HBA-MPM S.B. 1320 77(R)    BILL ANALYSIS


Office of House Bill AnalysisS.B. 1320
By: Staples
Business & Industry
4/17/2001
Engrossed



BACKGROUND AND PURPOSE 

Currently, there are errors in certain statutory cross references and a
lack of standardization of the filing procedures in the Texas Non-Profit
Corporation Act, the Texas Professional Corporation Act, the Texas Limited
Liability Company Act, the Texas Revised Limited Partnership Act, and the
Texas Revised Partnership Act.  Senate Bill 1320 makes corrections to
statutory cross references in these Acts, modifies the contents of articles
of merger, and adds an additional time period to specify when an event of
withdrawal of a partner occurs. 

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. 

ANALYSIS

Senate Bill 1320 amends law relating to filings made with the secretary of
state (secretary) by business organizations.  The bill amends the Texas
Limited Liability Company Act to authorize a person who has reserved a
specified company name to terminate the reservation during the period for
which the name is reserved by filing an application of cancellation with
the secretary and paying an applicable fee (SECTION 1). 

The bill authorizes a foreign limited liability company whose certificate
of authority has been revoked by the secretary to be reinstated by the
secretary at any time within a period of 36 rather than 24 months (SECTION
5). 

The bill provides that the articles of merger must include either the plan
of merger or a statement certifying: 

_the name and state of incorporation or organization of each domestic or
foreign limited liability company or other applicable entity; 

_that a plan of merger has been approved;

_such amendments or changes in the articles of organization of each
domestic surviving limited liability company; 

_that the articles of organization of each new domestic limited liability
company to be created pursuant to the terms of the plan of merger are being
filed with the secretary; 

_that an executed plan of merger is on file at the principal place of
business of each surviving or new domestic or foreign limited liability
company or other entity; and 

_that a copy of the plan of merger will be furnished by each limited
liability company or other entity  to any member of each domestic limited
liability company that is a party to or created  by the plan of merger, and
in certain circumstances, to any creditor or obligee (SECTION 6). 

S.B. 1320 amends the Texas Non-Profit Corporation Act to authorize a
nonprofit organization dissolved by the secretary and the certificate of
authority of a foreign corporation revoked by the secretary to be
reinstated within 36 rather than 12 months (SECTIONS 9 and 10).   

The bill amends the Texas Revised Partnership Act to add another time
period when an event of withdrawal of a partner occurs.  The bill provides
that an event of withdrawal of a partner occurs on  a conversion of the
partnership if the partner did not consent to the conversion and failed to
notify the partnership in writing of the partner's desire not to withdraw
within 60 days of the effective date of conversion or the date the partner
receives actual notice of the conversion, whichever date is later.  The
bill specifies that a withdrawal of a partner under these circumstances is
effective immediately before the effective date of the conversion and is
not considered a wrongful withdrawal (SECTION 13). 

The bill repeals a provision of the Texas Professional Corporation Act that
authorizes the holders of a professional corporation to vote to dissolve
the corporation (SECTION 16). 

EFFECTIVE DATE

September 1, 2001.