sec. 152.609.  ACTION TO DETERMINE TERMS OF REDEMPTION.  (a)  Authorizes a
withdrawn partner or the partnership to maintain an action against the
other party under Section 152.211 to determine the terms of redemption of
that partner's interest or other terms of the redemption obligations of
either party.  

(b)  Provides specified deadlines for the time in which an action must be
commenced.   

(c)  Requires the court to determine the terms of the redemption of the
withdrawn partner's interest, any contribution obligation or setoff due,
and accrued interest and to enter judgment for an additional payment or
refund.  

(d)  If deferred payment is authorized under Section 152.608, the court
shall also determine the security for payment if requested to consider
whether security is appropriate.  

(e)  Authorizes the court to equitably assess specified damages against a
party who failed to tender payment or make an offer to pay or to comply
with the requirements of Section 152.607(c) or otherwise acted arbitrarily,
vexatiously, or not in good faith. 
  
Sec. 152.610. DEFERRAL ON WINDING UP PARTNERSHIP. (a) Authorizes the
partnership to defer paying the redemption price until the partnership
makes a winding up  distribution to the remaining partners if the partner
withdraws under Section 152.501 and an specified event requiring winding up
occurs no later than the 60th day after the date of withdrawal. 

(b)  Establishes that the redemption price or contribution obligation is
the amount the withdrawn partner would have received or contributed if the
event requiring winding up had occurred at the time of the partner's
withdrawal.  

Sec. 152.611. REDEMPTION OF TRANSFEREE'S PARTNERSHIP INTEREST. (a)
Provides that a partnership must redeem the partnership interest of a
transferee for its fair value if certain conditions are met.  
  
(b) Provides that the partnership must pay the transferee the cash amount
that the partnership estimates to be the redemption price plus any accrued
interest from the date of demand within a specified time period if an
agreement for the redemption price is not reached before the 121st day
after the date of a written demand. 

(c) Provides that upon request of the transferee, the payment  must be
accompanied or followed by specified income and liability statements. 
   
(d) Provides that if the payment is accompanied by written notice that it
fully satisfies the partnership's obligations relating to the redemption of
the transferee's interest, then the payment less interest is the redemption
price, unless the transferee commences an action to determine the
redemption price within a specified time period. 

Sec.152.612. ACTION TO DETERMINE TRANSFEREE'S REDEMPTION PRICE. (a)
Authorizes a  transferee to maintain an action against a partnership to
determine the redemption price of the transferee's interest.  

(b)  Requires the court to determine the redemption price of the
transferee's interest and accrued interest and enter judgment for payment
or refund.  

(c) Authorizes the court to assess reasonable and equitable attorney's fees
and other specified fees and expenses against the partnership if the court
finds that the partnership failed to make payment or acted arbitrarily,
vexatiously, or not in good faith. 

(d) Authorizes the redemption of a transferee's interest under Sections
152.611 to be deferred by the court if the partnership establishes that the
failure to defer will cause undue hardship to the partnership business.  

SUBCHAPTER I.  SUPPLEMENTAL WINDING UP AND
TERMINATION PROVISIONS

Sec. 152.701.  ADDITIONAL EVENTS REQUIRING WINDING UP.  Specifies events
that require winding up of a partnership, in addition to any event
specified in Section 11.051. 
  
Sec. 152.702.  EFFECT OF EVENT REQUIRING WINDING UP.  Provides the
partnership continues until the winding up of its business is completed, at
which time the partnership is terminated and the relationship among the
partners is changed as provided by this subchapter.  
Sec. 152.703.  PERSONS ELIGIBLE TO WIND UP PARTNERSHIP BUSINESS.  Provides
that the partnership business may be wound up by the partners who have not
withdrawn, the legal representative of the last surviving partner, or a
person appointed by the court under this section.  Authorizes a court, on
application of a partner, a partner's legal representative or transferee,
or a withdrawn partner whose interest is not redeemed under Section 152.608
and for good cause, to appoint a person to carry out the winding up and
make an order, direction, or inquiry that the circumstances require.  
 
Sec. 152.704.  RIGHTS AND DUTIES OF PERSON WINDING UP PARTNERSHIP
BUSINESS.  Authorizes a person winding up a partnership's business to, in
the name of and for and on behalf of the partnership, prosecute and defend
a civil, criminal, or administrative suit; settle and close the
partnership's business; dispose of and convey the partnership's property;
satisfy or provide for the satisfaction of the partnership's liabilities;
distribute to the partners any remaining property of the partnership; and
perform the actions specified in Sections 11.052, 11.053, and 11.055.
Prohibits Section 11.052(a)(2) from being applicable to a partnership. 
 
Sec. 152.705.  BINDING EFFECT OF PARTNER'S ACTION AFTER EVENT REQUIRING
WINDING UP.  Provides that after an event occurs which requires winding up
of the partnership business, a partnership is bound by a partner's act that
is appropriate for winding up or would bind the partnership under Sections
152.301 and 152.302 before the event occurred, if the other party to the
transaction does not have notice of the event requiring the winding up.   

Sec. 152.706. PARTNER'S LIABILITY TO OTHER PARTNERS AFTER WIND UP. Provides
that after an event occurs requiring winding up of the partnership
business, the losses which a partner must contribute under specified
sections include losses from a liability incurred under Section 152.705,
except as provided by this section. Provides that a partner who incurs a
partnership liability by an act that is not appropriate for winding up and
has notice that an event requiring a winding, is liable to the partnership
for a loss arising from that liability.  

Sec. 152.707.  DISPOSITION OF ASSETS.  Requires partnership property,
including any required contributions of the partners under Sections 152.708
and 152.709, in winding up the partnership business, to be applied to its
obligations to creditors, including partners who are creditors other than
in a partner capacity.  Requires that a surplus be applied to pay cash
distributions to partners pursuant to their rights to distributions under
Section 152.708. 
 
Sec. 152.708.  SETTLEMENT OF ACCOUNTS.  (a) Entitles each partner to a
settlement of all partnership accounts on winding up the partnership
business.  

(b)  Sets forth procedures in settling accounts among the partners.  

(c)  Provides that the profits and losses that result from the liquidation
of the partnership property must be credited and charged to the partners'
capital accounts.  

(d)  Requires the partnership to distribute to a partner an amount equal to
the positive balance in that partner's capital account.  Requires a partner
to contribute to the partnership the amount of the negative balance in the
partner's capital account, except as provided by Section 152.304(b) or
152.801.  

Sec. 152.709.  CONTRIBUTIONS TO DISCHARGE OBLIGATIONS.  (a) Requires each
partner to contribute the amount necessary to satisfy partnership
obligations, excluding specified liabilities, in the same proportion that
the partner shares partnership losses; requires the other partners, if a
partner fails to contribute, to contribute the additional amount necessary
to satisfy the partnership obligations in the proportions in which the
partners share partnership losses; and authorizes a partner or partner's
legal representative to recover specified amounts from the other partners
or the estate of a deceased partner, except as provided by Sections
152.304(b) and 152.801, to the extent not taken into account in settling
the accounts among partners under Section 152.708.  

(b)  Provides that the estate of a deceased partner is liable for the
partner's obligation to contribute to the partnership.  

(c)  Specifies the persons authorized to enforce the obligation of a
partner or the estate of a deceased partner to contribute to a partnership. 
   
Sec. 152.710.  CONTINUATION OF PARTNERSHIP.  Describes the circumstances in
which a partnership created for a definite term or for a particular
undertaking or for which the partnership agreement provides for winding
upon the occurrence of a specified event. Specifies circumstances which
constitute prima facie evidence of agreement by all partners to continue
the business. Specifies circumstances which constitute prima facie evidence
of an agreement to continue the partnership under Section 152.701(b).   

 SUBCHAPTER J.  REGISTERED LIMITED LIABILITY PARTNERSHIPS

Sec. 152.801.  LIABILITY OF PARTNER.  (a) Provides that a partner in a
registered limited liability partnership is not personally liable, directly
or indirectly, by contribution, indemnity, or otherwise, for a debt or
partnership obligation incurred while the partnership is a registered
limited liability partnership, except as provided by Subsection (b).  

(b)  Provides that a partner in a registered limited liability partnership
is not personally liable for a partnership debt or obligation arising from
an error, an omission, negligence, incompetence, or malfeasance committed
by another partner or representative of the partnership while the
partnership is a registered limited liability partnership unless the first
partner: 

(1)  was supervising or directing the other partner or representative when
the error, omission, negligence, incompetence, or malfeasance was committed
by the other partner or representative; or 

(2) was directly involved in the specific activity in which the error,
omission, negligence, incompetence, or malfeasance was committed by the
other partner or representative; or 

(3) had notice or knowledge of the error, omission, negligence,
incompetence, or malfeasance by the other partner or representative at the
time of occurrence and failed reasonably act to prevent or cure it.  

(c)  Provide that Sections 2.101(a)(1), 152.305, and 152.306 do not limit
the effect of Subsection (a) with respect to a registered limited liability
partnership.  

(d)  Provides that in this section, "representative" includes an agent,
servant, or employee of a registered limited liability partnership. 

(e)  Provides that Subsections (a) and (b) do not affect the liability of a
partnership to pay its debts and obligations from partnership property; the
liability of a partner imposed by law or contract independently of the
partner's status as a partner; or the manner in which service of citation
or other civil process may be served in an action against a partnership. 
 
(f)  Provides that this section controls over the other parts of Chapter
152 and the other partnership provisions regarding the partner liability in
a registered limited liability partnership, the chargeability of the
partners' for the debts and obligations of the partnership, and the
partners' obligations regarding contributions and indemnity.  

Sec. 152.802.  REGISTRATION. (a) Sets forth the application requirements
for a partnership to become a registered limited liability partnership.   
   
(b)  Provides that the application must be signed by a majority-in-interest
of the partners or one or more partners authorized by a
majority-in-interest of the partners.  

(c)  Provides that a partnership is registered as a registered limited
liability partnership by the secretary of state when a completed initial or
renewal application is filed in accordance with Chapter 4 or on a later
date specified in the application.  

(d)  Provides that a registration is not affected by subsequent changes in
the partners of the partnership.  
 
(e)  Provides that the registration of a limited liability partnership is
effective until the first anniversary of the date of registration or a
later effective date, unless the application is withdrawn or revoked at an
earlier time or renewed.  

(f) Authorizes the withdrawal of a registration by filing a withdrawal
notice with the secretary of state in accordance with Chapter 4.  Provides
that a withdrawal notice terminates the status of the partnership as a
registered limited liability partnership from the date on which the notice
is filed or a later date specified in the notice, but not later than the
expiration date under Subsection (e).  Specifies the information and
signatures which must be contained in the withdrawal notice.  
   
(g)  Authorizes the renewal of an effective registration before its
expiration if application with the secretary of state is filed in
accordance with Chapter 4.  Provides that a renewal application continues
an effective registration for one year after the date the registration
would otherwise expire.  Specifies the information and fees that must be
included in the renewal application.   

(h)  Authorizes the secretary of state to remove from its active records
the registration of a partnership which has been withdrawn or revoked or
expired and not been renewed.  

(i)  Provides that the secretary of state is not responsible for
determining whether a partnership is in compliance with the requirements of
Section 152.804(a). 


(j)  Authorizes a document filed under this subchapter to be amended by
filing an application for amendment of registration with the secretary of
state in accordance with Chapter 4 and this subsection.  Sets forth the
information, fees, and signatures that must be contained in the articles of
amendment.    
    
Sec. 152.803.  NAME.  Provides that the name of a registered limited
liability partnership must contain the phrases  "registered limited
liability partnership" or "limited liability partnership", or an
abbreviation of one of the phrases as the last word or letters of its name.

Sec. 152.804.  INSURANCE OR FINANCIAL RESPONSIBILITY.  (a) Provides that a
registered limited liability partnership must carry at least $100,000 of
specified liability insurance or provide $100,000 specifically designated
and segregated in the manner specified to be used for the satisfaction of
judgments against the partnership for the kind of error, omission,
negligence, incompetence, or malfeasance for which liability is limited by
Section 152.801(b). 

(b) Prohibits the requirements of this section from being admissible
against a registered limited liability partnership that is in compliance
with Subsection (a) in determining liability relating to the debt or
obligation in question or the damages in question.   

(c)  Provides that if compliance with Subsection (a) is disputed,
compliance must be determined separately from proceeding to determine the
partnership debt or obligation in question; the amount of the debt or
obligation; or partner liability for the debt or obligation, and the burden
of proof is on the person claiming limitation of liability. 
 
Sec. 152.805.  LIMITED PARTNERSHIP.  Authorizes a limited partnership to
become a registered limited liability partnership by complying with
applicable provisions of Chapter 153.  

SUBCHAPTER K.  FOREIGN LIMITED LIABILITY PARTNERSHIPS

Sec. 152.901.  GENERAL.  Provides that a foreign limited liability
partnership is subject to Section 2.101, with respect to its activities in
this state, to the same extent as a domestic registered limited liability
partnership.  

 (b) Prohibits a foreign limited liability partnership from being denied
registration due to a difference between the laws of the state under which
the partnership is formed and the laws of this state.  

Sec. 152.902.  NAME. Provides that the name of a foreign limited liability
partnership must satisfy the requirements of the state of formation and end
with the phrases "registered limited liability partnership" or "limited
liability partnership" or an abbreviation of one of the phrases. 

Sec. 152.903. ACTIVITIES NOT CONSTITUTING TRANSACTING BUSINESS. Provides
that a foreign limited liability partnership is not considered to be
transacting business in this state for purposes of this code because it
carries on one or more of the activities in this state listed by Section
9.101.   

Sec. 152.904.  REGISTERED AGENT.  Requires a foreign limited liability
partnership to maintain a registered office and registered agent in this
state.  Provides that a foreign limited liability partnership is subject to
Sections 5.201 through 5.209 to the same extent as a foreign filing entity,
for purposes of a registered office and registered agent.  

Sec. 152.905.  STATEMENT OF FOREIGN QUALIFICATION. Provides that a foreign
limited liability partnership must file an application for registration in
accordance with Chapters 4 and 9 as though it were a foreign filing entity
and this section before it transacts business in this state.  Specifies the
information, items, fees, and signatures that must be included in the
statement in addition to the information required by Section 9.004.   
    
Sec. 152.906.  CANCELLATION OF REGISTRATION.  Authorizes a registration to
be canceled by filing a certificate of cancellation.  Sets forth the
information and signatures that must be included in a certificate of
cancellation. 
  
Sec. 152.907.  EFFECT OF CERTIFICATE OF CANCELLATION.  Provides that a
withdrawal notice terminates the registration of the partnership as a
foreign limited liability partnership as of the date  the notice is filed
or a later date specified in the notice, but not later than the expiration
date under Section 152.905(f).  

Sec. 152.908.  RENEWAL OF REGISTRATION.  Authorizes the renewal of an
effective registration by filing a renewal application for registration
before its expiration, in accordance with Chapter 9.  Specifies the
information, fees, and items that must be included in the application. 
  
Sec. 152.909.  ACTION BY SECRETARY OF STATE.  Authorizes the secretary of
state to remove from its active records a foreign limited liability
partnership's registration which is withdrawn, revoked, or expired and not
renewed. 

Sec. 152.910.  EFFECT OF FAILURE TO QUALIFY.  Provides that a foreign
limited liability partnership that transacts business in this state without
being registered is subject to Sections 9.012 and 9.013 to the same extent
as a foreign filing entity. Provides that a partner of a foreign limited
liability partnership is not liable for the partnership's debt or
obligation solely because the partnership transacted business in this state
without being registered.  

Sec. 152.911.  AMENDMENT.  Authorizes the amendment of a document filed
under this subchapter by filing an application for amendment of
registration in accordance with Chapter 4.  Sets forth the information that
must be included in an application. 
   
Sec. 152.912.  EXECUTION OF APPLICATION FOR AMENDMENT.  Provides that the
application for amendment must be signed by a majority-in-interest of the
partners or one or more partners authorized by a majority-in-interest of
the partners.  

Sec. 152.913.  EXECUTION OF STATEMENT OF CHANGE OF REGISTERED OFFICE OR
REGISTERED AGENT.  Provides that a statement filed by a foreign limited
liability  partnership in accordance with Section 5.202 must be signed by a
majority-in-interest of the partners or one or more partners authorized by
a majority-in-interest of the partners.  

CHAPTER 153.  LIMITED PARTNERSHIPS

SUBCHAPTER A.  GENERAL PROVISIONS

Sec. 153.001.  DEFINITION.  Defines "other limited partnership provisions"
for purposes of this chapter. 
 
Sec. 153.002.  CONSTRUCTION.  Requires this chapter and the other limited
partnership provisions to be applied and construed to effect its general
purpose to make the law uniform with respect to limited partnerships among
states that have similar laws. Provides that the rule that a statute in
derogation of the common law is to be strictly construed does not apply to
this chapter and the other limited partnership provisions.  

Sec. 153.003.  APPLICABILITY OF OTHER LAWS.  Provides that the provisions
of Chapter 152 governing partnership that are not limited partnerships and
the rules of law and equity govern in a case not provided for by this
chapter and the other limited partnership provisions.  Prohibits the powers
and duties of a limited partner from being governed by a provision of
Chapter 152 that would be inconsistent with the nature and role of a
limited partner as contemplated by this chapter.  Prohibits a limited
partner from having any obligation or duty of a general partner solely by
reason of being a limited partner. 

Sec. 153.004.  NON-WAIVABLE TITLE 1 PROVISIONS.  Sets forth the provisions
of Title 1 which are prohibited from being waived or modified in the
partnership agreement of a limited partnership unless the provision that is
modified specifies the method by which a modification is required to be
approved. 

Sec. 153.005.  WAIVER OR MODIFICATION OF RIGHTS OF THIRD PARTIES.
Authorizes a provision in this title or in that part of Title 1 applicable
to a limited partnership that grants a right to a person, other than a
general partner, a limited partner, or assignee of a partnership interest
in a limited partnership, to be waived or modified in the partnership
agreement of the limited partnership only if the person consents in writing
to the waiver or modification. 
 
SUBCHAPTER B.  SUPPLEMENTAL PROVISIONS REGARDING CERTIFICATE OF
FORMATION AND AMENDMENT TO CERTIFICATE

Sec. 153.051.   SUPPLEMENTAL PROVISIONS REGARDING CERTIFICATE OF FORMATION.
(a)  Provides that in order to form a limited partnership the partners must
enter into a partnership and file a certificate of formation as provided by
Chapter 3 and this section.  

(b) Authorizes the partners of a limited partnership agreement formed under
Section 10.001 or 10.101 to include the partnership agreement required
under Subsection (a) in the plan of merger or conversion.  

(c)  Provides that a certificate of formation for a limited partnership
must include the address of the principal office of the partnership in the
United States where records are to be kept or made available under Section
153.551.  

(d)  Establishes that a certificate of formation on file with the secretary
of state is notice that the partnership is a limited partnership and of all
other facts contained in the certificate as required by Section 3.005.  

Sec. 153.052. REQUIRED AMENDMENT TO CERTIFICATE OF FORMATION. (a) Requires
a general partner to file a certificate of amendment upon the occurrence of
a specified event within a certain time period.    
 
(b)  Requires a general partner promptly amend a certificate of formation
to make it accurate if the general partner becomes aware that a statement
in the certificate was false when made or that a matter described in the
certificate has changed, making the certificate false in any material
respect. 

Sec. 153.053.  DISCRETIONARY AMENDMENT TO CERTIFICATE OF FORMATION. (a)
Authorizes the amendment of a certificate of formation at any time for a
proper purpose, as determined by the general partners.  

(b)  Authorizes a certificate of formation to be amended to state the name,
mailing address, and street address of the business or residence of each
person winding up the limited partnership's affairs under certain
circumstances.   
 
(c)  Requires each person winding up the limited partnership's affairs, if
the certificate of formation is amended under Subsection (b), to execute
and file the certificate of amendment.  Provides that a person winding up
the partnership's affairs is not subject to liability as a general partner
because of the filing of the certificate of amendment.  

(d)  Provides that a general partner who is not winding up the limited
partnership's affairs is not required to execute and file a certificate of
amendment as provided by this section.  

  SUBCHAPTER C.  LIMITED PARTNERS

Sec. 153.101.  ADMISSION OF LIMITED PARTNERS.  (a)  Provides that in the
formation of a limited partnership, a person acquiring a limited
partnership interest becomes a limited partner on the later of the date the
limited partnership is formed or the date stated in the records of the
limited partnership as the date that the person becomes a limited partner
or, if that date is not in those records, the date that the person's
admission is first reflected in the records of the limited partnership.  

(b) Provides that after a limited partnership is formed, a person who
acquires a partnership interest directly from the limited partnership
becomes a new limited partner by complying with the relevant admission
provisions of the partnership agreement or by the written consent of all
partners, if the partnership agreement does not contain such provisions. 
 
(c) Provides that after formation of a limited partnership, an assignee of
a partnership interest becomes a new limited partner as provided by Section
153.253(a).  

(d) Authorizes a person to be a limited partner, unless the person lacks
capacity apart from this chapter and the other limited partnership
provisions.  

Sec. 153.102.  LIABILITY TO THIRD PARTIES.  (a)  Provides that a limited
partner is not liable for the obligations of a limited partnership, unless
the limited partner is also a general partner or the limited partner
participates in the control of the business, except as provided by
Subsection (c) of this section.  

(b) Provides that if the limited partner participates in the control of the
business, the limited partner is liable only to a person who transacts
business with the limited partnership while reasonably believing that the
limited partner is a general partner based on the limited partner's
conduct.  

(c)  Provides that a limited partner who knowingly permits the limited
partner's name to be used in the name of the limited partnership is liable
to a creditor who extends credit to the partnership without actual
knowledge that the limited partner is not a general partner, except under a
circumstance permitted by Section 5.055(c).  

Sec. 153.103.  ACTIONS NOT CONSTITUTING PARTICIPATION IN BUSINESS FOR
LIABILITY PURPOSES. Specifies certain actions and exercises of power by a
limited  partner that do not constitute participation in the control of the
business for purposes of this section and Sections 153.102, 153.104, and
153.105 stockholder of a corporate general partner. 
     
Sec. 153.104.  ENUMERATION OF ACTIONS NOT EXCLUSIVE. Specifies that the
enumeration in Section 153.103 does not mean that a limited partner who has
acted or acts in another capacity or possesses or exercises another power
constitutes participation by that limited partner in the control of the
business of the limited partnership.  

Sec. 153.105.  CREATION OF RIGHTS.  Provides that Sections 153.102(c),
153.103, and 153.104 do not create rights of limited partners and that
those rights may only be created by the certificate of formation, other
sections of this chapter, or  the other limited partnership provisions. 
 
Sec. 153.106.  ERRONEOUS BELIEF OF CONTRIBUTOR BEING LIMITED PARTNER.
Provides that except as provided by Section 153.109, a person who
erroneously but in good faith believes that the person has made a
contribution to and has become a limited partner in a limited partnership
is not liable as a general partner or otherwise obligated because of making
or attempting to make the contribution, receiving distributions from the
partnership, or exercising the rights of a limited partner if, within a
reasonable time after discovering the mistake, the person takes specified
actions. 

 Sec. 153.107.  STATEMENT REQUIRED FOR LIABILITY PROTECTION.  Provides that
a written statement filed under Section 153.106(2) must be entitled "Filing
under Section 153.106(2), Business Organizations Code," and contain certain
information and a specified written statement.  Provides that the written
statement is effective for 180 days.  Authorizes the signing of a written
statement filed under Section 153.106(2) by more than one person claiming
limited partnership status under this section and specified sections. 
 
Sec. 153.108. REQUIREMENTS FOR LIABILITY PROTECTION FOLLOWING EXPIRATION OF
STATEMENT. (a) Provides that a person filing the statement has no further
protection from liability, if a certificate described by Section 153.106(1)
has not been filed before the expiration of the 180-day period unless the
person complies with this section. Provides that in order to be protected
under Section 153.106, the person must take specified actions within a
specified time period.    

(b)  Provides that a person who brings an action within the applicable
period which is diligently prosecuted to conclusion is protected from
liability under Section 153.106(2) until the action is finally decided
adversely to that person.  

(c)  Provides that this section and Sections 153.102, 153.106, 153.107, and
153.109 do not protect a person from liability that arises under Sections
153.102-153.105.  

Sec. 153.109.  LIABILITY OF ERRONEOUS CONTRIBUTOR.  Provides that a person
who makes a contribution in the circumstances described by Section 153.106
is liable as a general partner to a third party who transacts business with
the partnership before an action taken under Section 153.106 if: 

(1)  the contributor has knowledge or notice that no certificate is filed
or that the certificate inaccurately refers to the contributor as a general
partner; and 

(2)  the third party reasonably believed, based on the contributor's
conduct, that the contributor was a general partner at the time of the
transaction and extended credit to the partnership in reasonable reliance
on the credit of the contributor.  

Sec. 153.110.  WITHDRAWAL OF LIMITED PARTNER.  Authorizes a  limited
partner to withdraw from a limited partnership only at the time or on the
occurrence of an event specified in a written partnership agreement.
Provides that the withdrawal of the partner must be made in accordance with
that agreement.  
 
Sec. 153.111. DISTRIBUTION ON WITHDRAWAL. Entitles a withdrawing limited
partner to receive, the fair value of that limited partner's interest in
the limited partnership as of the date of withdrawal within a reasonable
time after withdrawal, except as otherwise provided by specified sections
or the partnership agreement,.  

Sec. 153.112. RECEIPT OF WRONGFUL DISTRIBUTION.  Provides that a limited
partner who receives a prohibited distribution under Section 153.210 is not
required to return the distribution, unless the limited partner knew that
the distribution was prohibited under that section.  Provides that this
subsection does not affect an obligation of the limited partner under the
partnership agreement or other applicable law to return the distribution.  

Sec. 153.113.  POWERS OF ESTATE OF LIMITED PARTNER WHO IS DECEASED OR
INCAPACITATED. Authorizes a limited partner's executor, administrator,
guardian, conservator, or other legal representative, in the event that the
partner dies or is adjudged to be incapacitated in managing the limited
partner's person or property, to exercise all of the partner's rights and
powers in the settlement of the partner's estate or property, including the
power of an assignee to become a limited partner under the partnership
agreement.  

SUBCHAPTER D.  GENERAL PARTNERS

Sec. 153.151.  ADMISSION OF ADDITIONAL GENERAL PARTNERS.  Authorizes the
admittance of additional general partners after a limited partnership is
formed, in the manner provided in a written partnership agreement or with
the written consent of all partners, if a written partnership agreement
does not provide for the admission of additional general partners.
Authorizes a person to be a general partner, unless the person lacks
capacity apart from this chapter.  

Sec. 153.152.  GENERAL POWERS AND LIABILITIES OF GENERAL PARTNER. Describes
the rights, powers, limitations, and liabilities of a general partner of a
limited partnership  
 
Sec. 153.153.  POWERS AND LIABILITIES OF PERSON WHO IS BOTH GENERAL PARTNER
AND LIMITED PARTNER. Describes the rights, powers, limitations, and
liabilities of a person who is both a general partner and a limited partner
of a limited partnership.   

Sec. 153.154.  CONTRIBUTIONS BY AND DISTRIBUTIONS TO GENERAL PARTNER.
Authorizes the general partner of a limited partnership to make
contributions to, be allocated profits and losses of, and receive a
distribution from the limited partnership as a general partner, a limited
partner, or both.  

Sec. 153.155. WITHDRAWAL OF GENERAL PARTNER. Provides that a person ceases
to be a general partner of a limited partnership on the occurrence of one
or more specified events of withdrawal. Authorizes a general partner to
withdraw at any time from a limited partnership and cease to be a general
partner by giving written notice to the other partners.  

Sec. 153.156.  NOTICE OF EVENT OF WITHDRAWAL.  Requires a general partner
who is subject to an event of withdrawal under Section 153.155(a)(4) or (5)
due to the passage of the specified period, to notify the other partners of
the event no later than the 30th day after the date on which the event
occurred.  

Sec. 153.157. WITHDRAWAL OF GENERAL PARTNER IN VIOLATION OF PARTNERSHIP
AGREEMENT. Provides that a general partner's withdrawal from a partnership
for a definite term or particular undertaking before the expiration of that
term or completion of that undertaking is a breach of the partnership
agreement, unless otherwise provided by the partnership agreement.  

Sec. 153.158.  EFFECT OF WITHDRAWAL.  (a) Specifies the actions that may be
taken  by the general partner, partners, or limited partners, if a general
partner ceases to be a general partner under Section 153.155.  

(b)  Provides that the owner of the partnership interest of the withdrawn
general partner has the status of an assignee under Subchapter F, Section
153.113, and Section 153.555 until an action described by Subsection (a) is
taken.  

(c) Authorizes the reconstitution of the partnership if there are no
remaining general partners following the withdrawal of a general partner. 
 
Sec. 153.159.  CONVERSION OF PARTNERSHIP INTEREST AFTER WITHDRAWAL.
Authorizes the limited partnership interest to be reduced pro rata with all
other partners to provide compensation, an interest in the partnership, or
both, to a replacement general partner, if the partners convert the
partnership interest under Section 153.158(a)(1). 

Sec. 153.160. EFFECT OF CONVERSION OF PARTNERSHIP INTEREST.  Authorizes the
withdrawing general partner, after an amendment to the certificate of
formation reflecting the general partner's withdrawal as a general partner
is filed under Section 153.052, to vote as a limited partner in all
matters, to the same extent as the members of the class of limited partners
having the least voting rights with respect to the matter on which the vote
is taken and prohibits the withdrawing general partner from voting on the
admission and compensation of a general partner to replace the withdrawing
partner. Provides that the general partner does not have voting rights if
the general partner's withdrawal violates the partnership agreement. 

Sec. 153.161.  LIABILITY OF GENERAL PARTNER FOR DEBT INCURRED AFTER EVENT
OF WITHDRAWAL. Provides that a general partner is not personally liable in
the partner's capacity as a general partner for partnership debt incurred
after that partner ceases to be a general partner under Section 153.155,
unless the creditor reasonably believed that the partner remained a general
partner at the time the debt was incurred, unless otherwise provided by a
written partnership agreement and subject to the liability created under
Section 153.162.  Provides that a creditor of the partnership has reason to
believe that a partner remains a general partner if the creditor meets
specified criteria.    

Sec. 153.162. LIABILITY FOR WRONGFUL WITHDRAWAL.  Authorizes the
partnership to recover damages from a withdrawing general partner for
breach of the partnership agreement, if the general partner's withdrawal
from a limited partnership violates the partnership agreement.  Specifies
the manner in which a partnership is authorized to effect the recovery of
damages.    

SUBCHAPTER E.  FINANCES

Sec. 153.201.  FORM OF CONTRIBUTION.  Authorizes a limited partner's
contribution to consist of a tangible or intangible benefit to the limited
partnership or other property of any kind or nature, including cash; a
promissory note; services performed; a contract for services to be
performed; and another interest in or security of the limited partnership,
another domestic or foreign limited partnership, or other entity.  

Sec. 153.202. ENFORCEABILITY OF PROMISE TO MAKE CONTRIBUTION. (a)  Provides
that a promise by a limited partner to make a contribution to, or pay cash
or transfer other property to a limited partnership is not enforceable
unless the promise is in writing and signed by the limited partner.  

(b)  Obligates a partner or the partner's legal representative or successor
to the limited partnership to perform an enforceable promise to contribute
to or pay cash or transfer other property to a limited partnership,
notwithstanding the partner's death, disability, or other change in
circumstances, except as otherwise provided by the partnership agreement. 

 (c)  Sets forth the obligations of a partner or a partner's legal
representative or successor who does not make a contribution or other
payment of cash or transfer of other property required by the enforceable
promise.   

(d)  Authorizes a partnership agreement to provide that the partnership
interest of a partner who fails to make a payment of cash or transfer of
other property to the partnership, whether as a contribution or with
respect to a contribution previously made, required by an enforceable
promise is subject to specified consequences.     

Sec. 153.203. RELEASE OF OBLIGATION TO PARTNERSHIP. Authorizes the
compromise or release of an obligation of a partner or the legal
representative or successor of a partner to make a specified contribution,
transfer, or distribution in violation of this chapter or the partnership
agreement if consented to by all of the partners, unless otherwise provided
by the partnership agreement. 

Sec. 153.204.  ENFORCEABILITY OF OBLIGATION. Authorizes a creditor of a
limited partnership who extends credit or otherwise acts in reasonable
reliance on an obligation described by Section 153.203 to enforce the
original obligation under specified circumstances. Provides that a general
partner remains liable to persons other than the partnership and the other
partners, as provided by specified sections, notwithstanding the compromise
or release. 
 
Sec. 153.205. ENFORCEABILITY OF CONDITIONAL OBLIGATION. Prohibits a
conditional obligation from being enforced unless the conditions of the
obligation have been satisfied or waived as to or by the applicable limited
partner. Provides that a conditional obligation includes a contribution
payable on a discretionary call of a limited partnership before the time
the call occurs.  

Sec. 153.206.  ALLOCATION OF PROFITS AND LOSSES.  Requires the profits and
losses of a limited partnership to be allocated among the partners in the
manner provided by a written partnership agreement. Sets forth the manner
in which the profits and losses are required to be allocated if a written
partnership agreement does not provide for the allocation of profits and
losses. 
  
Sec. 153.207.  RIGHT TO DISTRIBUTION.  Provides that when a partner becomes
entitled to receive a distribution, the partner has the status of and is
entitled to all remedies available to a creditor of the limited
partnership, with respect to the distribution, subject to Sections 153.112,
153.210, and 153.505.  

Sec. 153.208. SHARING OF DISTRIBUTIONS. Sets forth the requirements for a
distribution of cash or another asset of a limited partnership to a
partner.  Defines "return of capital" for purposes of this section.   
 
Sec. 153.209.  INTERIM DISTRIBUTIONS. Entitles a partner to receive a
distribution from a limited partnership to the extent and at the time or on
the occurrence of an event specified in the partnership agreement before
the partner withdraws from the partnership and the winding up of the
partnership business, except as otherwise provided by specified sections. 

Sec. 153.210.  LIMITATION ON DISTRIBUTION.  Prohibits a limited partnership
from making a distribution to a partner if immediately after giving effect
to the distribution and despite any compromise of a claim referred to by
Sections 153.203 and 153.204, all liabilities of the limited partnership,
other than liabilities to partners with respect to their partnership
interests and liabilities for which the recourse of creditors is limited to
specified property of the limited partnership, exceed the fair value of the
partnership assets.  Requires that the fair value of property that is
subject to a liability for which recourse of creditors is limited be
included in the partnership assets for purposes of this subsection, only to
the extent that the fair value of that property exceeds that liability. 

SUBCHAPTER F.  PARTNERSHIP INTEREST
 
Sec. 153.251.  ASSIGNMENT OF PARTNERSHIP INTEREST.  Provides that a
partnership interest is assignable wholly or partly, and an assignment of a
partnership interest does not dissolve a limited partnership; does not
entitle the assignee to become, or to exercise rights or powers of, a
partner; entitles the assignee to be allocated income, gain, loss,
deduction, credit, or similar items and to receive distributions to which
the assignor was entitled to the extent those items are assigned, except as
otherwise provided by the partnership agreement. 

Sec. 153.252.  RIGHTS OF ASSIGNOR. Provides that the assignor partner
continues to be a partner in the limited partnership until the assignee
becomes a partner, except as otherwise provided by the partnership
agreement. Authorizes the assignor partner to exercise any rights or powers
of a partner, except to the extent those rights or powers are assigned.
Authorizes the termination of a general partner's status as a general
partner by the affirmative vote of a majority-in-interest of a limited
partners if the general partner assigns of all of the general partner's
rights as a general partner, except as otherwise provided by the
partnership agreement. 

Sec. 153.253.  RIGHTS OF ASSIGNEE.  Authorizes an assignee of a partnership
interest, including the partnership interest of a general partner, to
become a limited partner if and to the extent that the partnership
agreement provides or all partners consent.  Provides that an assignee who
becomes a limited partner, to the extent of the rights and powers assigned,
has the rights and powers and is subject to the restrictions and
liabilities of a limited partner under a partnership agreement and this
code.  

Sec. 153.254.  LIABILITY OF ASSIGNEE.  Provides that an assignee does not
have liability as a partner solely as a result of an assignment of a
partnership interest in a limited partnership until the assignee becomes a
partner. Provides that an assignee who becomes a limited partner is liable
for the obligations of the assignor to make contributions under specified
sections; is not obligated for liabilities unknown to the assignee at the
time of becoming a limited  partner and that could not be ascertained from
a written partnership agreement; and is not liable for the obligations of
the assignor under specified sections, unless otherwise provided by a
written partnership agreement. 

Sec. 153.255. LIABILITY OF ASSIGNOR. Provides that an assignor of a
partnership interest is not released from the assignor's liability to the
limited partnership, regardless of whether the assignee becomes a limited
partner.  

Sec. 153.256.  CHARGE IN PAYMENT OF JUDGMENT CREDITOR.  (a)  Authorizes a
court, on application by a judgment creditor of a partner or other owner of
a partnership interest, to charge the partnership interest of the partner
or other owner with payment of the unsatisfied amount of the judgment plus
interest;   appoint a receiver for the debtor partner's share of the
partnership's profits and other money payable or that becomes payable to
the debtor partner with respect to the partnership; and make other orders,
directions, and inquiries that the circumstances of the case require.  

(b) Provides that, to the extent that the partnership interest is charged
in the manner provided by Subsection (a), the judgment creditor has only
the rights of an assignee of the partnership interest.  

(c) Authorizes the redemption of a partnership interest charged at any time
before foreclosure, or purchase by specified partners if a sale is directed
by the court, without constituting an event requiring winding up.   

(d)  Provides that the remedies provided by Subsection (a) are exclusive of
other remedies that may exist, including remedies under laws of this state
applicable to partnerships without limited partners.  

Sec. 153.257.  EXEMPTION LAWS APPLICABLE TO PARTNERSHIP INTEREST NOT
AFFECTED.  Provides that Section 153.256 does not deprive a partner of the
benefit of an exemption law applicable to that partner's partnership
interest.  
 
SUBCHAPTER G.  REPORTS, RECORDS, AND INFORMATION

Sec. 153.301. PERIODIC REPORT. Authorizes the secretary of state to require
a domestic limited partnership or a foreign limited partnership registered
to transact business in this state to file a report no more than once every
four years.   

Sec. 153.302. FORM AND CONTENTS OF REPORT. Provides that the report must
include specified information, be made on a form adopted by the secretary
of state for that purpose, and be signed on behalf of the limited
partnership by at least one general partner. Provides that the information
contained in the report must be given as of the date of the execution of
the report.  

Sec. 153.303.  FILING FEE.  Provides for the filing fee in Chapter 4. 

Sec. 153.304.  DELIVERY OF REPORT.  Provides that the report must be
delivered to the secretary of state no later than the 30th day after the
date on which notice is mailed.  

Sec. 153.305.  ACTION BY SECRETARY OF STATE.  Requires the secretary of
state to send a notice that the report required by Section 153.301 is due.
Provides that the report must be addressed and mailed to the limited
partnership at specified locations. Requires the secretary of state to
include with the notice a copy of a report form to be prepared and filed as
provided by this subchapter.  

Sec. 153.306. EFFECT OF FILING REPORT. Requires the secretary of state to
perform specified actions regarding the filing of the report and updating
records.  Provides that the filing of a report does not relieve the limited
partnership of the requirement to file a required amendment to the
certificate of formation, except that the limited partnership is not
required to file an amendment to change the information as specified in
this section. 
 
Sec. 153.307.  EFFECT OF FAILURE TO FILE REPORT. Provides that a domestic
or foreign limited partnership forfeits the limited partnership's right to
transact business in this state    if it fails to file a report when it is
due.  Provides that a forfeiture under this section takes effect without
judicial ascertainment.  Requires the secretary of state to note that a
right to transact business has been forfeited and the date of forfeiture in
its records relating to the limited partnership.   

Sec. 153.308. NOTICE OF FORFEITURE OF RIGHT TO TRANSACT BUSINESS. Requires
the mailing of notice of the forfeiture to the limited partnership at the
registered office of the limited partnership, the last known address of the
limited partnership, any other place of business of the limited
partnership.  

Sec. 153.309. EFFECT OF FORFEITURE OF RIGHT TO TRANSACT BUSINESS.  (a)
Prohibits the limited partnership from maintaining an action, suit, or
proceeding in a state court and prohibits a limited partnership's successor
or assignee from maintaining an action, suit, or proceeding in a state
court on a right, claim, or demand that arises from the transaction of
business by the limited partnership in this state, unless the right is
revived in accordance with Section 153.310  

(b) Provides that the forfeiture of the right to transact business in this
state does not impair the validity of a contract or act of the limited
partnership or prevent the limited partnership from defending an action,
suit, or proceeding in a court of this state.  

(c)  Provides that this section and Sections 153.307 and 153.308 do not
affect the liability of a limited partner to the limited partnership.  

Sec. 153.310. REVIVAL OF RIGHT TO TRANSACT BUSINESS. Authorizes a limited
partnership that forfeits the right to transact business in this state to
be relieved from the forfeiture by filing the required report with the
filing fees with as specified time period.  Requires the secretary of
state, if a limited partnership complies with this section, to revive the
right to transact business in this state, cancel the note regarding the
forfeiture, and note the revival and the date of revival in its records. 
 
Sec. 153.311. CANCELLATION OF CERTIFICATE OR REGISTRATION AFTER FORFEITURE.
Authorizes the secretary of state to cancel the certificate of formation of
a domestic limited partnership, or the registration of a foreign limited
partnership, if the limited partnership forfeits its right to transact
business and fails to revive that right. Provides that the cancellation of
the certificate or registration takes effect without judicial
ascertainment.  Requires the secretary of state to note the cancellation
and the date of cancellation in its records relating to the limited
partnership. Provides that, upon cancellation, the limited partnership's
status is changed to inactive according to the records of the secretary of
state.  Provides that the change to inactive status does not affect the
liability of a limited partner to the limited partnership.  

Sec. 153.312.  REINSTATEMENT OF CERTIFICATE OF FORMATION OR REGISTRATION.
(a)  Authorizes a limited partnership with a canceled certificate of
formation or registration to be relieved of the cancellation by filing the
report required by Section 153.301, accompanied by the filing fees provided
by Chapter 4.  

(b) Requires the secretary of state, if the limited partnership pays the
fees required by Subsection (a), to reinstate the certificate or
registration of the limited partnership without judicial ascertainment,
change the limited partnership's status to active, and note the
reinstatement in its records relating to the limited partnership.   

(c)  Requires the secretary of state, if the name of the limited
partnership is not available at the time of reinstatement, to require the
limited partnership as a precondition to reinstatement to file an amendment
to the partnership's certificate of formation or application or in the case
of a foreign limited partnership, amend its application for registration to
adopt an assumed name for use in this state. 

SUBCHAPTER H.  LIMITED PARTNERSHIP AS REGISTERED LIMITED
LIABILITY PARTNERSHIP

Sec. 153.351.  REQUIREMENTS.  Provides that a limited partnership is a
registered limited liability partnership and a limited partnership, if the
partnership registers as a registered limited liability partnerships
permitted by its partnership agreement or if its partnership agreement does
not include a provision for becoming a registered limited liability
partnership, with the consent of partners required to amend its partnership
agreement; complies with Subchapter J, Chapter 152; and complies with
Chapter 5 and has as the last words or letters of its name the phrases
"registered limited liability partnership," "registered limited liability
limited partnership," or "limited liability limited partnership" or an
abbreviation of one of the phrases. 

Sec. 153.352. APPLICABILITY OF OTHER REQUIREMENTS. Provides that for
purposes of applying Section 152.802 to a limited partnership an
application to become a registered limited liability partnership or to
withdraw a registration must be signed by at least one general partner and
other references to a partner mean a general partner only.  

Sec. 153.353.  LAW APPLICABLE TO PARTNERS.  Provides that Section 152.801
applies to a general partner and to a limited partner who is liable under
other provisions of this chapter for the debts or obligations of the
limited partnership, if a limited partnership is a registered limited
liability partnership. 

SUBCHAPTER I.  DERIVATIVE ACTIONS

Sec. 153.401.  RIGHT TO BRING ACTION.  Authorizes a limited partner to
bring an action in a court on behalf of the limited partnership to recover
a judgment in the limited partnership's favor, if all general partners with
authority refused to bring the action or an  effort to cause those general
partners to bring the action is not likely to succeed.  

Sec. 153.402.  PROPER PLAINTIFF.  Sets forth the requirements that a
plaintiff must meet to bring derivative action against the partnership. 
   
Sec. 153.403.  PLEADING. Sets forth information that must be included in
the complaint in a derivative action.   
   
Sec. 153.404.  SECURITY FOR EXPENSES OF DEFENDANTS.  Authorizes the court
in a derivative action, to require the plaintiff to give security for the
reasonable expenses incurred or expected to be incurred by a defendant in
the action, including reasonable attorney's fees.  Authorizes the court to
increase or decrease the amount of the security on a showing that the
security provided is inadequate or excessive.   

(c)  Authorizes a plaintiff to file an affidavit in accordance with the
Texas Rules of Civil Procedure if the plaintiff is unable to give security. 

(d)  Requires the court to dismiss the suit without prejudice , if a
plaintiff fails to give the security within a reasonable time set by the
court, except as provided by Subsection (c). 

(e)  Authorizes the court, on final judgment for a defendant and on a
finding that suit was brought without reasonable cause against the
defendant, to require the plaintiff to pay reasonable expenses, including
reasonable attorney's fees, to the defendant, regardless of whether
security has been required.  

Sec. 153.405. EXPENSES OF PLAINTIFF. Authorizes the court to award the
plaintiff reasonable expenses and reasonable attorney's fees, and requires
the court to direct the plaintiff to remit to a party identified by the
court the remainder of the proceeds received by the plaintiff, if a
derivative action is successful, wholly or partly, or if anything is
received by the plaintiff because of a judgment, compromise, or settlement
of the action or claim constituting a  part of the action. 
 
SUBCHAPTER J.  CANCELLATION OF CERTIFICATE OF FORMATION

Sec. 153.451. CERTIFICATE OF CANCELLATION.  (a) Requires that a certificate
of formation be canceled by filing a certificate of cancellation with the
secretary of state in accordance with Chapter 4 on the completion of the
winding up of the partnership business,  when there are no limited
partners, or subject to Subsection (b), on a merger or conversion as
provided by Chapter 10.  

(b)  Provides that the certificate of merger or conversion filed under
Chapter 10 are sufficient, without a filing under this section, to cancel
the certificate of formation of a nonsurviving limited partnership, if the
limited partnership is not one of the surviving or resulting domestic
limited partnerships or other entities in a merger or conversion. 

Sec. 153.452.  CONTENTS OF CERTIFICATE OF CANCELLATION.  Sets forth the
information that is required to be contained in a certificate of
cancellation. 

SUBCHAPTER K.  SUPPLEMENTAL WINDING UP AND TERMINATION PROVISIONS

Sec. 153.501.  ADDITIONAL EVENTS REQUIRING WINDING UP.  Sets forth events
requiring the winding up of a limited partnership.     

Sec. 153.502. CONTINUATION WITHOUT WINDING UP. Authorizes the limited
partnership to  
cancel an event requiring winding up if all remaining partners, or another
group or percentage of partners as specified by the partnership agreement,
agree in writing to continue the business of the limited partnership, no
later than the 90th day after the event. Authorizes a limited partnership
to revoke an event requiring winding up as specified in Section 153.501, if
certain conditions are met.  Provides that the appointment of one or more
new general partners  is effective from the date of withdrawal.  
            
Sec. 153.503.  WINDING UP PROCEDURES.  Requires the winding up of the
partnership's affairs to be accomplished by the general partners or, if
there are no general partners, the limited partners or a person or a person
chosen by the limited partners.  Requires that Section 11.052(c)(2) not be
applicable to a limited partnership. 

Sec. 153.504.  POWERS OF PERSON CONDUCTING WIND UP.  Authorizes a person
winding up the limited partnership's business in the name of and on behalf
of the limited partnership, after an event requiring the winding up of the
partnership and until the filing of a certificate of cancellation, to take
the actions specified in Sections 11.052, 11.053, and 11.055.  

Sec. 153.505.  DISPOSITION OF ASSETS. Specifies the manner in which a
limited partnership's assets are required to be paid or transferred on the
winding up of the partnership.   

SUBCHAPTER L.  MISCELLANEOUS PROVISIONS

Sec. 153.551. RECORDS. Sets forth specified records that a domestic limited
partnership is  required to maintain or make available in its principal
office in the United States, within a specified time period.  Requires the
limited partnership to maintain its records in written form within in a
reasonable time. Requires the limited partnership to keep in its registered
office in this state and make available to a partner, on reasonable
request, the street address of its principal office in the United States in
which the records required by this section are maintained.  

Sec. 153.552.  EXAMINATION OF RECORDS AND INFORMATION.  (a) Authorizes a
partner or an assignee of a partnership interest, upon written request
stating a proper purpose, to examine and copy records required to be kept
and other information regarding the business, affairs, and financial
condition of the limited partnership.  

(b)  Authorizes a partner or an assignee, at a reasonable time and at the
partner's sole expense, to examine and copy the records requested under
Subsection (a). 

(c)  Requires the partnership to provide, without charge, to a  requesting
partner or assignee copies of the partnership agreement and certificate of
formation and all amendments or restatements and any tax return described
by Section 153.551(a)(2).  

(d)  Provides that a request made under Subsection (c) must be made to a
designated person under the partnership agreement or  if there is no
designation, a general partner at the partnership's principal office in the
United States.  

Sec. 153.553. EXECUTION OF CERTAIN FILINGS. (a) Sets forth the execution
requirements of a certificate required to be filed by a limited partnership
with the secretary of state 153.053(b), 153.053(c), or 153.106(1), but
provides that the certificate of amendment need not be signed by a
withdrawing general partner. 
   
(b)  Authorizes any person to sign a certificate or partnership agreement
or amendment or restated certificate by an attorney in fact.  Provides that
a power of attorney relating to the signing of a certificate or partnership
agreement or amendment or restated certificate by an attorney in fact is
not required to be sworn to, verified, or acknowledged; is not required to
be filed with the secretary of state; and is required to be retained with
the partnership records under Sections 153.551 and 153.552.  

(c)  Establishes that an execution of a certificate by a general partner or
the execution of a written statement by a person under Section 153.106(2)
is an oath or affirmation, under a penalty of perjury.   

 Sec. 153.554. EXECUTION, AMENDMENT, OR CANCELLATION BY JUDICIAL ORDER.
(a)  Authorizes a person adversely affected by the failure or refusal of a
person to execute or file a certificate as required by this chapter or
Title 1 or to execute a partnership agreement, to petition a court to
direct the execution or filing of the certificate or the execution of the
partnership agreement, as appropriate. 

(b)  Requires a court that finds that the execution or filing of a
certificate is proper and that a person required to execute or file the
certificate has failed or refused to execute or file the certificate, to
order the secretary of state to record an appropriate certificate. 

(c) Provides that the judicial remedy described by Subsection (b) is not a
limit on the rights of a person to file a written statement under Section
153.106(2).  

(d)  Requires the court, upon a finding that the partnership agreement
should be executed and that a person required to execute the partnership
agreement has failed or refused to execute the agreement, to enter an order
granting appropriate relief.  

(e)  Requires a court, if the court enters an order in favor of the
adversely affected person requesting relief under this section, to award to
that person reasonable expenses, including reasonable attorney's fees.  

Sec. 153.555.  PERMITTED TRANSFER IN CONNECTION WITH RACETRACK LICENSE.
Provides that specified transfers relating to a limited partnership are not
prohibited transfers under the Texas Racing Act. 

Sec. 153.556.  OBLIGATION OF FOREIGN LIMITED PARTNERSHIP TO FILE ASSUMED
NAME CERTIFICATE.  Provides that, unless a foreign limited partnership
conducts business under another name, filing the application for
registration under Chapter 9 makes it unnecessary to file any other
documents under Chapter 36, Business & Commerce Code. 

Sec. 153.557.  COMMON CARRIER.  Provides that a limited partnership engaged
as a common carrier in the pipeline business for transporting oil, oil
products, gas, carbon dioxide, salt brine, fuller's earth, sand, clay,
liquified minerals, or other mineral solutions has all of the rights and
powers conferred by Sections 111.019-111.022 (Right of Eminent Domain;
Costs of Relocation of Property; Limitations on the Powers of Eminent
Domain in Certain Situations; Restoration of Property; Pipeline Easements;
Pipeline on Public Stream or Highway; Pipeline Under Railroad, Street
Railroad, or Canal; Right to Use Street or Alley in City or Town), Natural
Resources Code.  Provides that a limited partnership that is a common
carrier as defined in Section 111.002, Natural Resources Code, has in
addition all of the obligations conferred by Sections 111.001-111.025,
Natural Resources Code. 
   
CHAPTER 154.  PROVISIONS APPLICABLE TO BOTH GENERAL
AND LIMITED PARTNERSHIPS

SUBCHAPTER A.  PARTNERSHIP INTERESTS

Sec. 154.001.  NATURE OF PARTNER'S PARTNERSHIP INTEREST. Provides that a
partner's partnership interest is personal property for all purposes.
Authorizes a partner's partnership interest to be community property under
applicable law.  Provides that a partner is not a co-owner of partnership
property.  

Sec. 154.002. TRANSFER OF INTEREST IN PARTNERSHIP PROPERTY PROHIBITED.
Provides that a partner does not have an interest that can be transferred,
voluntarily or involuntarily, in partnership property.  

SUBCHAPTER B.  PARTNERSHIP AGREEMENT

Sec.154.101. CLASS OR GROUP OF PARTNERS. Authorizes a written partnership
agreement to establish or provide for the future creation of additional
classes or groups of one or more partners that have certain express
relative rights, powers, and duties, including voting rights.  Provides
that the future creation of additional classes or groups may be expressed
in the partnership agreement or at the time of creation of the class or
group. Provides that the rights, powers, or duties of a class or group of
partners may be senior to those partners of an existing class or group.  

Sec. 154.102.  PROVISIONS RELATING TO VOTING.  Authorizes a written
partnership agreement that grants or provides for granting a right to vote
to a partner to contain specified provisions relating to partnership
voting. 
   
Sec. 154.103.  NOTICE OF ACTION BY CONSENT WITHOUT A MEETING.  Requires
giving prompt notice of the taking of an action under a partnership
agreement that may be taken without a meeting by consent of fewer than all
of the partners to a partner who has not given written consent to the
action. Defines  "taking of an action." 
  
SUBCHAPTER C.  PARTNERSHIP TRANSACTIONS AND RELATIONSHIPS

Sec. 154.201. BUSINESS TRANSACTIONS BETWEEN PARTNER AND PARTNERSHIP.
Authorizes a partner to lend money to and transact other business with the
partnership, except as otherwise provided by the partnership agreement.
Provides that a partner has the same rights and obligations with respect to
those matters as a person who is not a partner, subject to applicable law. 

Sec. 154.202.  EFFECT OF PARTNER CHANGE ON RELATIONSHIP BETWEEN PARTNERSHIP
AND CREDITORS.  Provides that the relationships between a partnership and
its creditors are not affected by the withdrawal of a partner or  addition
of a new partner.  

Sec. 154.203. DISTRIBUTIONS IN KIND. Provides that a partner, regardless of
the nature of the partner's contribution, is not entitled to demand or
receive from a partnership a distribution in any form other than cash,
except as provided by the partnership agreement. Prohibits compelling a
partner to accept a disproportionate distribution of an asset in kind from
a partnership under specified circumstances, except as provided by the
partnership agreement . 

TITLE 5.  REAL ESTATE INVESTMENT TRUSTS

CHAPTER 200.  REAL ESTATE INVESTMENT TRUSTS

SUBCHAPTER A.  GENERAL PROVISIONS

Sec. 200.001.  DEFINITION.  Defines "real estate investment trust."  

Sec. 200.002.  APPLICABILITY OF CHAPTER. Provides that the provisions of
Chapters 20 and 21 govern a matter to the extent that this chapter or Title
1 does not govern the matter. Provides that an unincorporated trust that
does not meet the requirements of this chapter is an unincorporated
association under Chapter 253.  

Sec. 200.003.  CONFLICT WITH OTHER LAW.  Provides that this chapter
controls if there is conflict between this chapter and Chapters 20 and 21.
Provides that Chapters 20 and 21 do not control over this chapter merely
because a provision of Chapter 20 or 21 is more or less extensive,
restrictive, or detailed than a similar provision of this chapter. 
 
Sec. 200.004.  ULTRA VIRES ACTS.  Prohibits the lack of capacity of a real
estate investment trust from being  the basis of any claim or defense at
law or in equity.  Provides that an act of a real estate investment trust
or a transfer of property by or to a real estate investment trust is not
invalid due to the occurrence of specified circumstances.  Sets forth who
may assert in a proceeding the fact that an act or transfer is beyond the
scope of the expressed purpose or purposes of the real estate investment
trust or is inconsistent with an  expressed limitation on the authority of
an officer or trust manager. Authorizes the court to set aside and enjoin
the performance of the contract, if an unauthorized act or transfer that is
sought to be enjoined if specified circumstances are met. Authorizes the
court to award to the real estate investment trust or to another party to
the contract compensation for loss or damage resulting from the action of
the court in setting aside and enjoining the performance of the contract,
excluding loss of anticipated profits.  

Sec. 200.005. SUPPLEMENTARY POWERS OF REAL ESTATE INVESTMENT TRUST.
Authorizes a real estate investment trust to engage in activities mandated
or authorized by specified regulations, subject to Section 2.106(a) and in
addition to the powers specified in Section 2.101.  Provides that this
section does not authorize a real estate investment trust or an officer or
trust manager of a real estate investment trust to exercise a power in a
manner inconsistent with a limitation on the purposes or powers of the real
estate investment trust contained in the trust's certificate of formation;
this code; or another law of this state.  

Sec. 200.006.  REQUIREMENT THAT FILING INSTRUMENT BE SIGNED BY OFFICER.
Authorizes a filing instrument of a real estate investment trust to be
signed by an officer of the real estate investment trust, unless otherwise
provided by this chapter. 
  
SUBCHAPTER B. FORMATION AND GOVERNING DOCUMENTS

Sec. 200.051.  SUPPLEMENTAL PROVISIONS REQUIRED IN CERTIFICATE OF
FORMATION.  Provides that for purposes of this code, the certificate of
formation of a real estate investment trust is a declaration of trust.
Authorizes the certificate of formation to be titled "declaration of trust"
or "certificate of formation."  Specifies the statements that must be
stated in the  the certificate of formation of a real estate investment
trust.  
    
Sec. 200.052. NO PROPERTY RIGHT IN CERTIFICATE OF FORMATION. Provides that
a shareholder of a real estate investment trust does not have a vested
property right resulting from the certificate of formation, including a
provision in the certificate of formation relating to the management,
control, capital structure, dividend entitlement, purpose, or duration of
the real estate investment trust.  

Sec. 200.053.  PROCEDURES TO ADOPT AMENDMENT TO CERTIFICATE OF FORMATION.
Specifies the required by the trust managers to adopt an amendment to the
certificate of formation of a real estate investment trust as provided by
Subchapter B, Chapter 3, the trust managers.   Authorizes the resolution to
incorporate the proposed amendment in a restated certificate of formation
that complies with Section 3.057.  

Sec. 200.054.  ADOPTION OF AMENDMENT BY TRUST MANAGERS.  Authorizes the
trust managers to adopt a proposed amendment to the real estate investment
trust's certificate of formation by resolution without shareholder
approval, if a real estate investment trust does not have any issued and
outstanding shares. 

Sec. 200.055.  ADOPTION OF AMENDMENT BY SHAREHOLDERS. Describes the
required acts that a resolution must direct, if a real estate investment
trust has issued shares. 

Sec. 200.056.  NOTICE OF AND MEETING TO CONSIDER PROPOSED AMENDMENT.
Requires each shareholder of record entitled to vote to be given written
notice containing the proposed amendment or a summary of the changes to be
effected within the time and in the manner provided by this code for giving
notice of meetings to shareholders.  Authorizes the proposed amendment or
summary to be included in the notice of an annual meeting. Requires a
proposed amendment, if the proposed amendment is to be considered at an
annual meeting, to be adopted only on receiving the affirmative vote of
shareholders entitled to vote required by Section 200.261. Authorizes an
unlimited number of amendments to submitted for adoption by the
shareholders at a meeting.  

Sec. 200.057.  SUPPLEMENTAL PROVISIONS FOR CERTIFICATE OF AMENDMENT.
Specifies items which must be stated in a certificate of amendment for a
real estate  investment trust.  Authorizes a majority of the trust managers
to execute the certificate of amendment on behalf of the real estate
investment trust, if shares of the real estate investment trust have not
been issued and the certificate of amendment is adopted by the trust
managers.  Provides that the certificate of amendment must be filed in
accordance with Chapter 4 and takes effect as provided by Subchapter B,
Chapter 3.  

Sec. 200.058.  RESTATED CERTIFICATE OF FORMATION.  Authorizes a real estate
investment trust to adopt a restated certificate of formation, as provided
by Subchapter B, Chapter 3, by following specified procedures.  Authorizes
a majority of the trust managers to sign the restated certificate of
formation on behalf of the real estate investment trust, if shares of the
real estate investment trust have not been issued and the restated
certificate of formation is adopted by the trust managers.  Authorizes a
restated certificate of formation to be used to update the current number
of trust managers and the names and addresses of the persons serving as
trust managers.  

Sec. 200.059.  BYLAWS. Requires the trust managers of a real estate
investment trust to adopt initial bylaws. Authorizes the inclusion of
provisions for the regulation and management of the affairs of the real
estate investment trust that are consistent with law and the real estate
investment trust's certificate of formation within the bylaws.  Authorizes
the trust managers of a real estate investment trust to amend or repeal
bylaws or adopt new bylaws with specified exceptions.   

Sec. 200.060.  DUAL AUTHORITY.  Authorizes the shareholders of a real
estate investment trust to amend, repeal, or adopt the bylaws of the real
estate investment trust even if the bylaws may also be amended, repealed,
or adopted by the trust managers of the real estate investment trust,
unless the certificate of formation or a bylaw adopted by the shareholders
provides otherwise as to all or a part of a real estate investment trust's
bylaws. 

Sec. 200.061.  ORGANIZATION MEETING.  Requires the initial trust managers
of the real estate investment trust to hold an organization meeting to
adopt bylaws, electing officers, and transacting other business, after the
real estate investment trust has been formed.  Specifies notice
requirements of an organization meeting.   

SUBCHAPTER C.  SHARES

Sec. 200.101.  NUMBER.  Authorizes a real estate investment trust to issue
the number of shares stated in the real estate investment trust's
certificate of formation.  

Sec. 200.102.  CLASSIFICATION OF SHARES.  Authorizes a real estate
investment trust to provide in the real estate investment trust's
certificate of formation specified information relating the classification
of shares.  

Sec. 200.103.  CLASSES OF SHARES ESTABLISHED BY TRUST MANAGERS. Authorizes
a real estate investment trust to provide in the real estate investment
trust's certificate of formation that the trust managers may periodically
classify or reclassify any unissued shares in specified ways.   Provides
that, before issuing shares, the trust managers who perform as authorized
by the certificate of formation an action described by this section, must
file with the county clerk of the county of the principal place of business
of the real estate investment trust a statement of designation that
containing specified items. 
   
Sec. 200.104.   ISSUANCE OF SHARES.  Authorizes a real estate investment
trust to issue shares for consideration if authorized by the trust
managers.  Prohibits the issuance of shares until consideration, determined
in accordance with this subchapter, has been received. 
   
Sec. 200.105.   TYPES OF CONSIDERATION FOR ISSUANCE OF SHARES.  Authorizes
the issuance of shares with or without par value by a real estate
investment trust for the specified types of consideration 

Sec. 200.106.  DETERMINATION OF CONSIDERATION FOR SHARES.  Requires the
trust managers to determine the consideration to be received by a real
estate investment trust for shares. 

Sec. 200.107.  AMOUNT OF CONSIDERATION FOR ISSUANCE OF SHARES WITH PAR
VALUE.  Prohibits the consideration to be received by a real estate
investment trust for the issuance of shares with par value from being less
than the par value of the shares.  

Sec. 200.108.  VALUE OF CONSIDERATION.  Provides that in the absence of
fraud in the transaction, the judgment of the trust managers is conclusive
in determining the value of the consideration received for the shares.  

Sec. 200.109.  LIABILITY OF ASSIGNEE OR TRANSFEREE.  Prohibits an assignee
or transferee of certificated shares, uncertificated shares, or a
subscription for shares in good faith and without knowledge that full
consideration for the shares or subscription has not been paid from being
held personally liable to the real estate investment trust or a creditor of
the real estate investment trust for an unpaid portion of the
consideration.  

Sec. 200.110.  SUBSCRIPTIONS.  Authorizes a real estate investment trust to
accept a subscription by notifying the subscriber in writing.  Provides
that a subscription to purchase shares in a real estate investment trust
that is in the process of being formed is irrevocable for six months if the
subscription is in writing and signed by the subscriber, unless the
subscription provides for a longer or shorter period or all of the other
subscribers agree to the revocation of the subscription.  Provides that a
written subscription entered into after the real estate investment trust is
formed is a contract between the subscriber and the real estate investment
trust.  

Sec. 200.111.  PREFORMATION SUBSCRIPTION.  Authorizes a real estate
investment trust, after a real estate investment trust is formed to
determine the payment terms of a preformation subscription unless the
payment terms are specified by the subscription. Provides that the payment
terms may authorize payment in full on acceptance or by installments.
Requires a real estate investment trust to make calls placed to all
subscribers of similar interests for payment on preformation subscriptions
uniform as far as practicable, unless the subscription provides otherwise.
Authorizes the real estate investment trust to  collect as any other debt
the amount due on any unpaid preformation subscription or forfeit the
subscription on 20 days' written notice to the subscriber.  Authorizes the
real estate investment trust to retain any amount previously paid on the
subscription even though the forfeiture of a subscription terminates all
the rights and obligations of the subscriber. 
 
Sec. 200.112.  COMMITMENT TO PURCHASE SHARES.  Authorizes a person who
contemplates the acquisition of shares in a real estate investment trust to
commit to act in a specified manner with respect to the shares after the
acquisition, including the voting of the shares or the retention or
disposition of the shares.  Provides that the commitment must be in writing
and be signed by the person acquiring the shares to be binding.  Provides
that a written commitment entered into under this section is a contract
between the shareholder and the real estate investment trust.  
 
SUBCHAPTER D.  SHAREHOLDER RIGHTS AND RESTRICTIONS

Sec. 200.151.  REGISTERED HOLDERS AS OWNERS. Authorizes a real estate
investment trust to consider the person registered as the owner of a share
in the share transfer records of the real estate investment trust at a
particular time, including a record date set under Section 6.102, as the
owner of that share at that time for specified purposes, except as
otherwise provided by specified law.  

Sec. 200.152. NO STATUTORY PREEMPTIVE RIGHT UNLESS SPECIFICALLY PROVIDED BY
CERTIFICATE OF FORMATION. Provides that a shareholder of a real estate
investment trust does not have a preemptive right to acquire securities
except to the extent specifically provided by the certificate of formation.

 Sec. 200.153.  TRANSFER OF SHARES AND OTHER SECURITIES.  Provides that the
shares and other securities of a real estate investment trust are
transferable in accordance with Chapter 8, Business & Commerce Code, except
as otherwise provided by this code. 
 
Sec. 200.154.  RESTRICTION ON TRANSFER OF SHARES AND OTHER SECURITIES. (a)
Authorizes the imposition of a restriction on the transfer or registration
of transfer of a security by the real estate investment trust's certificate
of formation, the real estate investment trust's bylaws,  a written
agreement among two or more holders of the securities, or a written
agreement among one or more holders of the securities and the real estate
investment trust if certain requirements are met.  

(b)  Provides that a restriction imposed under Subsection (a) is not valid
with respect to a security issued before the restriction has been adopted,
unless the holder of the security voted in favor of the restriction or is a
party to the agreement imposing the restriction.  

Sec. 200.155.  VALID RESTRICTION ON TRANSFER. Provides that a restriction
placed on the transfer or registration of transfer of a security of a real
estate investment trust is valid if the restriction meets specified
requirements, notwithstanding Sections 200.154 and 200.157. 

Sec. 200.156.  BYLAW OR AGREEMENT RESTRICTING TRANSFER OF SHARES OR OTHER
SECURITIES.  Authorizes a real estate investment trust to file with the
county clerk of the county of the principal place of business of the real
estate investment trust a copy of a bylaw or agreement that restricts the
securities of the trust.  Provides that the certificate representing the
restricted shares or securities must state the fact of the filing if
required by Section 3.202.  Authorizes the trust to make the agreement
restricting the transfer part of the certificate of formation by complying
with this code or amending the certificate of formation. Sets forth the
information which must be included in the certificate of amendment. 

Sec. 200.157.  ENFORCEABILITY OF RESTRICTION ON TRANSFER OF CERTAIN
SECURITIES.  Provides that a transfer restriction is specifically
enforceable against the holder or a successor or transferee of the holder
if the restriction is reasonable and noted conspicuously on the certificate
representing the security or, with respect to uncertificated securities,
noted in the notice sent with respect to the security under Section 3.205.
Provides that the restriction is ineffective against a transferee for value
without actual knowledge of the restriction's existence. 

Sec. 200.158.  JOINT OWNERSHIP OF SHARES.  Authorizes a  real estate
investment trust to transfer shares and pay distributions to a surviving
joint owner when two or more persons are registered as joint owners of the
shares and one owner dies.  Prohibits the recording and distribution from
being made after receipt of a written notice that a party other than the
surviving joint owner is claiming an interest in the shares or
distribution.  Provides that any cause of action existing in favor of an
owner of an interest in the shares or distribution against the surviving
owner is not affected by the trust's discharge. 

Sec. 200.159.  LIABILITY FOR DESIGNATING OWNER OF SHARES.  Prohibits a real
estate investment trust or its officer, trust manager, employee, or agent
from being held liable for considering a registered owner to be the owner
of a share for a purpose described by Section 200.151. 

Sec. 200.160.  LIABILITY REGARDING JOINT OWNERSHIP OF SHARES.  Provides
that a real estate investment trust that transfers shares or makes a
distribution to a surviving joint owner under Section 200.158 before
receiving a written claim is discharged from liability. 

SUBCHAPTER E.  DISTRIBUTIONS AND SHARE DISTRIBUTIONS

Sec. 200.201.  AUTHORITY FOR DISTRIBUTIONS.  Authorizes the trust managers
to authorize a distribution and the real estate investment trust to make a
distribution subject to  Section 200.202 and any restriction in the
certificate of formation. 

Sec. 200.202.  LIMITATIONS ON DISTRIBUTIONS.  Prohibits a real estate
investment trust from making a distribution that causes the trust to become
insolvent or that is more than the surplus of the trust.  Authorizes a real
estate investment trust to purchase or redeem its own shares under
specified circumstances. 

Sec. 200.203.  PRIORITY OF DISTRIBUTIONS.  Provides that debt arising as a
result of declaration of a distribution and indebtedness issued in a
distribution are at parity with general, unsecured debt unless subordinated
or secured by agreement. 

Sec. 200.204.  RESERVES, DESIGNATIONS, AND ALLOCATIONS FROM SURPLUS.
Authorizes the trust managers to create a reserve out of the surplus or
designate or allocate part of the real estate investment trust surplus for
a proper purpose.  Authorizes a trust to increase, decrease, or abolish a
reserve, designation, or allocation in this manner. 

Sec. 200.205.  AUTHORITY FOR SHARE DISTRIBUTIONS.  Authorizes trust
managers to make share distributions subject to Section 200.206 and any
restrictions in the certificate of formation. 

Sec. 200.206.  LIMITATIONS ON SHARE DISTRIBUTIONS.  Prohibits a real estate
investment trust from making a share distribution if its surplus is less
than the amount required by Section 200.208 to be transferred to stated
capital.  Prohibits a share distribution of one class from being made on
shares of another class unless the certificate of formation provides for
the distribution or the share distribution is authorized by the shares of
the shareholders in the distributed class. 

Sec. 200.207.  VALUE OF SHARES ISSUED AS SHARE DISTRIBUTIONS.  Requires a
share distribution payable in authorized but unissued shares to be issued
at the par value of the shares and  such a distribution without par value
to be issued at the value set by the trust managers when the share
distribution is authorized. 

Sec. 200.208.  TRANSFER OF SURPLUS FOR SHARE DISTRIBUTIONS.  Requires a
surplus of not less than the aggregate par value of the shares issued in a
share distribution to be transferred to stated capital.  Requires the
amount of surplus transferred to stated capital with respect to shares
without par value to be determined by the trust managers. 

Sec. 200.209.  DETERMINATION OF SOLVENCY, NET ASSETS, STATED CAPITAL, AND
SURPLUS.  Authorizes the trust managers to base the determination of
whether the real estate investment trust is or would be insolvent and the
determination of the value of its net assets, stated capital, or surplus on
certain financial statements, financial information, projections, fair
valuations, or any combination of the foregoing. 

Sec. 200.210.  DATE OF TERMINATION OF SURPLUS.  Sets forth the dates on
which the determination of the solvency of the real estate investment trust
or its surplus is required to be made. 

Sec. 200.211.  SPLIT-UP OR DIVISION OF SHARES.  Authorizes the trust
managers to split the shares of a class of the real estate investment trust
without increasing the stated capital of the trust. 

SUBCHAPTER F.  SHAREHOLDER MEETINGS; VOTING AND QUORUM

Sec. 200.251.  ANNUAL MEETING.  Requires an annual meeting of shareholders
to be held at the time stated in or set in accordance with the bylaws of
the trust.  Authorizes a shareholder, if the meeting is not held, to
request to an officer or trust manager that the meeting be held within a
reasonable time, and if it is not called within 60 days, authorizes a
shareholder to bring a suit to compel the meeting to be held.   Provides
that each shareholder has an interest sufficient to institute a legal
proceeding to compel a meeting.  Provides that failure to hold a meeting
does not effect a winding up or termination of the real estate investment
trust. 

Sec. 200.252.  SPECIAL MEETING.  Authorizes a trust manager, an officer, or
any other person authorized by the certificate of formation or bylaws and
the holders of at least 10 percent of all the shares entitled to vote at
the meeting to call a special meeting of shareholders.  Authorizes the 10
percent shareholder requirement to be increased by the certificate of
formation but prohibits it from  exceeding 50 percent of the shares
entitled to vote. 

Sec. 200.253.  NOTICE OF MEETING.  Requires a written notice to be given to
shareholders entitled to vote at the meeting not later than 10 days and not
earlier than 60 days before the date of the meeting.  Provides that the
notice must be given in person or by mail or at the direction of the person
calling the meeting.  Provides that the notice of a special meeting must
state the purpose of the meeting. 

Sec. 200.254.  CLOSING OF SHARE TRANSFER RECORDS.  Requires the share
transfer records to be closed in accordance with Section 6.101 at least 10
days immediately preceding the date of a meeting. 

Sec. 200.255.  RECORD DATE FOR WRITTEN CONSENT TO ACTION.  Prohibits the
record date for the meeting from being more than 10 days after the date on
which the trust managers adopt the resolution setting the record date. 

Sec. 200.256.  RECORD DATE FOR PURPOSE OTHER THAN WRITTEN CONSENT TO
ACTION.  Provides that the record date must be at least 10 days before the
date on which the particular action requiring the determination of
shareholders is to be taken. 

Sec. 200.257.  QUORUM.  Provides that a quorum for a shareholders meeting
is the majority of the shares entitled to vote at a meeting.  Authorizes
the certificate of formation to provide that a quorum is present only if
the holders of a specified portion of the shares that is greater than the
majority of the shares, or a minority but not less than one third of the
shares, entitled to vote are represented.  Authorizes the shareholders
present at a meeting to conduct business until the meeting is adjourned,
and provides that a subsequent withdrawal of a shareholder does not negate
the quorum.  Authorizes the shareholders at a meeting where a quorum is not
present to adjourn the meeting until a later time. 

Sec. 200.258.  VOTING IN ELECTION OF TRUST MANAGERS.  Requires trust
managers to be elected by two-thirds of the votes cast by the holders of
shares entitled to vote in the election of trust managers at a meeting at
which a quorum is present, unless the certificate of formation or bylaws
require otherwise.  Authorizes the certificate or bylaws to provide for the
vote of a different portion of the shares so long as it is not less than a
majority of the shares.  Provides that votes for trust managers are based
on the number of shares owned by a shareholder unless cumulative voting is
authorized in accordance with Section 200.259. 

Sec. 200.259.  CUMULATIVE VOTING IN ELECTION OF TRUST MANAGERS. Provides
that cumulative voting is allowed only if specifically authorized by the
certificate of formation of a real estate investment trust.  Provides that
a shareholder who intends to cumulate votes must give prior written notice
of that intention to the trust managers. 

Sec. 200.260.  VOTING ON MATTERS OTHER THAN ELECTION OF TRUST MANAGERS.
Provides that generally a matter other than the election of trust managers
or for which a specified portion of the shares is required by this code
must be approved by the affirmative vote of the holders of a majority of
the shares entitled to vote and voting for, against, or expressly
abstaining on the matter at a shareholders meeting at which a quorum is
present.  Authorizes the bylaws or certificate of formation of a real
estate investment trust to provide that a matter other than the election of
trust managers or for which a specified vote is required by this code may
provide that the approval by shareholders is a specified portion but not
less than a majority of the shares entitled to vote on the matter. 
 
Sec. 200.261.  VOTE REQUIRED TO APPROVE FUNDAMENTAL ACTION.  Defines
"fundamental action."  Sets forth the votes required for approval of a
fundamental action. Provides that separate voting by a class or series of
shares of a real estate investment trust is required for approval of an
certain amendments to the certificate of formation unless an amendment to
the certificate of formation is undertaken by the trust managers.
Specifies certain circumstances in which a separate vote of the holders of
a series is not required. 

Sec. 200.262.  CHANGES IN VOTE REQUIRED FOR CERTAIN MATTERS.  Authorizes
the certificate of formation to require the affirmative vote of the holders
of a specified portion, but not less than a majority of the shares entitled
to vote on a matter for which a specified vote is required by this code.
Provides that this result also applies to separate votes by class.
Prohibits these provisions from being amended without the affirmative vote
of the same specified portion of the holders of the outstanding shares
entitled to vote. 

Sec. 200.263.  NUMBER OF VOTES PER SHARE.  Entitles each share to one vote
unless otherwise provided by the certificate of formation or this code. 

Sec. 200.264.  VOTING IN PERSON OR BY PROXY.  Authorizes a shareholder to
vote by written proxy.  Provides that a telegram, telex, cablegram,
electronic message or similar transmission or a photographic, photostatic,
facsimile or similar reproduction of a writing is considered an execution
in writing for this purpose. 

Sec. 200.265.  TERM OF PROXY.  Provides that a proxy is not valid after 11
months after execution unless otherwise provided by the proxy. 

Sec. 200.266.  REVOCABILITY OF PROXY.  Defines "proxy coupled with an
interest." 

Sec. 200.267.  ENFORCEABILITY OF PROXY.  Provides that an irrevocable proxy
is specifically enforceable against successors or transferees of the holder
if the proxy is noted conspicuously on the share certificate or the proxy
is contained in the notice sent to the holder of uncertificated shares
under Section 3.205.  Provides that a proxy that is otherwise enforceable
is ineffective against a transfer for value without actual knowledge of the
proxy's existence at the time of transfer or against a subsequent
transferee, regardless of whether the transfer is for value.  Provides that
the proxy is specifically enforceable against a person who is not a
transferee for value from the time the person acquires actual knowledge of
the existence of the irrevocable proxy. 

Sec. 200.268.  PROCEDURES IN BYLAWS RELATING TO PROXIES.  Authorizes a real
estate investment trust to establish procedures in its bylaws for
determining the validity of proxies and whether shares held of record by
nominees are represented at a meeting. 

SUBCHAPTER G.  TRUST MANAGERS

Sec. 200.301.  MANAGEMENT BY TRUST MANAGERS.  Vests in the trust managers
the powers necessary or appropriate to effectuate the real estate
investment trusts' purposes and to manage the trust estate. 

Sec. 200.302.  DESIGNATION OF TRUST MANAGERS.  Requires the certificate of
formation of the real estate investment trust to contain the name of each
trust manager. Provides that the selection of a successor trust manager is
considered to be an amendment to the certificate of formation. 

Sec. 200.303.  TRUST MANAGER ELIGIBILITY REQUIREMENTS.  Requires a trust
manager to be an individual but not necessarily a resident of this state or
a shareholder. Authorizes the certificate of formation or bylaws to
prescribe other qualifications for trust managers. 

Sec. 200.304.  NUMBER OF TRUST MANAGERS.  Requires the certificate of
formation  to set the number constituting the initial trust managers and
either the number of successor trust managers or provide for the manner in
which the number is determined.  Authorizes provisions regarding increases
or decreases in the number to be contained in the certificate of formation
or bylaws. 

Sec. 200.305.  COMPENSATION.  Entitles trust managers or officers to
receive compensation set by or in the manner provided in the certificate of
formation or bylaws or as determined by the trust managers, in the absence
of such provision. 

Sec. 200.306.  TERM OF TRUST MANAGER.  Provides that a trust manager serves
until the trust manager's successor is elected and authorizes the trust
manager to serve consecutive terms. 

Sec. 200.307.   STAGGERED TERMS OF TRUST MANAGERS.  Authorizes the board of
trust managers to be divided into two or three classes of the same or
similar number of trust managers in each class.  Sets forth the terms and
requirements of the office of trust managers in each class.  

Sec. 200.308.  VACANCY.  Authorizes the remaining trust managers, even if
less than a quorum, to fill a vacancy occurring in the office of a trust
manager.  Authorizes the certificate of formation or bylaws to provide
other procedures for filling vacancies. 

Sec. 200.309.  NOTICE OF MEETING.  Authorizes regular meetings to be held
with or without notice but requires notices for special meetings of trust
managers.  Provides that the notice need not specify the business purpose
of the meeting unless required by the bylaws. 

Sec. 200.310.  QUORUM.  Provides that a majority of the number of trust
managers constitutes a quorum unless the certificate of formation or bylaws
requires a greater number. 

Sec. 200.311.  COMMITTEES OF TRUST MANAGERS.  Authorizes the trust managers
to establish committees of trust managers if authorized by the certificate
of formation and bylaws. Provides that the committees have the authority
provided by the resolution designating the committee or the certificate of
formation and bylaws.  Prohibits the committee from certain actions.
Authorizes the committee to authorize a distribution or the issuance of
shares if authorized in the resolution designating the committee or the
certificate of formation.  Provides that the designation and delegation of
authority to a committee does not relieve a trust manager of responsibility
imposed by law. 

Sec. 200.312.  LIABILITY OF TRUST MANAGERS. Provides that a trust manager
is jointly and severally liable to the real estate investment trust for the
value of distributed assets which are distributed during the liquidation of
the real estate investment trust without payment and discharge or the
making of adequate provisions for the payment of all debts and other
obligations of the trust.  Provides that a trust manager who votes for or
assents to the making of a loan to another trust manager or officer of the
trust or the making of a loan secured by shares of the trust is jointly and
severally liable to the trust for the loan amount until the loan is repaid.
Provides that trust managers acting in good faith and with ordinary care
are excused from liability for distributed assets if they relied on certain
information and considered the assets of the trust to be valued at least at
book value. 

Sec. 200.313.  STATUTE OF LIMITATIONS ON CERTAIN ACTION AGAINST TRUST
MANAGERS.  Prohibits an action brought under Section 200.312 against a
trust manager after the second anniversary of the date of the alleged act
giving rise to the liability. 

Sec. 200.314.  IMMUNITY FROM LIABILITY FOR PERFORMANCE OF DUTY. Prohibits a
trust manager from being held liable to the trust for an act, omission,
loss, damage, or expense arising from the trust manager's duties except for
willful misfeasance, willful malfeasance or gross negligence. 

Sec. 200.315.  OFFICERS.  Authorizes an officer to exercise all of the
powers of a trust  manager unless action by a trust manager is specified by
this code or another applicable law. Provides that delegation of authority
to an officer does not relieve a trust manager of responsibility imposed by
law. 

Sec. 200.316.  CONTRACTS OR TRANSACTIONS INVOLVING INTERESTED TRUST
MANAGERS AND OFFICERS.  Makes this section applicable only to a contract or
transaction between a real estate investment trust and one or more managers
or officers or an entity or other organization in which one or more of the
trust's trust managers or officer is a managerial official or has a
financial interest.  Provides that contracts or transactions between a real
estate investment trust and an interested manager or officer are valid
notwithstanding the trust manager's vote or participation in the meeting at
which the contract is authorized if one of several approvals is obtained.
Authorizes common or interested trust managers to be included in
determining the presence of a quorum at a meeting of the trust manager, or
a committee of the trust managers, that authorizes the contract or
transaction. 

SUBCHAPTER H.  INVESTMENTS

Sec. 200.351.  INVESTMENTS.   Provides that the trust managers and officers
have complete discretion with respect to the investment of the trust estate
unless the investment is contrary to this chapter, the Internal Revenue
Code, or regulations under the Internal Revenue Code relating to or
governing real estate investment trusts. 

SUBCHAPTER I.  FUNDAMENTAL BUSINESS TRANSACTIONS

Sec. 200.401.  DEFINITIONS.  Defines "participating shares," "shares," and
"voting shares." 

Sec. 200.402.  APPROVAL OF MERGER.  Sets forth the procedures for approval
of a plan of merger by the trust managers and shareholders of the real
estate investment trust.  Provides that the plan of merger must be
submitted to the shareholders for approval, except as provided by this
subchapter or Chapter 10. 

Sec. 200.403.  APPROVAL OF CONVERSION.  Sets forth the procedures for
approval of a plan of conversion by the trust managers and shareholders of
the real estate investment trust.  Provides that the plan of conversion
must be submitted to the shareholders for approval, except as provided by
this subchapter or Chapter 10. 

Sec. 200.404.  APPROVAL OF EXCHANGE.  Sets forth the procedures for
approval of a plan of exchange by the trust managers and shareholders of
the real estate investment trust. Provides that the plan of exchange must
be submitted to the shareholders for approval, except as provided by this
subchapter or Chapter 10. 

Sec. 200.405.  APPROVAL OF SALE OF ALL OR SUBSTANTIALLY ALL OF ASSETS. Sets
forth the procedures for approval of a sale of all or substantially all of
the assets of the real estate investment trust by the trust managers and
shareholders of the real estate investment trust.  Provides that the sale
must be submitted to the shareholders for approval, except as provided by
this subchapter or Chapter 10. 

Sec. 200.406.  GENERAL PROCEDURE FOR SUBMISSION TO SHAREHOLDERS OF
FUNDAMENTAL BUSINESS TRANSACTION.  Requires a real estate investment trust
to notify each shareholder if a fundamental business transaction is to be
considered.  Sets forth the information which must be contained in such a
notice.  Provides that the notice must be given at least 20 days before the
meeting or the effective date of the transaction and state that the
purpose, or one of the purposes, of the meeting is to consider the
fundamental business transaction if the transaction is to be considered at
a meeting of the shareholders or is being submitted to the shareholders for
written consent, as appropriate. 

Sec. 200.407.  GENERAL VOTE REQUIREMENT FOR APPROVAL OF FUNDAMENTAL
BUSINESS TRANSACTION.  Requires an affirmative vote by the  holders of at
least two-thirds of the outstanding shares entitled to vote for a
fundamental business transaction to be approved.  Authorizes the
certificate of formation or bylaws to specify a different portion of the
shares in accordance with Sec. 200.261.  Requires the affirmative vote of
at least two-thirds of the outstanding shares of each class or series of
shares entitled to vote on the fundamental business transaction as a class
or series in addition to two-thirds of the outstanding shares of the real
estate trust.  Provides that approval of a merger by shareholders is not
required for a real estate investment trust that is a party to the plan of
merger unless the real estate investment trust is also a party to the
merger. 

Sec. 200.408.  CLASS VOTING REQUIREMENTS FOR CERTAIN FUNDAMENTAL BUSINESS
TRANSACTIONS.  Requires a separate vote by a class or series of shares  for
approval of a plan of merger, plan of conversion, plan of exchange, or sale
of all or substantially all of the shares of a real estate investment trust
if the class or series of shares is entitled under the certificate of
formation to vote as a class on the plan or sale. 

Sec. 200.409.  NO SHAREHOLDER VOTE REQUIREMENT FOR CERTAIN FUNDAMENTAL
BUSINESS TRANSACTIONS.  Provides that approval by the shareholders of a
real estate investment trust is not required if certain conditions are met.
Provides that mergers effected under Section 10.005 or 10.006 do not
require the approval of the shareholders. 

Sec. 200.410.  RIGHTS OF DISSENT AND APPRAISAL.  Provides that a
shareholder of a domestic real estate investment trust has the rights of
dissent and appraisal under Subchapter H, Chapter 10, with respect to a
fundamental business transaction. 

SUBCHAPTER J.  WINDING UP AND TERMINATION

Sec. 200.451.  APPROVAL OF VOLUNTARY WINDING UP.  Provides that a real
estate investment trust must approve a voluntary winding up by the
affirmative vote of shareholders set forth in Section 200.261. 

Sec. 200.452.  APPROVAL OF REINSTATEMENT OR REVOCATION OF VOLUNTARY WINDING
UP.  Authorizes a real estate investment trust to reinstate its existence,
revoke a voluntary decision to wind up, or cancel an event requiring
winding up by the affirmative vote of the shareholders. 

Sec. 200.453.  RESPONSIBILITY FOR WINDING UP.  Requires the trust managers
to manage the winding up of the business or affairs of the real estate
investment trust if the trust determines or is required to wind up. 

SUBCHAPTER K.  MISCELLANEOUS PROVISIONS

Sec. 200.501.  EXAMINATION OF RECORDS.  Entitles a shareholder of record of
the real estate investment trust for at least six months or a shareholder
of at least 5 percent of the outstanding shares to examine and copy the
books and records.  Provides that this section does not impair the power of
a court to compel production for examination by the shareholder of such
books and records. 

Sec. 200.502.  JOINDER OF SHAREHOLDERS NOT REQUIRED.  Provides that
shareholders need not join in any sale, lease, mortgage or other
disposition of the assets of the real estate investment trust. 

Sec. 200.503.  TAX LAW REQUIREMENTS.  Provides that a provision of this
chapter is subject to the provisions of the Internal Revenue Code and the
regulations promulgated thereunder with respect to real estate investment
trusts which are attempting to qualify as real estate investment trusts
under the Internal Revenue Code. 

TITLE 6.  ASSOCIATIONS

 CHAPTER 251.  COOPERATIVE ASSOCIATIONS

SUBCHAPTER A.  GENERAL PROVISIONS


Sec. 251.001.  DEFINITIONS.  Defines "cooperative basis," "invested
capital," "investment dividend," "membership capital," "net savings,"
"patronage dividend," and "savings returns." 

Sec. 251.002.  APPLICABILITY OF NONPROFIT CORPORATION PROVISIONS. Provides
that a provision of Title 1 and Chapters 20 and 22 governing nonprofit
corporations apply to a cooperative association, but that this chapter
controls over any conflicting provisions.   

Sec. 251.003.  EXEMPTION.  Exempts a corporation or association organized
under or having a purpose prohibited under Title 2 or a law listed Sections
22.051-22.054 from the provisions of this chapter. 

SUBCHAPTER B.  PURPOSES AND POWERS

Sec. 251.051.  PURPOSES.  Sets forth the activities for which a person is
authorized to incorporate a cooperative association.  Prohibits a
cooperative association from serving as a health maintenance organization,
furnish medical or health care, or employ or contract with a health care
provider in a manner prohibited by the statute under which the provider is
licensed. 

Sec. 251.052.  GENERAL POWERS.  Authorizes a cooperative association to
exercise the same powers and privileges as a nonprofit corporation and sets
out specific powers of a cooperative association. 

Sec. 251.053.  LIMITATION ON POWERS.  Prohibits a cooperative association
from engaging in health maintenance organizations or prepaid legal service
corporations.  Limits certain organizational expenses. 

SUBCHAPTER C.  FORMATION AND GOVERNING DOCUMENTS

Sec. 251.101.  SUPPLEMENTAL PROVISION REQUIRED IN CERTIFICATE OF FORMATION.
Sets out the information that must be specifically stated, in addition to
the information required by Section 3.005, in the certificate of formation.

Sec. 251.102.  ORGANIZATIONAL MEETING.  Requires that a cooperative
association hold an organizational meeting after a certificate of formation
is issued. 

Sec. 251.103.  AMENDMENT OF CERTIFICATE OF FORMATION.  Authorizes the board
of directors of a cooperative association to propose an amendment to the
certificate of formation by a two-thirds vote of the board members.  Sets
forth the manner by which the certificate of formation may be amended.   

Sec. 251.104.  BYLAWS.  Authorizes the bylaws to be adopted, amended or
repealed by majority of the cooperative association's members voting unless
the certificate of formation requires a greater majority.  Sets out the
information that the bylaws may contain. 

SUBCHAPTER D.  MANAGEMENT

Sec. 251.151.  BOARD OF DIRECTORS.  Provides that a cooperative association
is managed by a board of directors in accordance with Chapter 22.  Sets
forth the composition of the board.  Authorizes the bylaws to apportion the
number of directors among the units and provide for the election of the
directors by respective units to which the directors are apportioned.
Authorizes an executive committee of the board of director to be elected in
the manner and with the powers and duties specified by the certificate of
formation or bylaws.   
 Sec. 251.152.  OFFICERS.  Requires the directors to annually elect a
president, one or more vice presidents, a secretary, and treasurer or a
secretary/treasurer.  Authorizes any two or ore offices, other than the
offices of president and secretary, to be held by the same person.
Authorizes the officers to be designated by other titles as provided by the
certificate of formation or the bylaws of the cooperative association. 

Sec. 251.153.  REMOVAL OF DIRECTORS AND OFFICERS.  Authorizes a director or
officer of a cooperative association  to be removed from office in the
manner provided by the certificate of formation or bylaws, or by a majority
vote of the members voting at a regular or special meeting if the
certificate or bylaws do not provide for the person's removal. Entitles the
director or officer who is to be removed to be heard at the meeting.
Provides that a vacancy on the board of directors caused by removal is
filled in the manner that the bylaws establish for the election of
directors.  

Sec. 251.154.  REFERENDUM.  Authorizes the certificate of formation or the
bylaws to provide for a referendum on any action requested by at least 10
percent of the members or by at least a majority of the directors.
Provides that if a referendum is authorized, the proposition being voted on
must be submitted to the members within a specified time. Provides that a
right of a third party that has vested between the time of the action and
the time of the referendum is not impaired by the referendum results.   

SUBCHAPTER E.  MEMBERSHIP 

Sec. 251.201.  ELIGIBILITY AND ADMISSION.  Authorizes a person to become a
member only if the person meets the qualifications for eligibility stated
in the certificate of formation or the bylaws. 

Sec. 251.202.  EXPULSION.  Authorizes a member to be expelled by the vote
of a majority of the members voting at a meeting.  Provides that the member
in question must be given notice of the charges and is entitled to be heard
at the meeting.  Provides that, upon expulsion, the directors must purchase
the member's holdings at par value if the purchase does not jeopardize the
cooperative association's solvency.  

Sec. 251.203.  SUBSCRIBERS.  Provides that a person is a subscriber of the
cooperative association if the person is eligible for membership and
legally obligated to purchase a share or membership.  Authorizes the
certificate of formation or the bylaws to establish conditions under which
voting rights or other membership rights are granted. 

Sec. 251.204.  LIABILITY.  Provides that a member or subscriber is not
jointly or severally liable for a debt of the cooperative association.
Provides that a subscriber is liable for any unpaid amount on the
subscriber's membership certificate and a subscriber who assigns the
subscriber's interest is liable with the assignee until the certificates
are fully paid. 

SUBCHAPTER F.  SHARES

Sec. 251.251.  SHARE AND MEMBERSHIP CERTIFICATES:  ISSUANCE AND CONTENTS.
Prohibits a cooperative association from issuing certificates until any par
value has been paid in full.  Provides that each certificate for membership
capital must contain certain statements relating to the restrictions on
transferability. 

Sec. 251.252.  TRANSFER OF SHARES AND MEMBERSHIP; WITHDRAWAL. Requires a
member who withdraws to offer to sell the member's membership certificates
to the board of directors.  Authorizes the directors to purchase the shares
within 90 days of the offer and requires the directors to purchase the
shares if a majority of the members so vote. Provides that an investor
owning investor certificates must conform with the guidelines in the
association's bylaws governing the conveyance of such certificates.
Provides that, if an investor fails to comply with the bylaws, the
cooperative association must repurchase the certificate by paying the
investor the par value of the certificates plus all accrued investment
dividends.   
 
Sec. 251.253.  SHARE AND MEMBERSHIP CERTIFICATES; RECALL.  Provides that
the bylaws may authorize the board of directors to recall membership
certificates of a member who fails to patronize the cooperative association
and to reissue, cancel, or repurchase the certificates.  Authorizes the
bylaws to establish specific procedures, terms, and conditions for recalls
and repurchases of investment certificates. 

Sec. 251.254.  CERTIFICATES; ATTACHMENT.  Exempts the minimum amount
necessary for membership from attachment, execution, or garnishment for the
debts of a member.  Authorizes the directors, if a member's holdings are
subject to attachment, execution or garnishment, to admit the purchaser to
membership or purchase the holdings at par value. 

SUBCHAPTER G.  MEETINGS AND VOTING

Sec. 251.301.  MEETINGS.  Requires  regular meetings of the members to be
held at least once a year.  Authorizes special meetings to be requested by
a majority of directors or by at least 1/10th of the membership. 

Sec. 251.302.  NOTICE OF SPECIAL MEETING.  Requires the notice for special
meetings to include the purpose of the meeting. 

Sec. 251.303.  MEETINGS BY UNITS OF MEMBERSHIP.  Authorizes the certificate
of formation or bylaws to provide for meetings by units of the membership
and for a method of transmitting the votes cast at unit meeting to the
central meeting, for the method of representation of the membership by the
election of delegates to the central meeting, or for a combination of both
methods.  Provides that, unless the bylaws state otherwise, meetings by a
unit are called and held in the same manner as regular meetings. 

Sec. 251.304.  ONE MEMBER--ONE VOTE.  Provides that a member of a
cooperative association has one vote unless the cooperative association
includes another cooperative association or a group that is organized on a
cooperative basis.  Provides that any voting agreement that evades the
one-member-one-vote rule is not enforceable. 

Sec. 251.305.  NO PROXY.  Provides that a member is not entitled to vote by
proxy.  

Sec. 251.306.  VOTING BY MAIL.  Authorizes the certificate of formation or
bylaws to provide for voting by mail. 

Sec. 251.307.  VOTING BY MAIL OR BY DELEGATES.  Provides that provisions
applying to votes cast by members also apply to votes cast by mail or
delegates.  Prohibits a delegate from voting by mail.  

SUBCHAPTER H.  CAPITAL AND NET SAVINGS

Sec. 251.351.  LIMITATIONS ON RETURN ON CAPITAL.  Provides that an
investment dividend of a cooperative association cannot be cumulative and
cannot exceed 8 percent of investment capital unless bylaws state
otherwise.  Provides that total investment dividends distributed for a
fiscal year cannot exceed 50 percent of the net savings for that year. 

Sec. 251.352.  ALLOCATION AND DISTRIBUTION OF NET SAVINGS.  Requires the
directors to apportion the net savings, at least once a year, in the
following order: (1) investment dividends may be paid on investment
capital; (2) a portion of the remainder may be allocated to an educational
fund, then to the general welfare of the members, and then to retained
earnings; and (3) the remainder must be allocated in proportion to
individual patronage.  Authorizes the amount of savings returns for
subscriber patrons to be distributed to the subscriber or accredited to the
subscriber's account until the amount of capital subscribed for has been
fully paid. 

 SUBCHAPTER I.  REPORTS AND RECORDS

Sec. 251.401.  RECORDKEEPING.  Requires a cooperative association to keep
books and records relating to its operations in accordance with standard
accounting practices. 

Sec. 251.402.  REPORTS TO MEMBERS.  Requires a cooperative association to
submit a written report to its members at the annual meeting and sets forth
the information that must be contained in the annual report.  Requires the
directors to appoint a committee composed of members who are not principal
bookkeepers, accountants, or employees of the association to review the
report of the cooperative association. 

Sec. 251.403.  ANNUAL REPORT OF FINANCIAL CONDITION.  Requires cooperative
associations with at least a hundred members or $20,000 in annual business
to file a report of the association's financial condition stating specific
information no later than 20 days after the close of business each year.
Provides that the report must include a balance sheet and income and
expense statement of the cooperative association.  Requires a cooperative
association with at least 300,000 members or $750,000 in annual business to
file a copy of this report with the secretary of state.  Provides that a
person who signs a report that contains materially false information
commits an offense that is punishable by a fine, confinement, or both. 

Sec. 251.404.  FAILURE TO FILE REPORT.  Requires the secretary of state to
send written notice within 60 days after the report becomes due to a
cooperative association that fails to file.  Authorizes the members of the
cooperative association to send written notice of the requirement to the
cooperative association if the cooperative association was required to file
at its registered office but not with the secretary of state.  Authorizes a
member of the cooperative association or the attorney general to seek to
compel the filing of the report if the cooperative association does not
file within 60 days after receiving notice. 

SUBCHAPTER J.  WINDING UP AND TERMINATION

Sec. 251.451.  VOLUNTARY WINDING UP AND TERMINATION.  Authorizes a
cooperative association to wind up and terminate its affairs in accordance
with Chapter 11 and Section 22.301.  Requires three members of the
cooperative association, designated as trustees, to act on the behalf of
the cooperative association to pay debts, liquidate assets, and distribute
assets upon being directed to wind up and liquidate. 

Sec. 251.452.  EXECUTION OF CERTIFICATE OF TERMINATION.  Requires an
officer or one of the designated trustees to execute a certificate of
termination. 

Sec. 251.453.  DISTRIBUTION OF ASSETS.  Requires the trustees to distribute
the cooperative association's assets in a certain order. 

Sec. 251.454.  INVOLUNTARY TERMINATION.  Authorizes a suit for involuntary
termination of a cooperative association to be instituted for the causes
and prosecuted in the manner provided by Sec. 11.251 and requires the
assets to be distributed in accordance with Section 251.453. 

SUBCHAPTER K.  MISCELLANEOUS PROVISIONS

Sec. 251.501.  EXEMPTION FROM TAXES.  Exempts a cooperative association
from franchise tax and license fees.  Provides that a cooperative
association is exempt from the franchise tax imposed by Chapter 171, Tax
Code, only if the cooperative association is exempt under that chapter. 

Sec. 251.502.  USE OF NAME "COOPERATIVE."  Authorizes only a cooperative
association organized under this chapter, a group organized on a
cooperative basis under another law, or a foreign entity operating under a
cooperative basis and authorized to do business in Texas to use the term
"cooperative" or any abbreviation of that term.  Provides  that the misuse
of this term is a misdemeanor that is punishable by a fine, confinement, or
both.  Authorizes the attorney general to sue to enjoin a violation of this
section.  Provides that, if a court determines that a person who used the
term "cooperative" before September 1, 1975, is not organized on a
cooperative basis but is authorized to continue to use the term, the
business must place after its name the words "does not comply with the
cooperative association law of Texas."  Authorizes The University
Cooperative Society, a domestic nonprofit corporation related to the
University of Texas, to continue to use the word "cooperative" in its name. 

CHAPTER 252.  UNINCORPORATED NONPROFIT ASSOCIATIONS

Sec. 252.001.  DEFINITIONS.  Defines "member" and "nonprofit association."

Sec. 252.002.  SUPPLEMENTARY GENERAL PRINCIPLES OF LAW AND EQUITY. Provides
that the principals of law and equity supplement this chapter unless
specifically displaced. 

Sec. 252.003.  TERRITORIAL APPLICATION.  Authorizes real and personal
property in this state to be acquired, held, encumbered, and transferred by
a nonprofit association, regardless of whether the nonprofit association or
a member has any other relationship to this state. 

Sec. 252.004.   REAL AND PERSONAL PROPERTY; NONPROFIT ASSOCIATION AS
BENEFICIARY.  Authorizes a nonprofit association to acquire, hold,
encumber, and transfer an estate or interest in real and personal property
in its name.  Authorizes a nonprofit association to be a beneficiary of a
trust, contract, or will. 

Sec. 252.005.  STATEMENT OF AUTHORITY AS TO REAL PROPERTY.  Authorizes a
nonprofit association to execute and record a statement of authority to
transfer an estate or interest in real property.  Sets forth the
information the statement of authority must include.  Provides that it must
be executed in the same manner as a deed by a person who is not the person
authorized to transfer the estate or interest.  Authorizes the county clerk
to collect a recording fee.  Provides that any amendment of the statement
of authority must meet the requirements for execution and recording of the
original statement.  Provides that the authority of the person named is
conclusive in favor of a person who gives value without notice that the
person lacks authority if the record title to real property is in the name
of a nonprofit association and the statement of authority is recorded. 

Sec. 252.006.   LIABILITY IN TORT AND CONTRACT.  Provides that a nonprofit
association is a separate legal entity and a person is not liable for a
nonprofit association's breach of contract or a tortious act or omission
merely because the person is a member or is authorized to participate in
the management of the nonprofit association.  Provides that tortious acts
or omissions of members are not imputed to a person merely because that
person is a member or is authorized to participate in the management of the
nonprofit association. Authorizes a member to assert a claim against a
nonprofit association and a nonprofit association to assert a claim against
a member. 

Sec. 252.007.  CAPACITY TO ASSERT AND DEFEND; STANDING.  Authorizes a
nonprofit association to participate in a judicial, administrative, or
other governmental proceeding, or an arbitration, mediation or any other
form of alternative dispute resolution. Authorizes a nonprofit association
to assert a claim in its own name on behalf of its members if one or more
of the members has standing to assert the claim in the member's own right,
the interests that the nonprofit association seeks to protect are germane
to its purposes, and neither the claim asserted nor the relief requested
requires the participation of a member. 

Sec. 252.008.  EFFECT OF JUDGMENT OR ORDER.  Provides that a judgment
against the nonprofit association is not a judgment against a member. 

Sec. 252.009.  DISPOSITION OF PERSONAL PROPERTY OF INACTIVE NONPROFIT
ASSOCIATION.  Authorizes a person in custody of property of a nonprofit
association that has been inactive for at least three years to transfer the
property to an individual specified in a document of the nonprofit
association, and if no person is specified, to a nonprofit association
pursuing broadly similar purposes, or to a government or governmental
subdivision, agency or instrumentality.  Provides that, if the nonprofit
association is operating for a charitable, religious or educational
purpose, then any distribution must be made to another nonprofit
association or nonprofit corporation with similar purposes. 

Sec. 252.010.  BOOKS AND RECORDS.  Requires a nonprofit association to keep
books and records and to make them available for inspection and copying to
the members and the attorney general. 

Sec. 252.011.  APPOINTMENT OF AGENT TO RECEIVE SERVICE OF PROCESS.
Authorizes  a nonprofit association to file with the secretary of state a
statement appointing an agent authorized to receive service of process.
Provides that the statement and any amendments must be signed by an
authorized person of the nonprofit association and by the person appointed
as agent.  Authorizes the secretary of state to collect a filing fee.
Provides that an amendment to a statement must meet the requirements for
execution of the original statement.  Authorizes a statement appointing an
agent to be canceled by filing written notice of the cancellation
containing specific information set forth in this section. 

Sec. 252.012.  CLAIM NOT ABATED BY CHANGE.  Provides that a claim for
relief against a nonprofit association does not abate merely because of a
change in the members or persons authorized to manage the affairs of the
nonprofit association. 

Sec. 252.013.  SUMMONS AND COMPLAINT; SERVICE.  Provides that a summons and
complaint must be served on an authorized agent, an officer, managing or
general agent, or a person authorized to participate in the management of
the affairs of a nonprofit association. Requires the nonprofit association
to provide the names, current addresses, and telephone numbers of these
individuals to the attorney general within 10 days of the attorney
general's request. 

Sec. 252.014.  UNIFORMITY OF APPLICATION AND CONSTRUCTION.  Requires that
this chapter be applied and construed to make this law uniform with respect
to the subject of this chapter among the states enacting it. 

Sec. 252.015.  TRANSITION CONCERNING REAL AND PERSONAL PROPERTY. Authorizes
a fiduciary to transfer an estate or interest to a nonprofit association in
its name, if before September 1, 1995, an interest in real or personal
property was purportedly transferred to a nonprofit association, but under
the law the interest was vested in a fiduciary. Authorizes the nonprofit
association to require that the interest be transferred to it in its name. 

Sec. 252.016.  EFFECT ON OTHER LAW.  Provides that this chapter replaces
existing law with respect to matters covered by this chapter but does not
affect other law covering unincorporated nonprofit associations. 

CHAPTER 253.  UNINCORPORATED JOINT STOCK COMPANIES OR ASSOCIATIONS

Sec. 253. 001.  APPLICABILITY OF CHAPTER.  Provides that this chapter
applies to an action by or against an unincorporated joint stock company or
association or to an action for the enforcement of the liability of a
stockholder of the company or association. 

Sec. 253.002.  EFFECT OF CHAPTER.  Provides that this chapter does not
affect or impair the right of an unincorporated joint stock company or
association to sue in the individual names of its stockholders or member or
the right of a person to sue the individual stockholders or members. 

 Sec. 253.003.  CUMULATIVE REMEDIES.  Provides that each remedy provided by
this chapter is cumulative of other remedies in law. 

Sec. 253.004.  SUIT IN NAME OF JOINT STOCK ASSOCIATION.  Authorizes a
domestic or foreign unincorporated joint stock company or association doing
business in this state to sue or be sued in its own name.  Provides that an
individual stockholder or member of the company or association does not
need to be a named party to the suit. 

Sec. 253.005.  SERVICE OF CITATION.  Authorizes citation to be served in an
action against a joint stock company or association in the manner provided
by Section 17.023, Civil Practice and Remedies Code.  Authorizes service to
be made on a stockholder or member of the company or association.   

Sec. 253.006.  LIABILITY OF STOCKHOLDERS OR MEMBERS.  Provides that a
stockholder of an unincorporated joint stock company or association is
liable to the same extent as a partner in general partnership under this
code. 

Sec. 253.007.  EXECUTION OF JUDGMENT.  Provides that a judgement rendered
against a joint stock company or association is binding on the joint
property of all the stockholders or members of the company or association
if service is only made on an officer or agent of the company and
authorizes it to be enforced by execution.  Provides that the judgment is
not binding on the individual property of the stockholders or members  and
does not authorize execution against an individual.  Provides that a
judgment against a joint stock company or association is binding on the
individual property of a stockholder or member who is served with citation
and authorizes execution against the individual property only after
execution against the joint property has been returned unsatisfied. 

TITLE 7.  PROFESSIONAL ENTITIES

CHAPTER 301.  PROVISIONS RELATING TO PROFESSIONAL ENTITIES

Sec. 301.001.  APPLICABILITY OF TITLE.  Provides that Title 7 applies only
to professional entities and foreign professional entities.  Provides that
the title does not affect the professional relations between the
professional and the professional's client or the legal remedies afforded a
client against a professional for errors, omissions, negligence,
incompetence, or malfeasance. 

Sec. 301.002.  CONFLICTS OF LAW.  Provides that this title prevails over
conflicting provisions of Titles 1, 2, 3, or 4. 

Sec. 301.003.  DEFINITION.  Defines "permitted person" in this title.

Sec. 301.004.  AUTHORIZED PERSON.  Provides that a person is an authorized
person with respect to a professional association if the person is a
professional individual and a professional corporation or a professional
limited liability company if the person is a professional individual or
professional organization. 

Sec. 301.005.  SUPPLEMENTAL PROVISIONS REQUIRED IN CERTIFICATE OF
FORMATION.  Sets forth the supplemental information that is required to be
included in a certificate of formation of a professional entity. 

Sec. 301.006.  APPLICATION FOR REGISTRATION OF FOREIGN PROFESSIONAL ENTITY.
Authorizes a foreign professional entity to register to transact business
in Texas by filing an application for registration in accordance with
Chapter 9.  Authorizes the secretary of state to accept an application only
if the name and the purpose of the entity comply with Title 7 and the
chapters of Title 1 applicable to names and purposes.  Provides that the
application must state that the jurisdiction of formation of the foreign
professional entity permits reciprocal admission of a Texas entity formed
under this Code. 

 Sec. 301.007.  LICENSE REQUIRED TO PROVIDE PROFESSIONAL SERVICE.
Authorizes a professional association or foreign professional association
to provide a professional service in this state only through individuals
who are licensed to perform the professional service, and authorizes other
professional entities to provide services through authorized persons who
render the same professional service as the professional entity. Prohibits
an unlicensed individual from providing a professional service in this
state under the guise of employment.  Prohibits this section from being
construed to prohibit a professional entity from employing individuals who
do not ordinarily provide a professional service. 

Sec. 301.008.  CERTAIN REQUIREMENTS TO BE OWNER, GOVERNING PERSON, OR
OFFICER.  Provides that an authorized person may be an owner of a
professional entity or a governing person of a professional limited
liability company, and a professional individual may be an officer of a
professional entity or a governing person of a professional association or
professional corporation.  

Sec. 301.009.  DUTIES AND POWERS OF OWNER OF MANAGERIAL OFFICIAL WHO CEASES
TO BE LICENSED; PURCHASE OF OWNERSHIP INTEREST.  Requires  a managerial
official who ceases to be licensed to resign the person's position of
employment and an owner who ceases to be licensed to relinquish the
person's ownership interests. Requires a person who succeeds to an
ownership interest to relinquish any financial interest in the entity if
the person is not an authorized owner.  Requires the professional entity to
purchase or cause to be purchased, at a price provided in the governing
documents or any applicable agreement, the interest of any person who is
required to relinquish the person's financial interest.  Authorizes a
person who is required to relinquish the person's financial interest but
who owns all of the outstanding shares to act as a managerial official for
the entity for the purpose of winding up the affairs of the entity. 

Sec. 301.010.  TRANSFER OF OWNERSHIP INTEREST.  Authorizes the transfer of
an ownership interest in a professional entity only to an owner, the
entity, or a authorized person. 

Sec. 301.011.  LIABILITY.  Provides that a professional entity is jointly
and severally liable for an error, omission, negligent or incompetent act,
or malfeasance by an owner, managerial official, employee, or agent of the
professional entity providing a professional service for the entity or
during the course of the person's employment. Provides that such a person
is not subject to the same liability imposed on the professional entity.
Provides that if such a person is a professional organization the
professional organization and the professional entity are jointly and
severally liable. 

Sec. 301.012.  EXEMPTION FROM SECURITIES LAWS. Exempts the sale, issuance,
or offer to sell an ownership interest in a professional entity from state
securities laws. 

CHAPTER 302.  PROVISIONS RELATING TO PROFESSIONAL ASSOCIATIONS

Sec. 302.001.  APPLICABILITY OF CERTAIN PROVISIONS GOVERNING FORPROFIT
CORPORATIONS.  Makes the provisions of Chapter 20 and 21 governing
forprofit corporations applicable to professional associations. 

Sec. 302.002.  SUPPLEMENTAL PROVISIONS REQUIRED IN CERTIFICATE OF
FORMATION; ADDITIONAL REQUIREMENTS.  Authorizes one or more persons
licensed to practice medicine, osteopathy, or podiatry to form a
professional association and sets forth the additional information which
must be included in such a certificate of formation. 

Sec. 302.003.  DURATION OF PROFESSIONAL ASSOCIATION.  Provides that a
professional association continues until certain conditions exist.   

Sec. 302.004.  AMENDMENT OF CERTIFICATE OF FORMATION.  Authorizes a
professional association to amend its certificate of formation by following
the procedures for amendment in Chapter 3 and the procedures in the
certificate of formation.  Provides that an amendment is not necessary to
reflect a change in associates or membership interests. 

Sec. 302.005.  ADOPTION OF BYLAWS; DELEGATION OF AUTHORITY.  Authorizes the
members to adopt bylaws for the association or to delegate the adoption to
a governing authority. 

Sec. 302.006.  GOVERNING AUTHORITY.  Requires a professional association to
be governed by a board of directors or executive committee. 

Sec. 302.007.  MEMBERS' VOTING RIGHTS.  Entitles each member to have the
voting rights provided in the certificate of formation. 

Sec. 302.008.  ELECTION OF OFFICERS.  Requires a professional association
to elect officers. 

Sec. 302.009.  OFFICER AND GOVERNING AUTHORITY ELIGIBILITY REQUIREMENTS.
Provides that only a member of the professional association is eligible to
serve as an officer or governing person of a professional association and
that the person is not required to be a governing person to serve as an
officer.  Provides that only a governing person is eligible to serve as the
president of the association. 

Sec. 302.010.  GENERAL POWERS, DUTIES, AND LIABILITIES.  Provides that a
professional association has the same powers, privileges, duties,
restrictions, and liabilities as a for-profit corporation. 

Sec. 302.011.  EMPLOYMENT OF AGENTS AND EMPLOYEES.  Authorizes the officers
of a professional association to employ agents or employees. 

Sec. 302.012.  LIMITATION ON MEMBER'S POWER TO BIND ASSOCIATION. Provides
that a member of a professional association is not entitled, merely by
virtue of being a member, to the authority to bind the association. 

Sec. 302.013.  DIVISION OF PROFITS.  Requires the members of the
association to divide the profits derived from the association in the
manner provided by the governing documents of the association. 

Sec. 302.014.  JOINT PRACTICE BY CERTAIN PROFESSIONALS.  Authorizes
persons licensed as doctors of medicine, doctors of osteopathy, or doctors
of podiatry to jointly form and own a professional association only if a
member of the association is appropriately licensed in this state.
Authorizes a member of such a professional association to provide a
professional service only if appropriately licensed in this state.
Prohibits a member from exercising control over the conduct of another
member who provides a different type of professional service for the
association. 

Sec. 302.015.  ANNUAL STATEMENT REQUIRED.  Requires a professional
association to file an annual report with the secretary of state and sets
forth the contents of the statement. 

Sec. 302.016.  WINDING UP AND TERMINATION; CERTIFICATE OF TERMINATION.
Authorizes and sets forth the procedures for a professional association to
wind up and terminate the association's business. 

CHAPTER 303.  PROVISIONS RELATING TO PROFESSIONAL CORPORATIONS

Sec. 303.001.  APPLICABILITY OF CERTAIN PROVISIONS GOVERNING FORPROFIT
CORPORATIONS.  Makes the provisions of Chapter 20 and 21 governing
forprofit corporations applicable to professional corporations. 

 Sec. 303.002.  GENERAL POWERS, DUTIES, AND LIABILITIES.  Provides that a
professional corporation has the same powers, privileges, duties,
restrictions, and liabilities as a for-profit corporation. 

Sec. 303.003.  AUTHORITY AND LIABILITY OF SHAREHOLDER.  Provides that a
shareholder of a corporation is not required to supervise the performance
of duties by an officer or employee of the corporation, and is subject to
the same liability as a shareholder of a for-profit corporation. 

Sec. 303.004.  NOTICE OF RESTRICTION ON TRANSFER OF SHARES.  Provides that
any restriction on the transfer of shares of a professional corporation
must be noted on each share certificate and incorporated by reference as
provided by Chapter 21. 

Sec. 303.005.  REDEMPTION OF SHARES; PRICE AND TERMS.  Authorizes a
professional corporation to redeem the shares of a shareholder at the price
agreed upon or specified in the governing documents or an applicable
agreement. 

Sec. 303.006.  EXISTENCE OF PROFESSIONAL CORPORATION BEFORE WINDING UP AND
TERMINATION.  Provides that the existence of a professional corporation
continues in spite of the death, incompetence, resignation, withdrawal,
retirement, or expulsion of any shareholder; the transfer of shares to a
new shareholder; or the occurrence of an event requiring the winding up of
a partnership until winding up and termination is concluded. 

Sec. 303.007.  WINDING UP AND TERMINATION OF PROFESSIONAL CORPORATION.
Prohibits a shareholder of a corporation from winding up the affairs and
terminating a corporation independently of other shareholders of the
corporation. 

CHAPTER 304.  PROVISIONS RELATING TO PROFESSIONAL
LIMITED LIABILITY COMPANIES

Sec. 304.001.  APPLICABILITY OF CERTAIN PROVISIONS GOVERNING LIMITED
LIABILITY COMPANIES.  Makes the provisions of Title 3 applicable to
professional limited liability companies. 

TITLE 8.  MISCELLANEOUS AND TRANSITION PROVISIONS

CHAPTER 401.  GENERAL PROVISIONS


Sec. 401.001.  DEFINITIONS.  Defines "mandatory application date" and
"prior law."  

CHAPTER 402.  MISCELLANEOUS AND TRANSITION PROVISIONS

Sec. 402.001.  APPLICABILITY UPON EFFECTIVE DATE.  Provides that, at the
effective date of this code, this code is applicable to a domestic entity
formed on or after the effective date of this code, a foreign filing entity
that is transacting business in this state and is not registered before the
effective date of this code, and a foreign non-filing entity. 

Sec. 402.002.  EARLY EFFECTIVENESS OF FEES.  Provides that on or after the
effective date of this code, the fees required by Chapter 4 apply to all
filings made with the secretary of state. 

Sec. 402.003.  EARLY ADOPTION OF CODE BY EXISTING DOMESTIC ENTITY.
Authorizes a domestic entity formed before the effective date of this code
to voluntarily elect to adopt and become subject to this code by complying
with the procedures to amend its governing documents to adopt this code
and, if necessary, amending its governing documents and, if the domestic
entity is a filing entity, filing with the secretary of state in accordance
with Chapter 4 a statement that the filing entity is electing to adopt this
code and, if necessary, a certificate of amendment that would cause its
certificate of formation to comply  with this code.  Authorizes this code
and any required amendment to the governing documents to be adopted by the
governing authority only in the manner provided for an amendment of the
particular governing document if the amendment to the governing documents
of the domestic entity that are necessary to conform the governing
documents to this code would not require, under prior law, the vote or
consent of the owners or members of the entity. 

Sec. 402.004.  EARLY ADOPTION OF CODE BY REGISTERED FOREIGN ENTITY.
Authorizes a foreign filing entity registered with the secretary of state
to voluntarily elect to adopt and become subject to this code by filing
with the secretary of state a statement with respect to the adoption by the
foreign entity of this code.  

Sec. 402.005.  APPLICABILITY TO EXISTING ENTITIES ON MANDATORY APPLICATION
DATE.  Provides that on January 1, 2006, if a domestic entity formed before
the effective date of this code or a foreign filing entity registered with
the Secretary of State to transact business before the effective date of
this code has not taken the action specified by Section 402.003 or 402.004
to elect to adopt this code, then this code applies to the entity and the
entity is not considered to have failed to comply with this code if the
entity's certificate of formation does not comply with this code.  Requires
a domestic filing entity and a foreign filing entity to conform its
certificate of formation or application for registration to the
requirements of this code when it next files an amendment to its
certificate of formation or application for registration. 

Sec. 402.006.  APPLICABILITY TO CERTAIN ACTS, CONTRACTS, AND TRANSACTIONS.
Provides that, except as otherwise expressly provided by Title 8, all of
the provisions of this code govern acts, contracts, or other transactions
by an entity subject to this code or its managerial officials, owners, or
members that occur on or after the mandatory application date.  Provides
that prior law governs acts, contracts, or transactions of the entity or
its managerial official, owners, or members that occur before the mandatory
application date. 

Sec. 402.007.  INDEMNIFICATION.  Provides that Chapter 8 of this code
governs any proposed indemnification by a domestic entity after the
mandatory application date, regardless of whether the events in which the
indemnification is based occurred before or after the mandatory application
date.  
 
Sec. 402.008.  MEETING OF OWNERS AND MEMBERS; CONSENTS; VOTING OF
INTERESTS.  Provides that Chapter 6 of this code and any other applicable
provision of this code should apply to meetings of owners or members held
on or after the mandatory application date or action undertaken by owners
or members under a written consent that takes effect on or after the
mandatory application date.  Provides that prior law applies to meeting of
owners or members and to any vote cast at a meeting if the meeting was
initially called for a date before the mandatory application date and
notice of the meeting was given to owners or member entitled to vote at the
meeting.   

Sec. 402.009.  MEETINGS OF GOVERNING AUTHORITY AND COMMITTEES; CONSENTS.
Provides that Chapter 6 and other applicable provisions of this code apply
to a meeting of the governing authority or a committee of the governing
authority held on or after the mandatory application date and action
undertaken by the governing authority or committee thereof under written
consent that takes effect on or after the mandatory application date.
Provides that prior law applies to meeting of the governing authority or
committee thereof and any vote cast at a meeting if the meeting was
initially called for a date before the mandatory application date and
notice of the meeting was given to governing persons entitled to vote at
the meeting.   

Sec. 402.010.  SALE OF ASSETS, MERGERS, REORGANIZATIONS, CONVERSIONS.
Provides that Chapter 10 and other applicable provisions of this code apply
to a transaction consummated by an entity after the mandatory application
date, except that if a required approval of the owners or members of the
entity has been given before the mandatory  application date or has been
given after the mandatory application date at a meeting of owners or
members initially called for a date before the mandatory application date,
the transaction is governed by the prior law.   

Sec. 402.011.  WINDING UP AND TERMINATION.  Provides that Chapter 11
applies to actions for involuntary or judicial winding up and termination
of an entity commenced after the mandatory application date or voluntary
winding up and termination proceeding initiated after the mandatory
application date by the governing authority, the terms of governing
documents, or applicable law.  Provides that prior law governs an action
for involuntary or judicial winding that is pending on the mandatory
application date or a proceeding for voluntary winding up and termination
initiated before the mandatory application date. 

Sec. 402.012.  REGISTRATION OF CERTAIN FOREIGN ENTITIES.  Provides that a
foreign entity that has transacted intrastate business in Texas before the
mandatory application date and that is required by Chapter 9 to register to
transact business is not subject to a direct or indirect penalty as a
result of failure to register under Chapter 9 if the application for
registration is filed not later than the 30th day after the mandatory
application date.   

Sec. 402.013.  ENTITIES UNDER SUSPENSION FOR NONFILING OF REQUIRED REPORTS
OR PAYMENT OF TAXES; APPLICABILITY OF PRIOR LAW.  Provides that, if the
rights, privileges, and powers of domestic entity have been suspended, and
are still suspended immediately before the mandatory application date under
prior law, this code applies to the entity on the mandatory application
date.  Provides that, if the right, privileges, and powers of a domestic
filing entity have been suspended and are still suspended under the Tax
Code immediately before the mandatory application date, the suspension
continues to apply to the entity until the rights, privileges, and powers
are restored under the secretary of state under that code.   

Sec. 402.014.  MAINTENANCE OF PRIOR ACTION.  Provides that, except as
expressly provided by Title 8, this code does not apply to an action or
proceeding commenced before the mandatory application date.  Provides that
prior law applies to the action or proceeding. 

SECTION 2.  CONFORMING AMENDMENT.  Amends Part Eleven, Texas Business
Corporation Act, by adding Article 11.02, as follows: 

Art. 11.02.  APPLICABILITY; EXPIRATION.  Provides that this Act does not
apply to a corporation to which the Texas Business Organizations Code
applies, except as provided by Title 8, Texas Business Organizations Code.
Provides that this Act expires January 1, 2006. 

SECTION 3.  CONFORMING AMENDMENT.  Amends Article 1302-7.01 et seq.,
V.T.C.S. (Part Seven, Texas Miscellaneous Corporation Laws Act), by adding
Article 7.09, as follows: 

Art. 7.09.  APPLICABILITY; EXPIRATION.  Provides that this Act does not
apply to a corporation to which the Texas Business Organizations Code
applies, except as provided by Title 8, Texas Business Organizations Code.
Provides that this Act expires January 1, 2006. 

SECTION 4.  CONFORMING AMENDMENT.  Amends Article 1396-1.01 et seq.,
V.T.C.S. (Texas Non-Profit Corporation Act), by adding Article 11.02, as
follows: 

Art.11.02.  APPLICABILITY; EXPIRATION.  Provides that this Act does not
apply to a corporation to which the Texas Business Organizations Code
applies, except as provided by Title 8, Texas Business Organizations Code.
Provides that this Act expires January 1, 2006. 

SECTION 5.  CONFORMING AMENDMENT.  Amends Article 1396-50.01 et seq.,
V.T.C.S. (Cooperative Association Act), by adding Section 47, as follows: 

Sec. 47.  APPLICABILITY; EXPIRATION.  Provides that this Act does not apply
to a corporation to which the Texas Business Organizations Code applies,
except as provided by  Title 8, Texas Business Organizations Code.
Provides that this Act expires January 1, 2006. 

SECTION 6.  CONFORMING AMENDMENT.  Amends Article 1396-70.01 et seq.,
V.T.C.S. (Texas Uniform Unincorporated Nonprofit Association Act), by
adding Section 19, as follows: 

Sec. 19.  APPLICABILITY; EXPIRATION.  Provides that this Act does not apply
to a corporation to which the Texas Business Organizations Code applies,
except as provided by Title 8, Texas Business Organizations Code.  Provides
that this Act expires January 1, 2006. 

SECTION 7.  CONFORMING AMENDMENT.  Amends Article 1528e, V.T.C.S. (Texas
Professional Corporation Act), by adding Section 21, as follows: 

Sec. 21.  APPLICABILITY; EXPIRATION.  Provides that this Act does not apply
to a corporation to which the Texas Business Organizations Code applies,
except as provided by Title 8, Texas Business Organizations Code.  Provides
that this Act expires January 1, 2006. 

SECTION 8.  CONFORMING AMENDMENT.  Amends Article 1528f, V.T.C.S. (Texas
Professional Association Act), by adding Section 27, as follows: 

Sec. 27.  APPLICABILITY; EXPIRATION.  Provides that this Act does not apply
to a corporation to which the Texas Business Organizations Code applies,
except as provided by Title 8, Texas Business Organizations Code.  Provides
that this Act expires January 1, 2006. 

SECTION 9.  CONFORMING AMENDMENT.  Amends Article 1528n, V.T.C.S. (Part
Eight, Texas Limited Liability Company Act), by adding Article 8.13, as
follows: 

Art. 8.13.  APPLICABILITY; EXPIRATION.  Provides that this Act does not
apply to a corporation to which the Texas Business Organizations Code
applies, except as provided by Title 8, Texas Business Organizations Code.
Provides that this Act expires January 1, 2006. 

SECTION 10.  CONFORMING AMENDMENT.  Amends Article 6132a-1, V.T.C.S.
(Article 13, Texas Revised Limited Partnership Act), by adding Section
13.10, as follows: 

Sec. 13.10.  APPLICABILITY; EXPIRATION.  Provides that this Act does not
apply to a corporation to which the Texas Business Organizations Code
applies, except as provided by Title 8, Texas Business Organizations Code.
Provides that this Act expires January 1, 2006. 

SECTION 11.  CONFORMING AMENDMENT.  Amends Article 6132b-11.01 et seq.,
V.T.C.S. (Article XI, Texas Revised Partnership Act), by adding Section
11.05, as follows: 

Sec. 11.05.  APPLICABILITY; EXPIRATION.  Provides that this Act does not
apply to a corporation to which the Texas Business Organizations Code
applies, except as provided by Title 8, Texas Business Organizations Code.
Provides that this Act expires January 1, 2006. 

SECTION 12.  CONFORMING AMENDMENT.  Amends Article 6138A., V.T.C.S. (Texas
Real Estate Investment Trust Act), by adding Section 29.10, as follows: 

Sec. 29.10.  APPLICABILITY; EXPIRATION.  Provides that this Act does not
apply to a corporation to which the Texas Business Organizations Code
applies, except as provided by Title 8, Texas Business Organizations Code.
Provides that this Act expires January 1, 2006. 

SECTION 13.  CONFORMING AMENDMENT.  Amends Article 1399, V.T.C.S., to
provide that, except as provided by Title 8, this Article and Articles
1400-1407, V.T.C.S. do not apply to a grand body to which the Texas
Business Organizations Code applies. 

SECTION 14.  CONFORMING AMENDMENT.  Amends Article 1407a, V.T.C.S., by
adding Section 9, as follows: 

Sec. 9.  Applicability.  Provides that, except as provided by Title 8, this
Act does not apply  to a church benefits board to which the Texas Business
Organizations Code applies. 

SECTION 15.  CONFORMING AMENDMENT.  Amends Article 1528g, V.T.C.S., by
adding Section 13, as follows: 

Sec. 13.  Applicability.  Provides that, except as provided by Title 8,
this Act does not apply to a business development corporation to which the
Texas Business Organizations Code applies. 

SECTION 16.  (a)  Makes this section applicable to organizations described
by Section 501(c)(3) or 170 (c), Internal Revenue Code of 1986, or a
corresponding provision of a subsequent federal tax law, to organizations
listed by the Internal Revenue Service in the Cumulative List of
Organization Describe in Section 170(c) of the Internal Revenue Code of
1986, I.R.S. Publication 78, or any successor I.R.S. publication, and to
persons or entities engaged in assisting such organizations. 

(b)  Prohibits a provision of this Act from depriving any organization,
person, or entity described in Subsection (a) of any right, exemption,
immunity, or other privilege which such organization, person, or entity has
under existing law. 

(b)  Prohibits a provision of this Act from affecting any other
reenactment, revision, amendment, or repeal of or addition to a statute by
the 76th Legislature, Regular Session, 1999, relating to any right,
exemption, immunity, or other privilege held by an organization, person, or
entity described in Subsection (a).  Provides that such other  reenactment,
revision, amendment, repeal, or addition is preserved and requires such to
be given effect in lieu of any provision of this Act which corresponds to
the statute so  reenacted, revised, amended, repealed, or added to. 

(c)  Provides that, if any provision of this Act conflicts with any other
statute enacted by the 76th Legislature, Regular Session, 1999,  relating
to any right, exemption, immunity, or other privilege held by an
organization, person, or entity described in Subsection (a), the other
statute controls. 

(d)  Requires any other statute enacted by the 76th Legislature, Regular
Session, 1999, relating to any right, exemption, immunity, or other
privilege held by an organization, person, or entity described in
Subsection (a), to take effect and apply as provided in such other statute,
notwithstanding any provision of this Act. 

SECTION 17.  (a)  Repealer:  Articles 1525 (Drainage), 1526 ( Irrigation
and Waterpower), 1527 (International Trading Corporations), 1527a
(International Commerce Development Corporation; Foreign Trade Zone), 1528
(Ice Companies), 1528a (State Housing Law), and 1528h (Dealing in
Acceptances), V.T.C.S. 

(b)  Repealer:  Effective January 1, 2006, Articles 1399 (Lodges), 1400
(Lodges:  Charter), 1401 (Lodges:  Trustees), 1402 (Lodges: Property), 1403
(Lodges:  Demise), 1404 (Lodges: Demise), 1405 (Lodges:  Loans), 1406
(Existing Lodge), 1407 (Lodges:  Tax), 1407a (Church Benefit Plans and
Church Benefits Boards),  and 1528g (Business Development Corporations),
V.T.C.S. 

SECTION 18.  Effective date: January 1, 2002.

SECTION 19.  Emergency clause.  

COMPARISON OF ORIGINAL TO SUBSTITUTE

The substitute modifies the original in SECTION 1, as follows:

In Section 1.002(3), the substitute redefines "association" to provide that
it is also governed under Title 7 and includes a joint stock association. 

 In Section 1.002(13), the substitute redefines "cooperative association"
to provide that it is governed by Chapter 251, rather than Title 6. 

In Section 1.002(18), the substitute redefines "distribution" to provide
that the transfer may be to a member of the entity, as well as to an owner. 

In Section 1.002(22), the substitute redefines "effective date of this
code" to be January 1, 2002, rather than 2001, and provides that the
applicability of the code is governed by Title 8. 

In Section 1.002(38), the substitute redefines "governing authority" to
include the general partners of a general partnership, the board of
directors of a cooperative association, and the trust managers, rather than
the trustees, of a real estate investment trust. 

In Section 1.002(59), the substitute redefines "nonprofit association" to
provide that it is governed under Chapter 252, rather than Title 6. 

In Section 1.002(60), the substitute redefines "nonprofit corporation" to
provide that it is governed under Chapter 22, rather than Title 2. 

In Section 1.002(63), the substitute redefines "organization" to include a
credit union and a savings and loan association, regardless of whether the
organization is for-profit, nonprofit, domestic, or foreign. 

In Section 1.002(72), the substitute redefines "professional association"
to distinguish it from either a partnership or a corporation. 

In Section 1.002(82), the substitute redefines "sale of all or
substantially all of the assets" to provide that it is without regard to
the goodwill of the business of the entity. 

In Section 1.008 (Short Titles), the substitute authorizes the provisions
of Chapter 154, rather than  Chapter 152, to be cited as the "Texas Limited
Partnership Law" and makes nonsubstantive changes. 

In Section 1.054 (Reservation of Power), the substitute provides that the
legislature has the power to amend, repeal, or modify this code. 

In Section 3.005 (Certificate of Formation), the substitute provide that
the purpose for which the entity is formed may be stated to be any lawful
purpose. 

In Section 3.151 (Books and Records for all Filing Entities), the
substitute provides that the records need not be maintained by a
partnership or a limited liability company to the extent such entities are
not required by the governing documents to maintain minutes of proceedings. 

In Section 3.202 (Form and Validity of Certificates; Enforcement of
Entity's Rights), the substitute deletes proposed Subsection (f), which
would have provided that a certificate representing shares of a corporation
in which any provision of the certificate of formation, bylaws, resolution
of the board of directors or shareholders, or agreement restricting the
transfer of shares has been incorporated by reference as provided by
Section F, Article 2.19, Texas Business Corporation Act, before September
1, 1975, is not invalidated or affected by the repeal of that section, and
prohibited an incorporation by reference as provided by Section F, Article
2,19, Texas Business Corporation Act, from being used on a certificate
issued on or after September 1, 1975, without regard to the form of
issuance. 

In Section 4.003 (Filing or Issuance of Reproduction or Facsimile), the
substitute makes a nonsubstantive change. 

In Section 4.056 (Failure to File a Statement), the substitute provides
that, if the event or fact  does not occur, the parties must sign and file
a certificate of abandonment. 


In Section 4.155 (Filing Fees:  Limited Partnerships), the substitute adds
filing fees for filing a certificate of winding up and termination, a
certificate of withdrawal of a foreign limited partnership, and a
certificate of reinstatement of a limited partnership or registration as a
foreign limited partnership after involuntary termination or revocation.
The substitute also changes various filing fees. 

In Section 4.158 (Filing Fees:  General Partnership), the substitute
provides that the filing fee for a certificate of amendment to increase the
number of partners is $200 for each partner in this state added by
amendment and prohibits the fee from exceeding $750. 

The substitute deletes proposed Subchapter E, Chapter 4, which would have
required domestic and foreign for-profit corporations registered to
transact business in this state to file an annual report with the secretary
of state and provided that failure to do so resulted in forfeiture of the
enitity's right to transact business in this state. 

In Section 5.052 (Unauthorized Purpose in Name Prohibited), the substitute
prohibits a filing entity or foreign filing entity from having a name that
contains any word or phrase that indicates that it is engaged in a
business, rather than formed for a purpose, that it is not authorized by
law to pursue. 

In Section 5.055 (Name of Limited Partnership or Foreign Limited
Partnership), the substitute deletes the prohibition against the name of a
limited partnership or foreign limited partnership containing the name of a
limited partner in the partnership and provides that the name of a  limited
partnership that is a registered limited liability limited partnership must
comply with Chapter 153, rather than Title 4. 

In Section 5.057 (Name of Cooperative Association), the substitute
authorizes a domestic or foreign entity to use the word "cooperative" in
its name to the extent permitted by Section 251.502. 

In Section 5.204 (Resignation of Registered Agent), the substitute deletes
the requirement that notice be given to an entity at the address most
recently known by the agent of the attorney or individual at whose request
the registered agent was appointed. 

The substitute deletes Section 6.204 (Filings with Filing Officer), which
would have provided that a certificate or document  filed with the
secretary of state must state that the action was taken by written consent
rather than a vote.  The substitute redesignates proposed Section 6.205 to
Section 6.204. 

In Section 7.012 (Limitation of Liability of Governing Person:  Domestic
Entity, Certain Other Organizations, Certain Federal Financial
Institutions), the substitute provides that this section does not apply to
a limited liability company and authorizes a domestic entity to adopt
provisions exonerating or limiting liability of a governing person for
monetary damages to the entity in the entity's certificate of formation,
rather than the governing documents. 

The substitute adds a new Section 8.053 (Limitations in Governing
Documents), which authorizes the certificate of formation of an enterprise
to restrict the circumstances under which the enterprise must sue or may
indemnify a person under this subchapter and authorizes the written
partnership agreement of a limited partnership to restrict the
circumstances in the same manner as the certificate of formation. 

In Section 8.105, the substitute changes the section title to
"Indemnification of and Advancement of Expenses to Persons Other Than
Governing Persons" from "Permissive Indemnification of and Advancement of
Expenses to Persons Other Than Governing Persons" and authorizes the
certificate of formation of an enterprise to restrict the circumstances
under which the enterprise must sue or may indemnify a person under this
subchapter and authorizes the written partnership agreement of a limited
partnership to restrict the circumstances in the same manner as the
certificate of formation. 

In Section 9.006 (Amendments to Registration), the substitute makes a
nonsubstantive change. 

In Section 9.007 (Voluntary Withdrawal of Registration), the substitute
makes nonsubstantive changes. 

In Chapter 10, the substitute changes the title to "Mergers, Interest
Exchanges, Conversions and Sales of Assets" from "Mergers, Share Exchanges,
and Conversions." 

In Section 10.102, the substitute makes a nonsubstantive change to the
title. 

The substitute adds Section 10.108 (Special Provisions Applying to
Nonprofit Entity Conversions), which prohibits a domestic nonprofit entity
from converting into a for-profit entity. 

In Section 10.155 (Filing of Certificate of Conversion), the substitute
makes nonsubstantive changes. 

In Section 10.202 (Abandonment After Filing), the substitute provides that
the abandonment must take place prior to the effectiveness of the merger,
exchange, or conversion. 

In Section 10.253 (Recording Instrument Conveying Real Property of Domestic
Entity), the substitute provides that an authorized person is an officer,
authorized attorney-in-fact, or other authorized person of the entity; or,
rather than and, in the case of a partnership or limited liability company,
a governing person of the entity. 

In Section 10.351 (Applicability of Subchapter), the substitute provides
that the term "domestic entity subject to dissenters' rights" includes a
domestic for-profit corporation, professional corporation, professional
association, and real estate investment trust. 

In Section 10.356 (Procedure For Dissent by Owners as to Actions;
Perfection of Right of Dissent And Appraisal), the substitute makes a
nonsubstantive change. 

In Section 11.051 (Event Requiring Winding up of Domestic Entity), the
substitute provides that the events that require the winding up of a
domestic entity are the expiration of the entity's period of duration, a
voluntary decision to wind up, an event specified in the governing
documents, an event specified in this code, or, rather than and, a court
decree. 

In Section 11.052 (Winding Up Procedures), the substitute provides that
Title 4 provides an exception to the notification requirements.  The
substitute also authorizes the domestic entity to prosecute or defend a
civil, criminal or administrative action during the winding up process. 

In Section 11.101 (Certificate of Termination for Filing Entity), the
substitute provides that the certificate of termination must contain any
other information required by this code to be included in addition to the
information specified. 

The substitute deletes proposed Section 11.103 (Notice of Termination to
Owners or Members of Nonfiling  Entity), which would have required a
nonfiling entity to send written notice of termination to its owners or
members on completion of the winding up process and sets forth the
information the notice must contain. 

The substitute redesignates proposed Section 11.104 (Effectiveness of
Termination of Nonfiling Entity) to Section 11.103 and provides that the
existence of a nonfiling entity terminates on the completion of the winding
up of its business and affairs, rather than on the sending of the notice to
its owners or members.  The substitute also provides that notice of  the
termination must be provided by the nonfiling entity in the manner provided
by the governing documents of the nonfiling entity if notice of termination
is required under the governing documents.   

The substitute adds Section 11.105 (Action by The Secretary of State),
which requires the secretary of state to remove from its active records a
domestic filing entity whose period of duration has expired when the
secretary of state determines that the entity has failed to file a
certificate of termination and the entity has failed to file an amendment
to extend its existence. 

In Section 11.152 (Continuation of Business Without Winding Up), the
substitute makes nonsubstantive changes. 

In Section 11.201 (Conditions for Reinstatement), the substitute authorizes
a terminated entity to be reinstated if the termination occurred with the
approval, rather than the knowledge, of the entity's governing persons when
their approval, rather than to the extent their knowledge, is required by
the title of this code governing the terminated entity. 


In Section 11.202 (Procedures for Reinstatement), the substitute provides
that the certificate of reinstatement must contain the filing number
assigned to the entity by the filing officer, rather than the secretary of
state.  The substitute also provides that a letter of eligibility from the
comptroller stating that the filing entity has satisfied all franchise tax
liabilities and is authorized to be reinstated must be filed with the
certificated of restatement if the filing entity is a professional
corporation, for-profit corporation, or limited liability company. 

In Section 11.203 (Use of Name Similar to Previously Registered Name), the
substitute makes nonsubstantive changes. 

In Section 11.206 (Effect of Reinstatement), the substitute deletes the
provision that a reinstated entity would have been subject to the
provisions of this chapter requiring winding up and termination and that
reinstatement would not revoke or cancel a prior event requiring winding
up. 

In Section 11.253 (Reinstatement after Involuntary Termination), the
substitute makes nonsubstantive changes. 

The substitute adds Section 11.254 (Reinstatement of Tax Forfeiture of
Certificate of Formation), which provides that a filing entity whose
certificate of formation has been forfeited under the provisions of the Tax
Code must follow the procedures in the Tax Code to reinstate its
certificate of formation. 

In Section 11.301 (Grounds Constituting Involuntary Winding Up and
Termination of Filing Entity By State Action), the substitute changes a
reference to Section 11.303, rather than to this subchapter. 

In Section 11.302 (Notification of Cause of Action by Secretary of State),
the substitute authorizes the secretary of state to send, rather than mail,
the notification. 

In Section 11.303 (Filing of Action by Attorney General), the substitute
makes a conforming change. 

In Section 11.310 (Publication of Notice), the substitute authorizes the
attorney general to send, rather than mail, the notification. 

In Section 11.314 (Involuntary Winding Up and Termination in Private
Actions), the substitute makes a nonsubstantive change. 

In Section 11.357 (Governing Persons of Entity During Limited Survival),
the substitute references Section 11.356, rather than this section. 
 
In Section 11.359 (Extinguishment of an Existing Claim), the substitute
references Section 11.052, rather than 11.103. 

In Section 11.403 (Appointment of Receiver for Specific Property), the
substitute makes nonsubstantive changes. 

In Section 11.407 (Court-ordered Filing of Claims), the substitute makes a
nonsubstantive change. 

In Section 12.154 (Authority to Disclose Information), the substitute makes
a nonsubstantive change. 

In Section 21.004 (Prohibited Activities), the substitute prohibits a
corporation from engaging in a combination of the petroleum oil producing
business in this state and the oil pipeline business in this state other
than through stock ownership in a corporation engaged in the oil pipeline
business and other than the ownership or operation of private pipelines in
and about the corporation's refineries, fields or stations. 

In Section 21.051, the substitute changes the section title to
"Supplemental Provisions Required in Certificate of Formation" from
"Supplemental Provisions for Certificate of Formation" and makes
nonsubstantive changes. 

In Section 21.055 (Adoption of Amendment by Shareholders), the substitute
provides that the shareholders must approve a proposed amendment if a
corporation has issued and outstanding shares, rather than only issued
shares. 

In Section 21.057 (Supplemental Provisions for Certificate of Amendment),
the substitute provides, rather than requires, that the certificate of
amendment must be filed in accordance with Chapter 4. 

In Section 21.061 (Organization Meeting), the substitute requires the
directors or other persons calling the meeting to send, rather than mail,
notice of the meeting's time and place to each other director or person
named in the certificate by the third, rather than fourth, day before the
date of the meeting. 

In Section 21.151 (Number of Authorized Shares), the substitute changes the
reference to shares to authorized shares. 

In Section 21.157 (Issuance of Shares), the substitute provides that, when
the consideration is received, the shares are considered to be issued,
rather than are issued. 

In Section 21.167 (Commitment to Purchase Shares), the substitute deletes
the provision that the commitment would have continued for a six-month
period unless the commitment provided for a longer or shorter period. 

In Section 21.169 (Terms and Conditions of Rights and Options), the
substitute makes a nonsubstantive change. 

In Section 21.206 (Limitation of Action to Enforce Preemptive Right), the
substitute provides that the notice must be sent, rather than mailed, to
the shareholder. 

In Section 21.252 (Contents and Filing of Statement of Cancellation of
Certain Redeemable Shares), the substitute makes a nonsubstantive change. 

In Section 21.253 (Cancellation of Treasury Shares), the substitute makes a
nonsubstantive change. 

In Subchapter G, the substitute changes the subchapter title to
"Distributions and Share  Distributions" from "Distributions and Share
Dividends." 

In Section 21.305 (Notice of Redemption), the substitute requires the
notice of redemption to be sent, rather than given. 

In Section 21.311 (Limitations on Share Distributions), the substitute
makes nonsubstantive changes. 

In Section 21.312 (Value of Shares Issued as Share Distributions), the
substitute makes nonsubstantive changes. 

In Section 21.313 (Transfer of Surplus for Share Distributions), the
substitute makes nonsubstantive changes. 

In Section 21.315 (Date of Determination of Solvency, Net Assets, Stated
Capital, and Surplus), the substitute makes nonsubstantive changes. 

In Section 21.316 (Liability of Directors for Wrongful Distributions), the
substitute provides that Section 21.318 does not limit any liability
imposed under Chapter 24, Business & Commerce Code, or the United States
Bankruptcy Code and makes nonsubstantive changes. 

In Section 21.318 (Contribution from Certain Shareholders and Directors),
the substitute provides that Chapter 7 provides an exception to Subsection
(c) and makes nonsubstantive changes. 

In Section 21.352 (Special Meetings), the substitute makes a nonsubstantive
change. 

In Section 21.361 (Cumulative Voting in Election of Directors), the
substitute provides that cumulative voting is based on the total number of
directors to be elected, rather than the total number of directors. 

In Section 21.364 (Vote Required to Approve Fundamental Action), the
substitute redefines "fundamental action" to include a cancellation of an
event requiring winding up and a reinstatement.  The substitute also adds a
new Subsection (e) to provide that the vote required under Subsection (d)
by a class or series of shares of a corporation is required notwithstanding
shares of that class or series do not otherwise have a right to vote under
the certificate of formation. In addition the substitute redesignates
proposed Subsections (e)-(f) to Subsections (f)-(g) and makes
nonsubstantive changes. 

In Section 21.366 (Number of Votes Per Share), the substitute makes a
nonsubstantive change. 

In Section 21.403 (Number of Directors), the substitute authorizes, rather
than requires, the corporation's certificate of formation to set the number
constituting the initial board of directors and  provides that this only
applies to a corporation that is to be managed by a board of directors. 

In Section 21.404 (Designation of Initial Board of Directors), the
substitute makes conforming and nonsubstantive changes. 

In Section 21.406, the substitute changes the title to "Special Voting
Rights of Directors" from "Voting by Directors." 

In Section 21.407 (Term of Office), the substitute provides that the
director's term of office ends if the director is removed from office.
Makes nonsubstantive changes. 

In Section 21.408 (Special Terms of Office), the substitute provides that
this section applies to staggered terms of office and that the initial
directors have staggered terms of office. 

 In Section 21.410 (Vacancy), the substitute provides that a vacancy in a
director position, rather than in the board of directors of the
corporation, may be filled only by the affirmative vote of specified
persons. 

In Section 21.416 (Committees of Board of Directors), the substitute makes
a nonsubstantive change. 

In Section 21.418 (Contracts or Transactions Involving Interested Directors
And Officers), the substitute includes committee members among those who
may vote to authorize a contract or transaction. 

The substitute changes the section title in Section 21.454 to "Approval of
Exchange" from "Approval of Interest Exchange" and makes conforming
changes. 

In Section 21.457 (General Vote Requirement for Approval of Fundamental
Business Transaction), the substitute corrects a cross-reference and to
require that shares entitled to vote as a class or series 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. 

In Section 21.458 (Class Voting Requirements for Certain Fundamental
Business Transactions), the substitute requires that shares entitled to
vote as a class or series 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. 

In Section 21.503 (Meeting of Shareholders; Notice), the substitute
provides, rather than requires,  that each shareholder of record entitled
to vote at a meeting described by Section 21.502 must be given written
notice stating that the purpose or one of the purposes of the meeting is to
consider the winding up, reinstatement, or revocation of the voluntary
winding up of the corporation.  The substitute also provides, rather than
requires, that the notice must be given in the time and manner provided by
this code for the giving of notice of shareholders' meetings.  

The substitute adds a new Section 21.504 (Responsibility For Winding Up),
which requires the directors of the corporation to manage the process of
winding up the business or affairs of the corporation if a corporation
determines or is required to wind up. 

In Section 21.554 (Determination by Directors or Independent Persons), the
substitute provides that the panel also acts by majority vote. 

The substitute changes the section title in Section 21.706 to "Adoption of
Close Corporation Status Through Merger, Exchange, or Conversion" from
"Adoption of Close Corporation Status Through Merger, Share Exchange, or
Conversion".  The substitute also authorizes a surviving or new corporation
resulting from a merger or conversion, or a corporation that acquires a
corporation in an interest exchange, to become a close corporation if the
certificate of formation conforms, rather than the articles of
incorporation conform, with Section 21.704.  In addition, the substitute
provides that close corporation status must be approved by the holders of
outstanding ownership or membership interests, rather than shares, and
includes a non-code organization among those who may enter into a business
combination or conversion transaction that would result in close
corporation status. 

In Section 21.709 (Statement Terminating Close Corporation Status; Filing;
Notice), the substitute makes a nonsubstantive change. 

In Section 21.712, the substitute changes the section title to "Term of
Office of Directors" from "Term of Directors" and requires a director
succeeding to the management of the corporation to have a term of office as
set forth in Section 21.408, rather than to serve until  the next annual
meeting and until a successor is elected and qualifies. 

In Section 22.054 (Prohibited Activities), the substitute makes
nonsubstantive changes. 

In Section 22.058 (Power of Certain Corporation to Serve as Trustee), the
substitute includes a corporation listed by any successor publication to
the Internal Revenue Service in the Cumulative List of Organizations among
corporations that may serve as trustee of a trust of which the corporation
is a beneficiary, or which benefits another similar organization. 

In Section 22.102, the substitute changes the title to "Supplemental
Provisions Required in Certificate of Formation" from "Supplemental
Requirements for Certificate of Formation." 

In Section 22.105 (Organization Meeting), the substitute provides that
notice must be sent, rather than mailed, by the third, rather than fourth,
day before the meeting. 

The substitute deletes proposed Section 22.106 (Duty of Certain Corporation
to Amend Certificate of Formation), which would have provided that a
corporation is not required to amend its certificate to contain the
information required by Section 3.005 or 22.102 if it existed on May 12,
1959. 

The substitute redesignates redesignates Sections 22.107-22.111 to Sections
22.106-22.110 and makes conforming changes. 

In Section 22.155 (Special Meetings of Members), the substitute makes a
nonsubstantive change. 

In Section 22.201 (Management by Board of Directors), the substitute
provides that Section 22.202 provides an exception to this section. 

In Section 22.202 (Management by Members), the substitute makes a
conforming change. 

In Section 22.204 (Number of Directors), the substitute provides that this
section only applies if the corporation is managed by a board of directors. 

In Section 22.205 (Designation of Initial Board of Directors), the
substitute provides that this section only applies if the corporation is to
be managed by a board of directors. 

In Section 22.231 (Contracts or Transactions Involving Interested
Directors, Officers, and Members), the substitute includes committee
members among those who may vote to authorize the contract or transaction
and makes conforming changes. 

The substitute adds a new Section 22.246 (Effect of Liability Provisions on
Duties Owed to Charitable Organizations) to provide that Sections 7.002 and
7.003 do not affect, limit, or eliminate any duty owed to a charitable
corporation by a director, officer, or managing member of the corporation. 

The substitute deletes Section 22.254 (Surviving Foreign Corporation in
Merger), which would have required a foreign corporation that is the
surviving or new corporation in a merger to comply with the provisions of
this code applicable to foreign corporations and to file an agreement with
the secretary of state. 

The substitute redesignates proposed Sections 22.255-22.258 to Sections
22.254-22.257. 

In Section 22.312 (Certificate of Termination), the substitute makes
nonsubstantive changes. 

The substitute adds Section 22.315 (Responsibility For Winding up), which
requires the winding up of a corporation's affairs to be managed by the
directors if management of the affairs is not vested in the corporation's
members or by the members if the management is vested in them. 
 
In Section 22.351, the substitute changes the title to "Supplemental
Information Required in Application for Registration" from "Supplemental
Information for Application for Registration." 

The substitute deletes Section 22.352 (Supplemental Information For
Withdrawal of Registration), which would have provided that a foreign
corporation's certificate of withdrawal must state that payment or
provision for payment has been made to any known creditor or claimant, and
that there is no suit pending or threatened against the corporation in any
court in this state or adequate provision has been made for the
satisfaction of any judgment, order, or decree that may be entered against
the corporation in a pending suit. 

In Section 22.408 (Notice Regarding Report), the substitute deletes the
requirement that the notice be sent to the address of the principal place
of business of the corporation as it appears in the certificate of
formation and the requirement that the secretary of state include two
copies of a report form with the notice. 

In Section 22.409, the substitute changes the section title to "Filing of
Report" from "Delivery and Filing of Report." 

In Section 22.411 (Notice of Forfeiture), the substitute requires the
notice to be mailed to the registered office of the corporation's
registered agent. 

In Section 23.071 (Annual Report; Provision of Required Information), the
substitute requires a corporation to provide any information that is
required, rather than periodically required, by the secretary of state. 

In Section 101.001 (Definitions), the substitute adds definitions for
"foreign limited liability company" or "foreign company" and for "limited
liability company." 

In Section 101.051, the substitute changes the section title to
"Supplemental Provisions Required in Certificate of Formation" from
"Supplemental Information for Certificate of Formation" and makes a
nonsubstantive change. 

In Section 101.054 (Waiver or Modification of Certain Statutory Provisions
Prohibited; Exceptions), the substitute deletes Section 101.055 and adds
Section 101.501 to the list of provisions that are prohibited from being
waived or modified and makes nonsubstantive changes. 

The substitute adds Section 101.056 (Additional Powers of Certain Pipeline
Businesses), which provides that an LLC engaged as a common carrier in the
pipeline business for the purpose of transporting oil, oil products, gas,
carbon dioxide, salt brine, fuller's earth, sand, clay, liquefied mineral,
or other mineral solutions has all the rights and powers conferred on a
common carrier by Sections 111.019-111.022 (Right of Eminent Domain; Costs
of Relocation of Property; Limitations on the Powers of Eminent Domain in
Certain Situations; Restoration of Property; Pipeline Easements; Pipeline
on Public Stream or Highway; Pipeline Under Railroad, Street Railroad, or
Canal; Right to Use Street or Alley in City or Town), Natural Resources
Code. 

In Section 101.111 (Rights and Duties of Assignor of Membership Interest),
the substitute provides that an assignor of a membership interest is not
released from the assignor's liability to, rather than any liability
arising from the assignor's membership interest in, the company, regardless
of whether the assignee becomes a member of the company. 

In Section 101.153 (Failure to Perform Enforceable Promise; Consequences),
the substitute makes a nonsubstantive change. 

In Section 101.255 (Contracts or Transactions Involving Interested
Governing Persons or Officers), the substitute includes committee members
among those who may vote to  authorize a contract or transaction. 

In Section 101.302 (Number and Qualifications), the substitute makes a
nonsubstantive change. 

In Section 101.303 (Term), the substitute makes nonsubstantive changes.

In Section 101.306, the substitute changes the section title to "Removal
And Replacement of Manager Elected by Class or Group" from "Election of
Manager by Class or Group." 

In Section 101.356 (Votes Required to Approve Certain Actions), the
substitute provides that this section or any other section, rather than
Subsections (b), (c), and (d), may provide exceptions to Subsection (a).
The substitute also provides that Subsection (e) may provide additional
exceptions to Subsections (b) and (c) and makes conforming changes. 

In Section 101.357 (Manner of Voting), the substitute authorizes a manager
or committee member of an LLC, if authorized by the company agreement, to
vote in person or by a proxy executed in writing by the manager, rather
than the governing person, or committee member, as appropriate. 

In Section 101.454 (Determination by Governing or Independent Persons), to
provide that the panel also acts by majority vote. 

In Section 101.459, the substitute changes the section title to
"Allegations if Demand Rejected" from "Demand." 

In Section 101.501 (Additional Records Required), the substitute changes
references to "domestic office" to "office in the United States." 

In Section 101.502 (Right to Examine Records and Certain Other
Information), the substitute changes references to "domestic office" to
"office in the United States" and provides that the written request may be
sent, rather than mailed. 

In Section 101.553 (Approval of Voluntary Winding Up, Revocation,
Cancellation, or Reinstatement), the substitute makes a nonsubstantive
change. 

In Section 152.001 (Definitions), the substitute adds the definition of
"transfer" to the terms defined in this chapter and makes a nonsubstantive
change. 

In Section 152.002 (Effect of Partnership Agreement; Nonwaivable and
Variable Provisions), the substitute corrects several cross-references and
prohibits a partnership agreement of the partners from waiving or modifying
specified provisions of Title 1 in certain circumstances. The substitute
also prohibits one of the specified prohibited provisions from being waived
or modified in a partnership agreement if the provision that is waived or
modified authorizes the partnership to waive or modify the provision in the
partnership's governing documents, unless the provision that is modified
specifies the person or group of person entitled to approve a modification
or the vote or other method by which a modification is required to be
approved.  The substitute makes nonsubstantive changes. 

In Section 152.051 (Partnership Defined), the substitute includes the
predecessors to this title and the provisions of Title 1 applicable to
partnerships and limited partnerships and a comparable statute of another
jurisdiction among the statutes under which a partnership may be created.
The substitute also provides that the provisions of this chapter govern
limited partnerships only to the extent provided by Sections 153.003 and
153.152 and Subchapter H, Chapter 153.   The substitute makes
nonsubstantive changes. 

In Section 152.053 (Qualifications to be Partner; Nonpartner's Liability to
Third Person), the substitute provides that Sections 152.307 and 152.505
provide exceptions to this section. 

 In Section 152.102 (Classification as Partnership Property), the
substitute makes a nonsubstantive change. 

In Section 152.206 (Partner's Duty of Care), the substitute corrects a
cross-reference. 

In Section 152.306 (Enforcement of Remedy), the substitute makes a
nonsubstantive change. 

In Section 152.405 (Power to Effect Transfer or Grant of Security
Interest), the substitute makes a nonsubstantive change. 

In Section 152.501 (Events of Withdrawal), the substitute corrects a
cross-reference. 

In Section 152.601 (Redemption if Partnership Not Wound Up), the substitute
makes nonsubstantive changes. 

In Section 152.602 (Redemption Price), the substitute makes a
nonsubstantive change. 

In Section 152.603 (Contribution Obligation), the substitute makes a
nonsubstantive change. 

In Section 152.606 (Indemnification for Certain Liability), the substitute
deletes the provision that  Section 152.505 provides an exception to this
section. 

In Section 152.607 (Demand or Payment of Estimated Redemption), the
substitute provides that the terms of a payment, tender, offer, or demand
govern a redemption in certain circumstances.  Makes nonsubstantive
changes. 

In Section 152.608 (Deferred Payment on Wrongful Withdrawal), the
substitute makes a nonsubstantive change. 

In Section 152.609, the substitute changes the title to "Action to
Determine Terms of Redemption" from "Action to Determine Partner's
Redemption" and deletes a reference to Section 152.210. 

In Section 152.611 (Redemption of Transferee's Partnership Interest), the
substitute makes conforming changes. 

In Section 152.612, the substitute changes the title to "Action to
Determine Transferee's Redemption Price" from "Action to Determine
Transferee's Redemption." 

In Section 152.701 (Additional Events Requiring Winding Up), the substitute
provides that a partnership in which the partnership agreement provides for
the winding up of the partnership business on a specified event requires
winding up upon the express will of all the partners or the occurrence of
the specified event, unless otherwise continued under Section 152.710.  The
substitute also deletes certain judicial decrees from the list of events
that require winding up of a partnership and makes conforming changes. 

In Section 152.704 (Rights and Duties of a Person Winding up Partnership
Business), the substitute authorizes a person winding up a partnership's
business to take the actions specified in Sections 11.052, 11.053, and
11.055, rather than setting forth those actions, and prohibits Section
11.052(a)(2) from being applicable to a partnership.  The substitute also
deletes the provision that would have authorized a person winding up a
partnership's business to continue the partnership business wholly or
partly, including delaying the disposition of partnership property, for a
period that is necessary to avoid unreasonable loss of the partnership's
property or business. 

In Section 152.705, the substitute changes the section title to "Binding
Effect of Partner's Action After Event Requiring Winding Up" from "Binding
Effect of Partner's Action After Wind Up." 

 In Section 152.707 (Disposition of Assets), the substitute includes any
required contributions of the partners under Sections 152.708 and 152.709
in partnership property for the purposes of this section. 

In Section 152.801 (Liability of Partner), the substitute makes
nonsubstantive changes. 

In Section 152.802 (Registration), the substitute deletes Subsection (i),
which would have authorized the secretary of state to revoke the filing of
a document under this subchapter if the secretary of state determines that
the filing fee for the document was paid by an instrument that was
dishonored when presented for payment.  The substitute also changes
Subsection (j) to authorize a document filed under this subchapter to be
amended by filing an application for amendment of registration, rather than
articles of amendment, with the secretary of state in accordance with
Chapter 4 and this subsection. The substitute makes conforming and
nonsubstantive changes. 

In Section 152.803 (Name), the substitute provides that the name of a
registered limited liability partnership may contain the phrase  "limited
liability partnership" or an abbreviation of that phrases as the last word
or letters of its name as an alternative to "registered limited liability
partnership" or its abbreviation. 

In Section 152.804 (Insurance or Financial Responsibility), the substitute
makes conforming changes. 

The substitute deletes Section 152.805 (Applicability of Certain Filing
Provisions), which would have provided that Chapters 4 and 10 apply to a
filing under this chapter with the secretary of state.  

The substitute redesignates Section 152.806 to Section 152.805.

In Section 152.901 (General), the substitute prohibits a foreign limited
liability partnership from being denied registration, rather than a
statement of foreign qualification, due to a difference between the laws of
the state under which the partnership is formed and the laws of this state. 

In Section 152.902 (Name), the substitute makes nonsubstantive changes.

In Section 152.905 (Statement of Foreign Qualification), the substitute
provides that a foreign limited liability partnership must file an
application for registration, rather than a statement of foreign
qualification with the secretary of state, in accordance with Chapters 4
and 9 as though it were a foreign filing entity and this section, rather
than Chapter 4, before it transacts business in this state.  Provides that
the information specified in this section is in addition to the information
required by Section 9.004.  The substitute also deletes the requirement
that the application set out the name of the partnership, the state in
which the partnership is formed, the address of the partnership's chief
executive office and registered office, the name and address of the
registered agent for service of process, a statement that the partnership
validly exists as a limited liability partnership under the laws of the
state of formation,  and a statement of the partnership's business. 

In Section 152.906, the substitute changes the section title from
"Withdrawal of Cancellation" to "Cancellation of Registration," deletes the
requirement  that it be filed in duplicate with the secretary of state, and
makes conforming changes. 

In Section 152.907, the substitute changes the section title to "Effect of
Certificate of Cancellation" from "Effect of Withdrawal Notice" and makes
conforming changes. 

In Section 152.908 (Renewal of Registration), the substitute provides that
the renewal application must be filed in accordance with Chapter 9, rather
than Chapter 4, and deletes the required filing fee.  The substitute also
makes conforming changes. 

 In Section 152.909 (Action by Secretary of State), the substitute deletes
Subsection (b), which would have authorized the secretary of state to
revoke the filing of a document under this subchapter if it determines that
the filing fee was paid by an instrument that was dishonored when presented
for payment. 

In Section 152.910 (Effect of Failure to Qualify), the substitute
cross-references Section 9.013, rather than 9.011. 

In Section 152.911 (Amendment), the substitute deletes the required fees
for an application for amendment of registration and makes conforming
changes. 

In Section 152.912 (Execution of Application for Amendment), the substitute
provides that the application for amendment, rather than the articles of
amendment, must be signed by a majority-in-interest of the partners or one
or more partners authorized by a majority-in-interest of the partners.  

The substitute deletes the proposed Section 153.003 (Applicability of Other
Law), which would have provided that the applicable provisions of Chapters
152 and 154 governing partnerships that are not limited partnerships and
the rules of law and equity govern in a case not provided for by this
chapter and the other limited partnership provisions. 

The substitute adds a new Section 153.003 (Applicability of Other Laws) to
provide that the provisions of Chapter 152 governing partnerships that are
not limited partnerships and the rules of law and equity govern in a case
not provided for by this chapter and the other limited partnership
provisions; prohibit the powers and duties of a limited partner from being
governed by a provision of Chapter 152 that would be inconsistent with the
nature and role of a limited partner as contemplated by this chapter; and
prohibit a limited partner from having any obligation or duty of a general
partner solely by reason of being a limited partner.  

The substitute adds Section 153.004 (Non-Waivable Title 1 Provisions),
which sets forth the provisions of Title 1 which are prohibited from being
waived or modified in the partnership agreement of a limited partnership
unless the provision that is modified specifies the method by which a
modification is required to be approved. 

The substitute adds new Section 153.005 (Waiver or Modification of Rights
of Third Parties), which authorizes a provision in this title or in that
part of Title 1 applicable to a limited partnership that grants a right to
a person, other than a general partner, a limited partner, or assignee of a
partnership interest in a limited partnership, to be waived or modified in
the partnership agreement of the limited partnership only if the person
consents in writing to the waiver or modification. 

In Section 153.051, the substitute changes the section title to
"Supplemental Provisions Regarding Certificate of Formation" from
"Certificate of Formation." 

In Section 153.052 (Required Amendment to Certificate of Formation), the
substitute corrects a cross-reference from Section 5.03 to Section 5.202. 

In Section 153.101 (Admission of Limited Partners), the substitute adds a
reference to the other provisions in this code applicable to limited
partnerships. 

In Section 153.102 (Liability to Third Parties), the substitute makes a
nonsubstantive change. 

In Section 153.103 (Actions Not Constituting Participation in Business for
Liability Purposes), the substitute makes nonsubstantive changes. 

In Section 153.106 (Erroneous Belief of Contributor Being Limited Partner),
the substitute provides that the statement to the secretary of state must
be a written statement and deletes references to Section 153.102 and
Sections 153.107-153.109. 

 In Section 153.107 (Statement Required for Liability Protection), the
substitute provides that the required statement must be a written
statement. 

In Section 153.108 (Requirements for Liability Protection Following
Expiration of Statement), the substitute makes nonsubstantive changes. 

In Section 153.109 (Liability of Erroneous Contributor), the substitute
changes references to Section 153.107 to 153.106. 

In Section 153.110 (Withdrawal of Limited Partner), the substitute provides
that the limited partner must withdraw at the time or on the occurrence of
an event specified in a written partnership agreement. 

In Section 153.155 (Withdrawal of General Partner), the substitute corrects
cross-references, deletes a reference to 3.201(a), and changes references
to "charter" to "certificate of formation or its equivalent." 

In Section 153.161, the substitute changes the section title to "Liability
of General Partner For Debt Incurred After Event of Withdrawal" from
"Liability of General Partner For Event of Withdrawal."  The substitute
also provides that a creditor of the partnership has reason to believe that
a partner remains a general partner if the creditor had no knowledge or
notice of the general partner's withdrawal and was a creditor of the
partnership at the time of the general partner's withdrawal or had extended
credit to the partnership within two years before the date of withdrawal. 

In Section 153.207 (Right to Distribution), the substitute corrects a
cross-reference. 

In Section 153.252 (Rights of Assignor), the substitute provides that the
assignor partner continues to be a partner in the limited partnership,
rather than the partnership, until the assignee becomes a partner, except
as otherwise provided by the partnership agreement. 

In Section 153.304 (Delivery of Report), the substitute deletes the
requirement that two copies of the report be delivered to the secretary of
state. 

In Section 153.305 (Action by Secretary of State), the substitute makes a
conforming change. 

In Section 153.306 (Effect of Filing Report), the substitute deletes the
requirement that the secretary of state endorse the report with the word
"Filed" and the month, day, and year of filing and provides that the
secretary of state acknowledge to, rather than notify, the limited
partnership of the filing of the report. 

In Section 153.311 (Cancellation of Certificate or Registration After
Forfeiture), the substitute corrects a reference to the "certificate of
limited partnership" to the "certificate of formation of a domestic limited
partnership." 

In Section 153.312, the substitute changes the section title to
"Reinstatement of Certificate of Formation or Registration" from
"Reinstatement of Certificate or Registration" and makes conforming
changes. 

In Section 153.351 (Requirements), the substitute provides that a limited
partnership must comply with Chapter 5 and expands the list of eligible
phrases for the name of the limited partnership. 

In Section 153.451 (Certificate of Cancellation), the substitute makes a
conforming change. 

The substitute deletes Section 153.503 (Judicial Decree), which would have
authorized a court, upon application by or for a partner, to decree the
winding up and termination of a limited partnership if the court determines
that the economic purpose of the limited partnership is likely to be
unreasonably frustrated; another partner has engaged in conduct  relating
to the limited partnership business that makes it not reasonably
practicable to carry on the business in limited partnership with that
partner; or it is not reasonably practicable to carry on the business of
the limited partnership in conformity with the partnership agreement.  

The substitute redesignates Section 153.504 (Winding Up Procedures) to
Section 153.503, deletes the requirement that the winding up of a limited
partnerships affairs take place as soon as reasonably practicable after an
event requiring the winding up of a partnership, except as provided by the
partnership agreement, and adds the requirement that Section 11.052(c)(2)
not be applicable to a limited partnership.  The substitute also makes
nonsubstantive changes. 

The substitute redesignates Section 153.505 (Powers of Person Conducting
Wind Up) to Section 153.504 and authorizes a person winding up a limited
partnership to take the actions specified in Sections 11.052, 11.053, and
11.055, rather than setting the actions out. 

The substitute redesignates Section 153.506 (Disposition of Assets) to
Section 153.505 and corrects a cross-reference. 

In Section 153.553 (Execution of Certain Filings), the substitute provides
that an initial certificate of formation must be signed as provided in
Section 3.004(b)(1), rather than by all general partners. 

In Section 153.554 (Execution, Amendment, or Cancellation by Judicial
Order), the substitute provides that the certificate must be filed or
executed as required by Title 1. 

The substitute adds Section 153.556 (Obligation of Foreign Limited
Partnership to File Assumed Name Certificate), which provides that, unless
a foreign limited partnership conducts business under another name, filing
the application for registration under Chapter 9 makes it unnecessary to
file any other documents under Chapter 36, Business & Commerce Code. 

The substitute adds Section 153.557 (Common Carrier), which provides that a
limited partnership engaged as a common carrier in the pipeline business
for transporting oil, oil products, gas, carbon dioxide, salt brine,
fuller's earth, sand, clay, liquified minerals, or other mineral solutions
has all of the rights and powers conferred by Sections 111.019-111.022
(Right of Eminent Domain; Costs of Relocation of Property; Limitations on
the Powers of Eminent Domain in Certain Situations; Restoration of
Property; Pipeline Easements; Pipeline on Public Stream or Highway;
Pipeline Under Railroad, Street Railroad, or Canal; Right to Use Street or
Alley in City or Town), Natural Resources Code; and provides that a limited
partnership that is a common carrier as defined in Section 111.002, Natural
Resources Code, has in addition all of the obligations conferred by
Sections 111.001-111.025, Natural Resources Code. 

In Section 154.202 (Effect of Partner Change on Relationship Between
Partnership and Creditors), the substitute makes nonsubstantive changes. 

The substitute changes the title heading of Title 5 to "Real Estate
Investment Trusts" from "Business Trusts." 

The substitute adds Section 200.006 (Requirement That Filing Instrument Be
Signed by Officer), which authorizes a filing instrument of a real estate
investment trust to be signed by an officer of the real estate investment
trust, unless otherwise provided by this chapter. 

In Section 200.051, the substitute changes the section title to
"Supplemental Provisions Required in Certificate of Formation" from
"Supplemental Provisions for Certificate of Formation." 

In Section 200.055 (Adoption of Amendment by Shareholders), the substitute
makes  conforming and nonsubstantive changes. 

In Section 200.057 (Supplemental Provisions For Certificate of Amendment),
the substitute deletes the requirement that an officer sign the certificate
of amendment on behalf of the real estate investment trust.  The substitute
also provides that the certificate of amendment must be filed in accordance
with Chapter 4 and takes effect, rather than has the same effect, as
provided by Subchapter B, Chapter 3. 

In Section 200.058 (Restated Certificate of Formation), the substitute
deletes the requirement that an officer sign the restated certificate of
amendment on behalf of the real estate investment trust.  Authorizes a
majority of the trust managers to sign, rather than execute, the restated
certificate of formation on behalf of the real estate investment trust, if
shares of the real estate investment trust have not been issued and the
restated certificate of formation is adopted by the trust managers.  The
substitute also makes a conforming change. 

In Section 200.061 (Organization Meeting), the substitute requires the
initial trust managers of the real estate investment trust to send, rather
than mail, the notice of the organization meeting to adopt bylaws, electing
officers, and transacting other business, by the third, rather the fourth,
day before the meeting. 

The substitute redesignates the text of Section 200.105 (Issuance of
Shares) to Section 200.104 and adds a provision to authorize a real estate
investment trust to issue shares for consideration if authorized by the
trust managers. 

The substitute redesignates existing Section 200.104 (Types of
Consideration for Issuance of Shares) to Section 200.105. 

In Section 200.108 (Value of Consideration), the substitute deletes
shareholders from the list of persons (trust managers) whose judgment, in
the absence of fraud in the transaction, is conclusive in determining the
value of the consideration received for the shares. 

In Section 200.111 (Preformation Subscription), the substitute makes a
nonsubstantive change. 

In Section 200.112 (Commitment to Purchase Shares), the substitute deletes
the provision that the commitment of a person who contemplates the
acquisition of shares in REIT continues for a six-month period unless the
commitment provides for a longer or shorter period. 

In Section 200.155 (Valid Restriction on Transfer), the substitute makes a
nonsubstantive change. 

In Section 200.158 (Joint Ownership of Shares), the substitute makes a
nonsubstantive change. 

In Subchapter E, the substitute changes the subchapter heading
"Distributions and Share Distributions" from "Distributions and Share
Dividends." 

In Section 201.203 (Priority of Distributions), the substitute includes a
real estate investment trust's indebtedness issued in a distribution as
debt at parity with the real estate investment trust's general, unsecured
debt unless subordinated or secured by agreement. 

In Section 201.209 (Determination of Solvency, Net Assets, Stated Capital,
And Surplus), the substitute provides that the method of determining a real
estate investment trust's insolvency includes whether the real estate
investment trust would be insolvent, in addition to whether the real estate
investment trust is insolvent. 

In Section 201.210 (Date of Termination of Surplus), the substitute makes a
nonsubstantive change. 
 
In Section 201.251 (Annual Meeting), the substitute provides that  a
shareholder is authorized to make a request that the annual meeting be held
within a reasonable time if it was not held at its designated time, by
certified mail, in addition to registered mail. 

In Section 200.252, the substitute changes the section title to "Special
Meetings" from "Special Meeting." 

In Section 200.261 (Vote Required to Approve Fundamental Action), the
substitute redefines "fundamental action" to include a cancellation of an
event requiring winding up and a reinstatement.  The substitute also makes
nonsubstantive changes. 

In Subchapter G, the substitute changes the subchapter heading to "Trust
Managers" from "Board of Managers." 

In Section 200.307 (Staggered Terms of Trust Managers), the substitute
makes conforming changes. 

In Section 200.308 (Vacancy), the substitute makes conforming changes.

In Section 200.311 (Committees of Trust Managers), the substitute makes
conforming changes. 

In Section 200.314 (Immunity From Liability For Performance of Duty), the
substitute adds damage to the list of actions and expenses for which a
trust manager is prohibited from being held liable. 

The substitute redesignates proposed Section 200.351to Section 200.316
(Contracts of Transaction Involving Interested Trust Managers and Officers)
and makes nonsubstantive changes. 

In Subchapter H, the substitute changes the subchapter heading to
"Investments" from "Transactions And Compensation of Officers or Trust
Managers." 

The substitute redesignates proposed Section 200.352 (Investments) to
Section 200.351 and makes conforming changes. 

In Section 200.404, the substitute changes the section title to "Approval
of Exchange" from "Approval of Interest Exchange" and makes conforming
changes. 

In Section 200.451 (Approval of Voluntary Winding up), the substitute makes
a conforming change. 

In Section 200.452 (Approval of Reinstatement or Revocation of Voluntary
Winding Up), the substitute authorizes a real estate investment trust to
cancel an event requiring winding up by the affirmative vote of the
shareholders. 

The substitute adds new Section 200.453 (Responsibility For Winding up) to
require the trust managers to manage the winding up of the business or
affairs of the real estate investment trust if the trust determines or is
required to wind up. 

In Subchapter C, Title 6, the substitute changes the subchapter heading to
"Formation And Governing Documents" from "Formation." 

In Section 251.101, the substitute changes the section title to
"Supplemental Provision Required in Certificate of Formation" from
"Certificate of Formation." 

In Section 251.102 (Organizational Meeting), the substitute makes a
conforming change. 

 In Section 251.103 (Amendment of Certificate of Formation), the substitute
provides that the certificate of amendment must be signed by an authorized
officer, rather than executed by the president and secretary, of the
cooperative association. 

In Section 251.104 (Bylaws), the substitute identifies relevant chapters
and title to the list of provisions the bylaws are authorized to contain. 

In Section 251.152 (Officers), the substitute authorizes any two or more
offices, other than the offices of president and secretary, to be held by
the same person. 

In Section 251.201 (Eligibility and Admission), the substitute makes a
nonsubstantive change. 

In Section 251.403 (Annual Report of Financial Condition), the substitute
provides that the report must be signed, rather than sworn to, by the
president and secretary. 

In Section 251.404 (Failure to File Report), the substitute deletes the
requirement that the notice be sent by registered mail. 

In Section 251.451, the substitute changes the section title to "Voluntary
Winding Up and Termination" from "Voluntary Winding Up and Liquidation" and
makes conforming changes. 

In Section 251.502 (Use of Name "Cooperative"), the substitute authorizes
only a cooperative association organized under this chapter, rather than
this title, a group organized on a cooperative basis under another law, or
a foreign entity, rather than corporation, operating under a cooperative
basis and authorized to do business in Texas to use the term "cooperative"
or any abbreviation of that term. 

The substitute deletes proposed Section 252.016 (Saving Clause), which
would have provided that this chapter does not affect an action or
proceeding begun or a right accrued before September 1, 1995. 


The substitute redesignates Section 252.017 (Effect on Other Law) to
Section 252.016. 

In Section 301.004 (Authorized Person), the substitute makes nonsubstantive
changes. 

In Section 301.005, the substitute changes the section title to
"Supplemental Provisions Required in Certificate of Formation" from
"Additional Information Required in Certificate of Formation." 

In Section 301.011 (Liability), the substitute includes action taken by an
owner, member, managerial official, employee, or agent of a professional
organization that is itself an owner, managerial official, employee, or
agent of a professional entity. 

In Section 302.002, the substitute changes the section title to
"Supplemental Provisions Required in Certificate of Formation; Additional
Requirements" from "Certificate of Formation; Additional Requirements" and
makes nonsubstantive changes. 

In Section 302.003 (Duration of Professional Association), the substitute
makes conforming changes. 

In Section 302.014 (Joint Practice by Certain Professionals), the
substitute corrects a reference. 

The substitute deletes Section 303.002 (Professional Corporation Not a
Partnership), which would have provided that a professional corporation is
not a partnership. 

The substitute redesignates proposed Sections 303.003-303.008 to Sections
303.002303.007. 

In Section 304.001, the substitute changes the section title to
"Applicability of Certain Provisions Governing Limited Liability Companies"
from "Applicability of Certain Provisions Governing Limited Liability
Corporations." 

In Section 401.001 (Definitions), the substitute provides that the
mandatory application date for an entity subject to this code under Section
402.001 is January 1, 2002, rather than the date of formation or
registration of the entity; and for an entity subject to this code under
Sections 402.003 or 402.004 it is the date of completion of the action
required by that section but no earlier than January 1, 2002, rather than
the date of filing of documentation necessary to adopt this code. 

In Section 402.001, the substitute changes the section title to
"Applicability upon Effective Date" from "Applicability to Entities Formed
or Registered on or after Effective Date" and includes a foreign non-filing
entity to the entities to which this code is applicable. 

In Section 402.002, the substitute changes the section title to "Early
Effectiveness of Fees" from "Applicability Before Mandatory Application
Date" and deletes Subsection (a), which would have provided that this code
only applies to a domestic entity formed before the mandatory application
date, or a foreign entity that has registered with the secretary of state
before the mandatory application date that elected to be governed by this
code.   

In Section 402.003, the substitute changes the section title to "Early
Adoption of Code by Existing Domestic Entity" from "Adoption of Code by
Domestic Entity Before Mandatory Application Date."  The substitute also
provides that a filing entity must file a statement, rather than a
certificate of amendment or restated certificate of formation that states,
that the filing entity is electing to adopt this code. 

In Section 402.004, the substitute changes the section title to "Early
Adoption of Code by Registered Foreign Entity" from "Adoption of Code by
Foreign Entity Before Mandatory Application Date."  The substitute also
provides that a foreign filing entity must file a statement, rather than an
amendment to its application for registration that states, that the filing
entity is electing to adopt this code. 

In Section 402.005 (Applicability to Existing Entities on Mandatory
Application Date), the substitute makes the mandatory application date
January 1, 2006, rather than December 1, 2005, changes references to the
governing authority to the managerial officials, and requires a domestic
filing entity and a foreign filing entity to conform its certificate of
formation or application for registration to the requirements of this code
when it next files an amendment to its certificate of formation or
application for registration.  The substitute also makes nonsubstantive
changes. 

In Section 402.006 (Applicability to Certain Acts, Contracts, and
Transactions), the substitute changes references to the governing authority
to the managerial officials and provides that prior law governs acts,
contracts, or transactions of the entity's managerial official, owners, or
members that occur before the mandatory application date. 

In Section 402.010 (Sale of Assets, Mergers, Reorganizations, Conversions),
the substitute provides that Chapter 10 and other applicable provisions of
this code apply to a transaction consummated by an entity after the
mandatory application date, except that if a required approval of the
owners or members of the entity, rather than the outstanding ownership
interests, has been given before the mandatory application date or has been
given after the mandatory application date at a meeting of owners or
members initially called for a date before the mandatory application date,
the transaction is governed by the prior law. 

In Section 402.011 (Winding Up and Termination), the substitute clarifies
that Chapter 11 applies to voluntary winding up and termination proceedings
taken after the mandatory application date. 
 
In Section 402.013, the substitute changes the section title to "Entities
Under Suspension for Nonfiling or Required Reports or Payment of Taxes;
Applicability of Prior Law" from "Corporation and Other Entities Under
Suspension for Nonfiling or Required Reports or Payment of Taxes;
Applicability of Prior Law" and makes conforming changes. 

The substitute adds new SECTION 13 (Conforming Amendment) to amend Article
1399, V.T.C.S., to provide that, except as provided by Title 8, this
Article and Articles 1400-1407, V.T.C.S. do not apply to a grand body to
which the Texas Business Organizations Code applies. 

The substitute adds new SECTION 14 (Conforming Amendment) to amend Article
1407a, V.T.C.S., by adding Section 9 to provide that, except as provided by
Title 8, this Act does not apply to a church benefits board to which the
Texas Business Organizations Code applies. 

The substitute adds a new SECTION  15 (Conforming Amendment) to amend
Article 1528g, V.T.C.S., by adding Section 13 to provide that, except as
provided by Title 8, this Act does not apply to a business development
corporation to which the Texas Business Organizations Code applies. 

The substitute adds a new SECTION 16 to make this Act applicable to certain
charitable organizations; to prohibit the provisions of this Act from
depriving charitable entities described by this section from any rights,
benefits, or immunities provided by other law; and to provide that in the
event of a conflict between this Act and other laws enacted by the 76th
Legislature, the other laws control. 

The substitute redesignates SECTION 13 of the original to SECTION 17
(Repealer) and provides that Articles 1399 (Lodges), 1400 (Lodges:
Charter), 1401 (Lodges:  Trustees), 1402 (Lodges: Property), 1403 (Lodges:
Demise), 1404 (Lodges:  Demise), 1405 (Lodges:  Loans), 1406 (Existing
Lodge), 1407 (Lodges:  Tax), 1407a (Church Benefit Plans and Church
Benefits Boards),  and 1528g (Business Development Corporations), V.T.C.S.
are repealed effective January 1, 2006, rather than the effective date of
this Act. 

The substitute redesignates SECTION 14 of the original to SECTION 18 and
changes the effective date to January 1, 2002, rather than January 1, 2001. 

The substitute redesignates SECTION 15 (emergency clause) of the original
to SECTION 19.