VERNON'S TEXAS CIVIL STATUTES
CHAPTER 9. NON-PROFIT, COOPERATIVE, RELIGIOUS AND CHARITABLE
Art. 1396-1.01. SHORT TITLE, CAPTIONS, PARTS, ARTICLES,
SECTIONS, SUBSECTIONS AND PARAGRAPHS. A. This Act shall be known
and may be cited as the "Texas Non-Profit Corporation Act."
B. The division of this Act into Parts, Articles, Sections,
Subsections, and Paragraphs and the use of captions in connection
therewith are solely for convenience and shall have no legal effect
in construing the provisions of this Act.
C. This Act has been organized and subdivided in the
following manner:
(1) The Act is divided into Parts, containing groups of
related Articles. Parts are numbered consecutively with cardinal
numbers.
(2) The Act is also divided into Articles, numbered
consecutively with Arabic numerals.
(3) Articles are divided into Sections. The Sections within
each Article are numbered consecutively with capital letters.
(4) Sections are divided into Subsections. The Subsections
within each Section are numbered consecutively with Arabic numerals
enclosed in parentheses.
(5) Subsections are divided into Paragraphs. The Paragraphs
within each Subsection are numbered consecutively with lower case
letters enclosed in parentheses.
Acts 1959, 56th Leg., p. 286, ch. 162, art. 1.01.
Art. 1396-1.02. DEFINITIONS. A. As used in this Act, unless
the context otherwise requires, the term:
(1) "Corporation" or "domestic corporation" means a
corporation not for profit subject to the provisions of this Act,
except a foreign corporation.
(2) "Foreign corporation" means a corporation not for profit
organized under laws other than the laws of this State.
(3) "Non-Profit Corporation" is the equivalent of "not for
profit corporation" and means a corporation no part of the income of
which is distributable to its members, directors, or officers.
(4) "Articles of incorporation" means the original or
restated articles of incorporation and all amendments thereto.
(5) "By-laws" means the code or codes of rules adopted for the
regulation or management of the corporation, irrespective of the
name or names by which such rules are designated.
(6) "Member" means one having membership rights in a
corporation in accordance with the provisions of its articles of
incorporation or its by-laws.
(7) "Board of Directors" means the group of persons vested
with the management of the affairs of the corporation, irrespective
of the name by which such group is designated.
(8) "President" means that officer designated as "president"
in the articles of incorporation or by-laws of a corporation, or
that officer authorized, in the articles of incorporation, the
by-laws, or otherwise, to perform the functions of the principal
executive officer, irrespective of the name by which he may be
designated, or that committee of persons authorized, in the
articles of incorporation, the by-laws, or otherwise, to perform
the functions of the principal executive officer.
(9) "Vice-president" means that officer designated as
"vice-president" in the articles of incorporation or the by-laws of
a corporation, or that officer or committee of persons authorized,
in the articles of incorporation, the by-laws, or otherwise, to
perform the duties of the president upon the death, absence, or
resignation of the president or upon his inability to perform the
duties of his office, irrespective of the name by which he, or they,
may be designated.
(10) "Secretary" means that officer designated as
"secretary" in the articles of incorporation or the by-laws of a
corporation, or that officer or committee of persons authorized, in
the articles of incorporation, the by-laws, or otherwise, to
perform the functions of secretary, irrespective of the name by
which he, or they, may be designated.
(11) "Treasurer" means that officer designated as
"treasurer" in the articles of incorporation or the by-laws of a
corporation, or that officer or committee of persons authorized, in
the articles of incorporation, the by-laws, or otherwise, to
perform the functions of a treasurer, irrespective of the name by
which he, or they, may be designated.
(12) "Insolvency" means inability of a corporation to pay its
debts as they become due in the usual course of its affairs.
(13) "Verified" means subscribed and sworn to under the
sanction of an oath, or such affirmation as is by law equivalent to
an oath, made before an officer authorized to administer oaths.
(14) "Director" means a member of the board of directors of a
corporation organized under this Act.
(15) "Ordinary care" means the care that an ordinarily
prudent person in a similar position would exercise under similar
circumstances.
Acts 1959, 56th Leg., p. 286, ch. 162, art. 1.02. Amended by Acts
1993, 73rd Leg., ch. 733, Sec. 1, eff. Jan. 1, 1994.
Art. 1396-2.01. PURPOSES. A. Except as hereinafter in this
Article expressly excluded herefrom, non-profit corporations may
be organized under this Act for any lawful purpose or purposes,
which purposes shall be fully stated in the articles of
incorporation. Such purpose or purposes may include, without being
limited to, any one or more of the following: charitable,
benevolent, religious, eleemosynary, patriotic, civic, missionary,
educational, scientific, social, fraternal, athletic, aesthetic,
agricultural and horticultural; and the conduct of professional,
commercial, industrial, or trade associations; and animal
husbandry. Subject to the provisions of Chapter 2, Title 83, of the
Revised Civil Statutes of Texas, 1925, and of such Chapter or any
part thereof as it may hereafter be amended, a corporation may be
organized under this Act if any one or more of its purposes for the
conduct of its affairs in this State is to organize laborers,
working men, or wage earners to protect themselves in their various
pursuits.
(1) Charitable corporations may be formed for the purpose of
operating a Dental Health Service Corporation which service
corporation will manage and coordinate the relationship between the
contracting dentist, who will perform the dental services, and the
patient who will receive such services where such patient is a
member of a group which has contracted with the Dental Health
Service Corporation to provide dental care to members of that
group. An application for a charter under this Section shall have
attached as exhibits (1) an affidavit by the applicants that not
less than thirty percent (30%) of the dentists legally engaged in
the practice of dentistry in this state together with their names
and addresses have signed contracts to perform the required dental
services for a period of not less than one (1) year, after
incorporation, and (2) a certification by the Texas State Board of
Dental Examiners that the applicant incorporators are reputable
citizens of the State of Texas and are of good moral character and
that the corporation sought to be formed will be in the best
interest of the public health. A corporation formed hereunder
shall have not less than twelve (12) directors, nine (9) of whom
shall be dentists licensed by the Texas State Board of Dental
Examiners to practice dentistry in this state and be actively
engaged in the practice of dentistry in this state. A corporation
formed hereunder shall maintain not less than thirty percent (30%)
of the number of dentists actually engaged in the practice of
dentistry in this state as participating or contracting dentists,
and shall file with the Texas State Board of Dental Examiners each
September the names and addresses of all contracting or
participating dentists. A corporation formed hereunder shall not
(1) prevent any patient from selecting the licensed dentist of his
choice to render dental services to him, (2) deny any licensed
dentist the right to participate as a contracting dentist to
perform the dental services contracted for by the patient, (3)
discriminate among patients or licensed dentists regarding payment
or reimbursement for the cost of performing dental services
provided the dentist is licensed to perform the dental service, or
(4) authorize any person to regulate, interfere, or intervene in
any manner in the diagnosis or treatment rendered by a licensed
dentist to his patient. A corporation formed hereunder may require
the attending dentist to provide a narrative oral or written
description of the dental services rendered for the purpose of
determining benefits or providing proof of treatment. Diagnostic
aids used in the course of treatment may be requested by the
corporation, but may not be required for any purpose.
B. This Act shall not apply to any corporation, nor may any
corporation be organized under this Act or obtain authority to
conduct its affairs in this State under this Act:
(1) If any one or more of its purposes for the conduct of its
affairs in this State is expressly forbidden by any law of this
State.
(2) If any one or more of its purposes for the conduct of its
affairs in this State is to engage in any activity which cannot
lawfully be engaged in without first obtaining a license under the
authority of the laws of this State to engage in such activity and
such license cannot lawfully be granted to a corporation, except as
provided by Subsection C.
(3) If any one or more of its purposes for the conduct of its
affairs in this State is to organize Group Hospital Service, Rural
Credit Unions, Agricultural and Livestock Pools, Mutual Loan
Corporations, Co-operative Credit Associations, Farmers'
Co-operative Societies, Co-operative Marketing Act Corporations,
Rural Electric Co-operative Corporations, Telephone Co-operative
Corporations, or fraternal organizations operating under the lodge
system and heretofore or hereafter incorporated under Articles 1399
through 1407, both inclusive, of Revised Civil Statutes of Texas,
1925.
(4) If any one or more of its purposes for the conduct of its
affairs in this State is to operate a bank under the banking laws of
this State or to operate an insurance company of any type or
character that operates under the insurance laws of this State.
C. Doctors of medicine and osteopathy licensed by the Texas
State Board of Medical Examiners and podiatrists licensed by the
Texas State Board of Podiatric Medical Examiners may organize a
non-profit corporation under this Act that is jointly owned,
managed, and controlled by those practitioners to perform a
professional service that falls within the scope of practice of
those practitioners and consists of:
(1) carrying out research in the public interest in medical
science, medical economics, public health, sociology, or a related
field;
(2) supporting medical education in medical schools through
grants or scholarships;
(3) developing the capabilities of individuals or
institutions studying, teaching, or practicing medicine, including
podiatric medicine;
(4) delivering health care to the public; or
(5) instructing the public regarding medical science, public
health, hygiene, or a related matter.
D. When doctors of medicine, osteopathy, and podiatry
organize a non-profit corporation that is jointly owned by those
practitioners, the authority of each of the practitioners is
limited by the scope of practice of the respective practitioners
and none can exercise control over the other's clinical authority
granted by their respective licenses, either through agreements,
articles of incorporation, bylaws, directives, financial
incentives, or other arrangements that would assert control over
treatment decisions made by the practitioner. The Texas State
Board of Medical Examiners and the Texas State Board of Podiatric
Medical Examiners continue to exercise regulatory authority over
their respective licenses.
Acts 1959, 56th Leg., p. 286, ch. 162, art. 2.01. Amended by Acts
1961, 57th Leg., p. 959, ch. 418, Sec. 1; Acts 1983, 68th Leg., p.
142, ch. 36, Sec. 1, eff. Aug. 29, 1983; Acts 1989, 71st Leg., ch.
1039, Sec. 4.07, eff. Sept. 1, 1989; Acts 1999, 76th Leg., ch. 813,
Sec. 2, eff. Aug. 30, 1999; Acts 2003, 78th Leg., ch. 534, Sec. 1,
eff. June 20, 2003.
Art. 1396-2.02. GENERAL POWERS. A. Subject to the provisions
of Sections B and C of this Article, each corporation shall have
power:
(1) To have perpetual succession by its corporate name,
unless a limited period of duration is stated in its articles of
incorporation. Notwithstanding the articles of incorporation, the
period of duration for any corporation incorporated before August
10, 1959, is perpetual if all fees and franchise taxes have been
paid as provided by law.
(2) To sue and be sued, complain and defend, in its corporate
name.
(3) To have a corporate seal which may be altered at pleasure,
and to use the same by causing it, or a facsimile thereof, to be
impressed on, affixed to, or in any manner reproduced upon,
instruments of any nature required to be executed by its proper
officers.
(4) To purchase, receive, lease, or otherwise acquire, own,
hold, improve, use, or otherwise deal in and with, real or personal
property, or any interest therein, wherever situated, as the
purposes of the corporation shall require, or as shall be donated to
it.
(5) To sell, convey, mortgage, pledge, lease, exchange,
transfer, and otherwise dispose of all or any part of its property
and assets.
(6) To lend money to and otherwise assist its employees and
officers, but not its directors, if the loan or assistance may
reasonably be expected to benefit, directly or indirectly, the
corporation providing the assistance. Loans made to officers must
be:
(a) made for the purpose of financing the principal residence
of the officer; or
(b) made during the first year of that officer's employment,
in which case the original principal amount may not exceed 100
percent of the officer's annual salary; or
(c) made in any subsequent year, in which case the original
principal amount may not exceed 50 percent of the officer's annual
salary.
(7) To purchase, receive, subscribe for, or otherwise
acquire, own, hold, vote, use, employ, mortgage, lend, pledge, sell
or otherwise dispose of, and otherwise use and deal in and with,
shares or other interests in, or obligations of, other domestic or
foreign corporations, whether for profit or not for profit,
associations, partnerships, or individuals, or direct or indirect
obligations of the United States or of any other government, state,
territory, government district, or municipality, or of any
instrumentality thereof.
(8) To make contracts and incur liabilities, borrow money at
such rates of interest as the corporation may determine, issue its
notes, bonds, and other obligations, and secure any of its
obligations by mortgage or pledge of all or any of its property,
franchises, and income.
(9) To lend money for its corporate purposes, invest and
reinvest its funds, and take and hold real and personal property as
security for the payment of funds so loaned or invested.
(10) To conduct its affairs, carry on its operations, and
have officers and exercise the powers granted by this Act in any
state, territory, district, or possession of the United States, or
any foreign country.
(11) To elect or appoint officers and agents of the
corporation for such period of time as the corporation may
determine and define their duties and fix their compensation.
(12) To make and alter by-laws, not inconsistent with its
articles of incorporation or with the laws of this State, for the
administration and regulation of the affairs of the corporation.
(13) To make donations for the public welfare or for
charitable, scientific, or educational purposes and in time of war
to make donations in aid of war activities.
(14) To cease its corporate activities and terminate its
existence by voluntary dissolution.
(15) Whether included in the foregoing or not, to have and
exercise all powers necessary or appropriate to effect any or all of
the purposes for which the corporation is organized.
(16) Any religious, charitable, educational, or eleemosynary
institution organized under the laws of this State may acquire,
own, hold, mortgage, and dispose of and invest its funds in real and
personal property for the use and benefit and under the discretion
of, and in trust for any convention, conference or association
organized under the laws of this State or another state with which
it is affiliated, or which elects its board of directors, or which
controls it, in furtherance of the purposes of the member
institution.
(17) To pay pensions and establish pension plans and pension
trusts for all of, or class, or classes of its officer and
employees, or its officers or its employees.
(18) To deliver money to a scholarship fund for rural
students.
B. Nothing in this Article grants any authority to officers
or directors of a corporation for the exercise of any of the
foregoing powers, inconsistent with limitations on any of the same
which may be expressly set forth in this Act or in the articles of
incorporation or by-laws or in any other laws of this State.
Authority of officers and directors to act beyond the scope of the
purpose or purposes of a corporation is not granted by any
provisions of this Article.
C. Nothing in this Article shall be deemed to authorize any
action in violation of the Anti-Trust Laws of this State or of any
of the provisions of Chapter 4 of Title 32 of Revised Civil Statutes
of Texas, 1925, as now existing or hereafter amended.
Acts 1959, 56th Leg., p. 286, ch. 162, art. 2.02. Amended by Acts
1977, 65th Leg., p. 837, ch. 313, Sec. 1, eff. Aug. 29, 1977; Acts
1979, 66th Leg., p. 174, ch. 96, Sec. 1, eff. May 2, 1979; Acts
1989, 71st Leg., ch. 1199, Sec. 1, eff. Aug. 28, 1989; Acts 1997,
75th Leg., ch. 904, Sec. 5, eff. Sept. 1, 1997.
Art. 1396-2.03. DEFENSE OF ULTRA VIRES. A. Lack of capacity
of a corporation shall never be made the basis of any claim or
defense at law or in equity.
B. No act of a corporation and no conveyance or transfer of
real or personal property to or by a corporation shall be invalid by
reason of the fact that such act, conveyance or transfer was beyond
the scope of the purpose or purposes of the corporation as expressed
in its articles of incorporation or by reason of limitations on
authority of its officers and directors to exercise any statutory
power of the corporation, as such limitations are expressed in the
articles of incorporation, but that such act, conveyance or
transfer was, or is, beyond the scope of the purpose or purposes of
the corporation as expressed in its articles of incorporation or
inconsistent with any such expressed limitations of authority, may
be asserted:
(1) In a proceeding by a member against the corporation to
enjoin the doing of any act or acts or the transfer of real or
personal property by or to the corporation. If the unauthorized act
or transfer sought to be enjoined is being, or is to be, performed
or made pursuant to any contract to which the corporation is a
party, the court may, if all of the parties to the contract are
parties to the proceedings and if it deems the same to be equitable,
set aside and enjoin the performance of such contract, and in so
doing may allow to the corporation or to the other parties to the
contract, as the case may be, compensation for the loss or damage
sustained by either of them which may result from the action of the
court in setting aside and enjoining the performance of such
contract, but anticipated profits to be derived from the
performance of the contract shall not be awarded by the court as
part of the loss or damage sustained.
(2) In a proceeding by the corporation, whether acting
directly or through a receiver, trustee, or other legal
representative, or through members in a representative suit,
against the incumbent or former officers or directors of the
corporation for exceeding their authority.
(3) In a proceeding by the Attorney General, as provided in
this Act, to dissolve the corporation, or in a proceeding by the
Attorney General to enjoin the corporation from performing
unauthorized acts, or to enforce divestment of real property
acquired or held contrary to the laws of this State.
Acts 1959, 56th Leg., p. 286, ch. 162, art. 2.03.
Art. 1396-2.04. CORPORATE NAME. A. The corporate name shall
conform to the following requirements:
(1) It shall not contain any word or phrase which indicates or
implies that it is organized for any purpose other than one or more
of the purposes contained in its articles of incorporation.
(2) It shall not be the same as, or deceptively similar to,
the name of any domestic corporation, whether for profit or not for
profit, existing under the laws of this State, or the name of any
foreign corporation, whether for profit or not for profit,
authorized to transact business or conduct affairs in this State,
or a name the exclusive right to which is, at the time, reserved in
the manner provided by the Texas Business Corporation Act, or the
name of a corporation which has in effect a registration of its
corporate name as provided in the Texas Business Corporation Act;
provided that a name may be similar if written consent is obtained
from the existing corporation having the name deemed to be similar,
or the person, or corporation, for whom the name deemed to be
similar is reserved or registered in the office of the Secretary of
State.
(3) It shall not contain the word "lottery."
Acts 1959, 56th Leg., p. 286, ch. 162, art. 2.04. Amended by Acts
1991, 72nd Leg., 1st C.S., ch. 6, Sec. 11A(b), eff. Nov. 5, 1991.
Art. 1396-2.04A. RESERVED NAME. A. The exclusive right to
the use of a corporate name may be reserved by:
(1) a person intending to organize a corporation under this
Act;
(2) a domestic corporation intending to change its name;
(3) a foreign corporation intending to apply for a
certificate of authority to conduct affairs in this State;
(4) a foreign corporation authorized to conduct affairs in
this State and intending to change its name; or
(5) a person intending to organize a foreign corporation and
intending to have that corporation apply for a certificate of
authority to conduct affairs in this State.
B. An application for name reservation or transfer of the
exclusive use of a specified corporate name is subject to the
procedures and period prescribed by Article 2.06, Texas Business
Corporation Act.
Added by Acts 1993, 73rd Leg., ch. 733, Sec. 2, eff. Jan. 1, 1994.
Art. 1396-2.05. REGISTERED OFFICE AND REGISTERED AGENT.
Each corporation shall have and continuously maintain in this
State:
(1) A registered office which may be, but need not be, the
same as its principal office.
(2) A registered agent, which agent may be an individual
resident in this State whose business office is identical with such
registered office, or a domestic corporation, whether for profit or
not for profit, or a foreign corporation, whether for profit or not
for profit, authorized to transact business or to conduct its
affairs in this State which has a business office identical with
such registered office.
Acts 1959, 56th Leg., p. 286, ch. 162, art. 2.05. Amended by Acts
1979, 66th Leg., p. 213, ch. 120, Sec. 1, eff. May 9, 1979; Acts
1993, 73rd Leg., ch. 733, Sec. 3, eff. Jan. 1, 1994.
Art. 1396-2.06. CHANGE OF REGISTERED OFFICE OR AGENT. A. A
corporation may change its registered office or change its
registered agent, or both, upon filing in the office of the
Secretary of State a statement setting forth:
(1) The name of the corporation.
(2) The post-office address of its then registered office.
(3) If the post-office address of its registered office is to
be changed, the post-office address to which the registered office
is to be changed.
(4) The name of its then registered agent.
(5) If its registered agent is to be changed, the name of its
successor registered agent.
(6) That the post-office address of its registered office and
the post-office address of the business office of its registered
agent, as changed, will be identical.
(7) That such change was authorized by its Board of Directors
or by an officer of the corporation so authorized by the Board of
Directors, or if the management of the corporation is vested in its
members pursuant to Article 2.14C of this Act, by the members.
B. The statement required by this Article shall be signed by
the corporation by an officer. The original and a copy of the
statement shall be delivered to the Secretary of State. If the
Secretary of State finds that such statement conforms to the
provisions of this Act, he shall, when all fees have been paid as
prescribed by law:
(1) Endorse on the original and the copy the word "Filed" and
the month, day, and year of the filing thereof.
(2) File the original in his office.
(3) Return the copy to the corporation or its representative.
C. Upon such filing, the change of address of the registered
office, or the appointment of a new registered agent, or both, as
the case may be, shall become effective.
D. Any registered agent of a corporation may resign
(1) by giving written notice to the corporation at its last
known address
(2) and by giving written notice, in triplicate (the original
and two copies of the notice), to the Secretary of State within ten
days after mailing or delivery of said notice to the corporation.
Such notice shall include the last known address of the corporation
and shall include the statement that written notice of resignation
has been given to the corporation and the date thereof. Upon
compliance with the requirements as to written notice, the
appointment of such agent shall terminate upon the expiration of
thirty (30) days after receipt of such notice by the Secretary of
State.
If the Secretary of State finds that such written notice
conforms to the provisions of this Act, he shall:
(1) Endorse on the original and both copies the word "filed"
and the month, day and year of the filing thereof.
(2) File the original in his office.
(3) Return one copy to such resigning registered agent.
(4) Return one copy to the corporation at the last known
address of the corporation as shown in such written notice.
Acts 1959, 56th Leg., p. 286, ch. 162, art. 2.06. Amended by Acts
1969, 61st Leg., p. 2477, ch. 834, Sec. 1, 2; Acts 1979, 66th Leg.,
p. 213, ch. 120, Sec. 2, eff. May 9, 1979; Acts 1987, 70th Leg., ch.
93, Sec. 36, eff. Aug. 31, 1987.
Art. 1396-2.06A. CHANGE OF ADDRESS OF REGISTERED AGENT. A.
The location of the registered office in this State for a
corporation may be changed from one address to another by filing in
the office of the Secretary of State a statement setting forth:
(1) the name of the corporation represented by the registered
agent;
(2) the street address at which the registered agent has
maintained the registered office for that corporation;
(3) the new street address at which the registered agent will
maintain the registered office for that corporation; and
(4) a statement that notice of the change has been given to
the corporation in writing at least ten (10) days before the date of
the filing.
B. The statement required by this article shall be signed by
the registered agent or, if the agent is a corporation, by an
officer of the corporate agent on its behalf. If the registered
agent is simultaneously filing statements for more than one
corporation, each statement may contain facsimile signatures in the
execution. The original and one copy of the statement shall be
delivered to the Secretary of State. If the Secretary of State
finds that the statement conforms to this Act, the Secretary of
State shall:
(1) endorse on the original and the copy the word "Filed," and
the month, day, and year of the filing;
(2) file the original in the Secretary of State's office; and
(3) return the copy to the registered agent.
C. The registered office of the corporation named in the
statement shall be changed to the new street address of the
registered agent on the filing of the statement by the Secretary of
State.
Added by Acts 1993, 73rd Leg., ch. 733, Sec. 4, eff. Jan. 1, 1994.
Art. 1396-2.07. SERVICE OF PROCESS ON CORPORATION. A. The
president and all vice-presidents of the corporation and the
registered agent of the corporation shall be agents of such
corporation upon whom any process, notice, or demand required or
permitted by law to be served upon the corporation may be served.
Where the chief executive function of a corporation is authorized
to be performed by a committee, service on any member of such
committee shall be deemed to be service on the president.
B. Whenever a corporation shall fail to appoint or maintain
a registered agent in this State, or whenever its registered agent
cannot with reasonable diligence be found at the registered office,
then the Secretary of State shall be an agent of such corporation
upon whom any such process, notice, or demand may be
served. Service on the Secretary of State of any process, notice,
or demand shall be made by delivering to and leaving with him, or
with the Deputy Secretary of State, or with any clerk having charge
of the corporation department of his office, duplicate copies of
such process, notice, or demand. In the event any such process,
notice, or demand is served on the Secretary of State, he shall
immediately cause one of the copies thereof to be forwarded by
registered mail, addressed to the corporation at its registered
office. Any service so had on the Secretary of State shall be
returnable in not less than thirty (30) days.
C. The Secretary of State shall keep a record of all
processes, notices, and demands served upon him under this Article,
and shall record therein the time of such service and his action
with reference thereto.
D. Service of process, notice, or demand required or
permitted by law to be served by a political subdivision of this
state or by a person, including another political subdivision or an
attorney, acting on behalf of a political subdivision in connection
with the collection of a delinquent ad valorem tax may be served on
a corporation whose corporate privileges are forfeited under
Section 171.251, Tax Code, or is involuntarily dissolved under
Article 7.01 of this Act by delivering the process, notice, or
demand to any officer or director of the corporation, as listed in
the most recent records of the secretary of state. If the officers
or directors of the corporation are unknown or cannot be found,
service on the corporation may be made in the same manner as service
is made on unknown shareholders under law. Notwithstanding any
disability or reinstatement of a corporation, service of process
under this section is sufficient for a judgment against the
corporation or a judgment in rem against any property to which the
corporation holds title.
Acts 1959, 56th Leg., p. 286, ch. 162, art. 2.07. Amended by Acts
1999, 76th Leg., ch. 1481, Sec. 39, eff. Sept. 1, 1999.
Amended by:
Acts 2005, 79th Leg., Ch. 41, Sec. 5, eff. September 1, 2005.
Art. 1396-2.08. MEMBERS. A. A corporation may have one or
more classes of members or may have no members.
B. If the corporation has one or more classes of members, the
designation of such class or classes, the manner of election or
appointment, and the qualifications and rights of the members of
each class shall be set forth in the articles of incorporation or
by-laws.
C. If the corporation is to have no members, that fact shall
be set forth in the articles of incorporation.
D. A corporation may issue certificates, or cards, or other
instruments evidencing membership rights, voting rights or
ownership rights as may be authorized in the articles of
incorporation or in the by-laws.
E. The members of a non-profit corporation shall not be
personally liable for the debts, liabilities, or obligations of the
corporation.
Acts 1959, 56th Leg., p. 286, ch. 162, art. 2.08. Amended by Acts
1961, 57th Leg., p. 653, ch. 302, Sec. 1.
Art. 1396-2.09. BY-LAWS. A. The initial by-laws of a
corporation shall be adopted by its board of directors or, if the
management of the corporation is vested in its members, by the
members. The by-laws may contain any provisions for the regulation
and management of the affairs of the corporation not inconsistent
with law or the articles of incorporation.
B. A corporation's board of directors may amend or repeal the
corporation's by-laws, or adopt new by-laws, unless:
(1) the articles of incorporation or this Act reserves the
power exclusively to the members in whole or in part;
(2) the management of the corporation is vested in its
members; or
(3) the members in amending, repealing, or adopting a
particular by-law expressly provide that the board of directors may
not amend or repeal that by-law.
Acts 1959, 56th Leg., p. 286, ch. 162, art. 2.09. Amended by Acts
1993, 73rd Leg., ch. 733, Sec. 5, eff. Jan. 1, 1994.
Art. 1396-2.10. MEETINGS OF MEMBERS. A. If a corporation has
members:
(1) Meetings of members shall be held at such place, either
within or without this State, as may be provided in the by-laws. In
the absence of any such provision, all meetings shall be held at the
registered office of the corporation in this State.
(2) An annual meeting of the members shall be held at such
times as may be provided in the by-laws, except that where the
by-laws of a corporation provide for more than one regular meeting
of members each year, an annual meeting shall not be required, and
directors may be elected at such meetings as the by-laws may
provide. Failure to hold the annual meeting at the designated time
shall not work a dissolution of the corporation. In the event the
board of directors fails to call the annual meeting at the
designated time, any member may make demand that such meeting be
held within a reasonable time, such demand to be made in writing by
registered mail directed to any officer of the corporation. If the
annual meeting of members is not called within sixty (60) days
following such demand, any member may compel the holding of such
annual meeting by legal action directed against said board, and all
of the extraordinary writs of common law and of courts of equity
shall be available to such member to compel the holding of such
annual meeting. Each and every member is hereby declared to have a
justiciable interest sufficient to enable him to institute and
prosecute such legal proceedings.
(3) Special meetings of the members may be called by the
president, the board of directors, by members having not less than
one-tenth (1/10) of the votes entitled to be cast at such meeting,
or such other officers or persons as may be provided in the articles
of incorporation or by-laws.
Acts 1959, 56th Leg., p. 286, ch. 162, art. 2.10.
Art. 1396-2.11. NOTICE OF MEMBERS' MEETINGS. A. In the case
of a corporation other than a church, written or printed notice
stating the place, day, and hour of the meeting and, in case of a
special meeting, the purpose or purposes for which the meeting is
called, shall be delivered not less than ten (10) nor more than
sixty (60) days before the date of the meeting, either personally,
by facsimile transmission, or by mail, by or at the direction of the
president, or the secretary, or the officers or persons calling the
meeting, to each member entitled to vote at such meeting. If
mailed, such notice shall be deemed to be delivered when deposited
in the United States mail addressed to the member at his address as
it appears on the records of the corporation, with postage thereon
paid. If transmitted by facsimile, notice is deemed to be delivered
on successful transmission of the facsimile.
B. In the case of a corporation which is a church, notice of
meetings of members will be deemed sufficient if made by oral
announcement at a regularly scheduled worship service prior to such
meeting, or as otherwise provided in its articles of incorporation
or its by-laws.
C. The by-laws may provide that no notice of annual or regular
meetings shall be required.
D. If its by-laws so provide, a corporation having more than
one thousand (1,000) members at the time a meeting is scheduled or
called may give notice of such meeting by publication in any
newspaper of general circulation in the community in which the
principal office of such corporation is located.
Acts 1959, 56th Leg., p. 286, ch. 162, art. 2.11. Amended by Acts
1993, 73rd Leg., ch. 733, Sec. 6, eff. Jan. 1, 1994.
Art. 1396-2.11A. RECORD DATE FOR DETERMINING MEMBERS
ENTITLED TO NOTICE AND VOTE. A. The by-laws of a corporation may
fix or provide the manner of fixing a date as the record date for
determining the members entitled to notice of a members' meeting.
If the by-laws do not fix and do not provide for fixing the record
date, the board of directors may fix a future date as the record
date. If a record date is not fixed, members at the close of
business on the business day preceding the date on which notice is
given, or if notice is waived, at the close of business on the
business day preceding the date of the meeting, are entitled to
notice of the meeting.
B. The by-laws of a corporation may fix or provide the manner
of fixing a date as the record date for determining the members
entitled to vote at a members' meeting. If the by-laws do not fix
and do not provide for fixing a record date, the board may fix a
future date as the record date. If a record date is not fixed,
members on the date of the meeting who are otherwise eligible to
vote are entitled to vote at the meeting.
C. The by-laws may fix or provide the manner for fixing a date
as the record date for the purpose of determining the members
entitled to exercise any rights regarding any other lawful action.
If the by-laws do not fix and do not provide for fixing a record
date, the board of directors may fix in advance a record date. If a
record date is not fixed, members at the close of business on the
date on which the board of directors adopts the resolution relating
to the record date, or the 60th day before the date of the other
action, whichever is later, are entitled to exercise those rights.
D. A record date fixed under this section may not be more than
sixty (60) days before the date of the meeting or action that
requires the determination of the members.
E. A determination of members entitled to notice of or to vote
at a members' meeting is effective for any adjournment of the
meeting unless the board fixes a new date for determining the right
to notice or the right to vote. The board must fix a new date for
determining the right to notice or the right to vote if the meeting
is adjourned to a date more than ninety (90) days after the record
date for determining members entitled to notice of the original
meeting.
Added by Acts 1993, 73rd Leg., ch. 733, Sec. 7, eff. Jan. 1, 1994.
Art. 1396-2.11B. VOTING MEMBERS' LIST FOR MEETING. A. After
fixing a record date for the notice of a meeting, a corporation
shall prepare an alphabetical list of the names of all its voting
members who are entitled to notice of the meeting. The list must
show the address and number of votes each voting member is entitled
to cast at the meeting. The corporation shall maintain, through the
time of the members' meeting, a list of members who are entitled to
vote at the meeting but are not entitled to notice of the meeting.
This list shall be prepared on the same basis and be part of the list
of voting members.
B. Not later than two (2) business days after the date notice
is given of a meeting for which a list was prepared, as provided by
Section A of this article, and continuing through the meeting, the
list of voting members must be available for inspection by any
member entitled to vote at the meeting for the purpose of
communication with other members concerning the meeting at the
corporation's principal office or at a reasonable place identified
in the meeting notice in the city where the meeting will be held. A
voting member or voting member's agent or attorney is entitled on
written demand to inspect and, subject to the limitations of
Section B, Article 2.23, of this Act to copy the list at a
reasonable time and at the member's expense during the period it is
available for inspection.
C. The corporation shall make the list of voting members
available at the meeting, and any voting member or voting member's
agent or attorney is entitled to inspect the list at any time during
the meeting or any adjournment.
Added by Acts 1993, 73rd Leg., ch. 733, Sec. 7, eff. Jan. 1, 1994.
Art. 1396-2.12. QUORUM OF MEMBERS. A. Unless otherwise
provided in the articles of incorporation or in the by-laws,
members holding one-tenth of the votes entitled to be cast,
represented in person or by proxy, shall constitute a quorum. The
vote of the majority of the votes entitled to be cast by the members
present, or represented by proxy at a meeting at which a quorum is
present, shall be the act of the members meeting, unless the vote of
a greater number is required by law, the articles of incorporation,
or the by-laws.
B. In the absence of an express provision to the contrary in
the articles of incorporation or the by-laws, a church incorporated
prior to the effective date of this Act shall be deemed to have
provided in its articles of incorporation or its by-laws that
members present at a meeting, notice for which shall have been duly
given, shall constitute a quorum.
Acts 1959, 56th Leg., p. 286, ch. 162, art. 2.12.
Art. 1396-2.13. VOTING OF MEMBERS. A. Each member,
regardless of class, shall be entitled to one (1) vote on each
matter submitted to a vote of the members, except to the extent that
the voting rights of members of any class or classes are limited,
enlarged, or denied by the articles of incorporation or the
by-laws.
B. A member may vote in person or, unless the articles of
incorporation or the by-laws otherwise provide, may vote by proxy
executed in writing by the member or by his duly authorized
attorney-in-fact. No proxy shall be valid after eleven (11) months
from the date of its execution, unless otherwise provided in the
proxy. Each proxy shall be revocable unless expressly provided
therein to be irrevocable, and in no event shall it remain
irrevocable for more than eleven (11) months. Where directors or
officers are to be elected by members, the by-laws may provide that
such elections may be conducted by mail, by facsimile transmission,
or by any combination of the two.
C. At each election for directors every member entitled to
vote at such election shall have the right to vote, in person or by
proxy, for as many persons as there are directors to be elected and
for whose election he has a right to vote, or, if expressly
authorized by the articles of incorporation, to cumulate his vote
by giving one candidate as many votes as the number of such
directors multiplied by his vote shall equal, or by distributing
such votes on the same principle among any number of such
candidates. Any member who intends to cumulate his votes as herein
authorized shall give written notice of such intention to the
secretary of the corporation on or before the day preceding the
election at which such member intends to cumulate his votes.
Acts 1959, 56th Leg., p. 286, ch. 162, art. 2.13. Amended by Acts
1993, 73rd Leg., ch. 733, Sec. 8, eff. Jan. 1, 1994.
Art. 1396-2.14. BOARD OF DIRECTORS. A. The affairs of a
corporation shall be managed by a board of directors. Directors
need not be residents of this State or members of the corporation
unless the articles of incorporation or the by-laws so require. The
articles of incorporation or the by-laws may prescribe other
qualifications for directors.
B. Boards of directors of religious, charitable,
educational, or eleemosynary institutions may be affiliated with,
elected and controlled by a convention, conference or association
organized under the laws of this State or another state, whether
incorporated or unincorporated, whose membership is composed of
representatives, delegates, or messengers from any church or other
religious association.
C. The articles of incorporation of a corporation may vest
the management of the affairs of the corporation in its members. If
the corporation has a board of directors, it may limit the authority
of the board of directors to whatever extent as may be set forth in
the articles of incorporation or by-laws. Except for a church
organized and operating under a congregational system, was
incorporated before January 1, 1994, and has the management of its
affairs vested in its members, a corporation shall be deemed to have
vested the management of the affairs of the corporation in its board
of directors in the absence of an express provision to the contrary
in the articles of incorporation or the by-laws.
D. The board of directors may be designated by any name
appropriate to the customs, usages, or tenets of the corporation.
E. The board of directors of a corporation may be elected (in
whole or in part) by one or more associations or corporations,
organized under the laws of this State or another state if (1) the
articles of incorporation or the by-laws of the former corporation
so provide, and (2) the former corporation has no members with
voting rights.
F. The articles of incorporation or the by-laws may provide
that any one or more persons may be ex-officio members of the board
of directors. A person designated as an ex-officio member of the
board of directors is entitled to notice of and to attend meetings
of the board of directors. The ex-officio member is not entitled to
vote unless otherwise provided in the articles of incorporation or
the by-laws. An ex-officio member of the board of directors who is
not entitled to vote does not have the duties or liabilities of a
director as provided in this Act.
Acts 1959, 56th Leg., p. 286, ch. 162, art. 2.14. Amended by Acts
1967, 60th Leg., p. 1716, ch. 656, Sec. 1, eff. June 17, 1967; Acts
1993, 73rd Leg., ch. 733, Sec. 9, eff. Jan. 1, 1994.
Art. 1396-2.15. NUMBER, ELECTION, CLASSIFICATION, AND
REMOVAL OF DIRECTORS. A. The number of directors of a corporation
shall be not less than three (3). Subject to such limitation, the
number of directors shall be fixed by, or in the manner provided in,
the articles of incorporation or the by-laws, except as to the
number constituting the initial board of directors, which number
shall be fixed by the articles of incorporation. The number of
directors may be increased or decreased from time to time by
amendment to, or in the manner provided in, the articles of
incorporation or the by-laws, but no decrease shall have the effect
of shortening the term of any incumbent director. The number of
directors may not be decreased to fewer than three (3). In the
absence of a by-law or a provision of the articles of incorporation
fixing the number of directors or providing for the manner in which
the number of directors shall be fixed, the number of directors
shall be the same as the number constituting the initial board of
directors as fixed by the articles of incorporation.
B. The directors constituting the initial board of directors
shall be named in the articles of incorporation and shall hold
office until the first annual election of directors or for such
other period as may be specified in the articles of incorporation or
the by-laws. Thereafter, directors shall be elected, appointed, or
designated in the manner and for the terms provided in the articles
of incorporation or the by-laws. If the method of election,
designation, or appointment is not provided in the articles of
incorporation or by-laws, the directors, other than the initial
directors, shall be elected by the board of directors. In the
absence of a provision in the articles of incorporation or the
by-laws fixing the term of office, a director shall hold office
until the next annual election of directors and until his successor
shall have been elected, appointed, or designated and qualified.
C. Directors may be divided into classes and the terms of
office of the several classes need not be uniform. Unless removed
in accordance with the provisions of the articles of incorporation
or the by-laws, each director shall hold office for the term for
which he is elected, appointed, or designated and until his
successor shall have been elected, appointed, or designated and
qualified.
D. A director may be removed from office pursuant to any
procedure therefor provided in the articles of incorporation or
by-laws. In the absence of a provision providing for removal, a
director may be removed from office, with or without cause, by the
persons entitled to elect, designate, or appoint the director. If
the director was elected to office, removal requires an affirmative
vote equal to the vote necessary to elect the director.
Acts 1959, 56th Leg., p. 286, ch. 162, art. 2.15. Amended by Acts
1989, 71st Leg., ch. 801, Sec. 45, eff. Aug. 28, 1989; Acts 1993,
73rd Leg., ch. 733, Sec. 10, eff. Jan. 1, 1994.
Art. 1396-2.16. VACANCIES. A. Unless otherwise provided in
the articles of incorporation or the by-laws, any vacancy occurring
in the board of directors shall be filled by the affirmative vote of
a majority of the remaining directors though less than a quorum of
the board of directors. A director elected to fill a vacancy shall
be elected for the unexpired term of his predecessor in office.
B. Any directorship to be filled by reason of an increase in
the number of directors shall be filled by election at an annual
meeting or at a special meeting of members called for that purpose.
If a corporation has no members, or no members having the right to
vote thereon, such directorship shall be filled as provided in the
articles of incorporation or the by-laws.
Acts 1959, 56th Leg., p. 286, ch. 162, art. 2.16.
Art. 1396-2.17. QUORUM AND VOTING DIRECTORS. A. A quorum for
the transaction of business by the board of directors shall be
whichever is less:
(1) A majority of the number of directors fixed by the bylaws,
or in the absence of a bylaw fixing the number of directors, a
majority of the number of directors stated in the articles of
incorporation, or
(2) Any number, not less than three, fixed as a quorum by the
articles of incorporation or the bylaws.
B. Directors present by proxy may not be counted toward a
quorum.
C. The act of the majority of the directors present in person
or by proxy at a meeting at which a quorum is present shall be the
act of the board of directors, unless the act of a greater number is
required by the articles of incorporation or the bylaws.
D. A director may vote in person or (if the articles of
incorporation or the bylaws so provide) by proxy executed in
writing by the director. No proxy shall be valid after three months
from the date of its execution. Each proxy shall be revocable
unless expressly provided therein to be irrevocable, and unless
otherwise made irrevocable by law.
Acts 1959, 56th Leg., p. 286, ch. 162, art. 2.17. Amended by Acts
1967, 60th Leg., p. 1716, ch. 656, Sec. 2, eff. June 17, 1967.
Art. 1396-2.18. COMMITTEES. A. If the articles of
incorporation or the bylaws so provide, the board of directors, by
resolution adopted by a majority of the directors in office, may
designate one or more committees, which, to the extent provided in
such resolution, in the articles of incorporation, or in the
bylaws, shall have and exercise the authority of the board of
directors in the management of the corporation. Each such
committee shall consist of two or more persons, a majority of whom
are directors; the remainder, if the articles of incorporation or
the bylaws so provide, need not be directors. The designation of
such committees and the delegation thereto of authority shall not
operate to relieve the board of directors, or any individual
director, of any responsibility imposed upon it or him by law. Any
non-director who becomes a member of any such committee shall have
the same responsibility with respect to such committee as a
director who is a member thereof.
B. Other committees not having and exercising the authority
of the board of directors in the management of the corporation may
be designated and appointed by a resolution adopted by a majority of
the directors at a meeting at which a quorum is present, or by the
president thereunto authorized by a like resolution of the board of
directors or by the articles of incorporation or by the by-laws.
Membership on such committees may, but need not be, limited to
directors.
Acts 1959, 56th Leg., p. 286, ch. 162, art. 2.18. Amended by Acts
1967, 60th Leg., p. 1716, ch. 656, Sec. 3, eff. June 17, 1967.
Art. 1396-2.19. PLACE AND NOTICE OF DIRECTORS' MEETINGS. A.
Meetings of the board of directors, regular or special, may be held
either within or without this State.
B. Regular meetings of the board of directors may be held with
or without notice as prescribed in the by-laws. Special meetings of
the board of directors shall be held upon such notice as is
prescribed in the by-laws. Attendance of a director at a meeting
shall constitute a waiver of notice of such meeting, except where a
director attends a meeting for the express purpose of objecting to
the transaction of any business on the ground that the meeting is
not lawfully called or convened. Neither the business to be
transacted at, nor the purpose of, any regular or special meeting of
the board of directors need be specified in the notice or waiver of
notice of such meeting, unless required by the by-laws.
Acts 1959, 56th Leg., p. 286, ch. 162, art. 2.19.
Art. 1396-2.20. OFFICERS. A. The officers of a corporation
shall consist of a president and a secretary and may also consist of
one or more vice-presidents, a treasurer, and such other officers
and assistant officers as may be deemed necessary, each of whom
shall be elected or appointed at such time and in such manner and
for such terms not exceeding three (3) years as may be prescribed in
the articles of incorporation or the by-laws. In the absence of any
such provisions, all officers shall be elected or appointed
annually by the board of directors, or, if the management of the
corporation is vested in its members, by the members. Any two or
more offices may be held by the same person, except the offices of
president and secretary. A committee duly designated may perform
the functions of any officer and the functions of any two or more
officers may be performed by a single committee, including the
functions of both president and secretary.
B. The officers of a corporation may be designated by such
other or additional titles as may be provided in the articles of
incorporation or the by-laws.
C. In the case of a corporation which is a church, it shall
not be necessary that there be officers as provided herein, but such
duties and responsibilities may be vested in the board of directors
or other designated body in any manner provided for in the articles
of incorporation or the by-laws.
D. In the discharge of a duty imposed or power conferred on an
officer of a corporation, the officer may in good faith and with
ordinary care rely on information, opinions, reports, or
statements, including financial statements and other financial
data, concerning the corporation or another person, that were
prepared or presented by:
(1) one or more other officers or employees of the
corporation, including members of the board of directors;
(2) legal counsel, public accountants, or other persons as to
matters the officer reasonably believes are within the person's
professional or expert competence; or
(3) in the case of religious corporations, religious
authorities and ministers, priests, rabbis, or other persons whose
position or duties in the religious organization the officer
believes justify reliance and confidence and whom the officer
believes to be reliable and competent in the matters presented.
E. An officer is not relying in good faith as required by
Section D of this article if the officer has knowledge concerning
the matter in question that makes reliance otherwise permitted by
Section D of this article unwarranted.
Acts 1959, 56th Leg., p. 286, ch. 162, art. 2.20. Amended by Acts
1993, 73rd Leg., ch. 733, Sec. 11, eff. Jan. 1, 1994.
Art. 1396-2.21. REMOVAL OF OFFICERS. A. Any officer elected
or appointed may be removed by the persons authorized to elect or
appoint such officer whenever in their judgment the best interests
of the corporation will be served thereby. The removal of an
officer shall be without prejudice to the contract rights, if any,
of the officer so removed. Election or appointment of an officer or
agent shall not of itself create contract rights.
Acts 1959, 56th Leg., p. 286, ch. 162, art. 2.21.
Art. 1396-2.22. OFFICER LIABILITY. (a) An officer is not
liable to the corporation or any other person for an action taken or
omission made by the officer in the person's capacity as an officer
unless the officer's conduct was not exercised:
(1) in good faith;
(2) with ordinary care; and
(3) in a manner the officer reasonably believes to be in the
best interest of the corporation.
(b) This article shall not affect the liability of the
corporation for an act or omission of the officer.
Added by Acts 2001, 77th Leg., ch. 727, Sec. 1, eff. Sept. 1, 2001.
Art. 1396-2.22A. POWER TO INDEMNIFY AND TO PURCHASE INDEMNITY
INSURANCE; DUTY TO INDEMNIFY. A. In this article:
(1) "Corporation" includes any domestic or foreign
predecessor entity of the corporation in a merger, consolidation,
or other transaction in which the liabilities of the predecessor
are transferred to the corporation by operation of law and in any
other transaction in which the corporation assumes the liabilities
of the predecessor but does not specifically exclude liabilities
that are the subject matter of this article.
(2) "Director" means any person who is or was a director of
the corporation and any person who, while a director of the
corporation, is or was serving at the request of the corporation as
a director, officer, partner, venturer, proprietor, trustee,
employee, agent, or similar functionary of another foreign or
domestic corporation, partnership, joint venture, sole
proprietorship, trust, employee benefit plan, or other enterprise.
(3) "Expenses" includes court costs and attorneys' fees.
(4) "Official capacity" means:
(a) when used with respect to a director, the office of
director in the corporation; and
(b) when used with respect to a person other than a director,
the elective or appointive office in the corporation held by the
officer or the employment or agency relationship undertaken by the
employee or agent in behalf of the corporation; but
(c) in both Paragraphs (a) and (b) does not include service
for any other foreign or domestic corporation or any partnership,
joint venture, sole proprietorship, trust, employee benefit plan,
or other enterprise.
(5) "Proceeding" means any threatened, pending, or completed
action, suit, or proceeding, whether civil, criminal,
administrative, arbitrative, or investigative, any appeal in such
an action, suit, or proceeding, and any inquiry or investigation
that could lead to such an action, suit, or proceeding.
B. A corporation may indemnify a person who was, is, or is
threatened to be made a named defendant or respondent in a
proceeding because the person is or was a director only if it is
determined in accordance with Section F of this article that the
person:
(1) conducted himself in good faith;
(2) reasonably believed:
(a) in the case of conduct in his official capacity as a
director of the corporation, that his conduct was in the
corporation's best interests; and
(b) in all other cases, that his conduct was at least not
opposed to the corporation's best interests; and
(3) in the case of any criminal proceeding, had no reasonable
cause to believe his conduct was unlawful.
C. Except to the extent permitted by Section E of this
article, a director may not be indemnified under Section B of this
article in respect of a proceeding:
(1) in which the person is found liable on the basis that
personal benefit was improperly received by him, whether or not the
benefit resulted from an action taken in the person's official
capacity; or
(2) in which the person is found liable to the corporation.
D. The termination of a proceeding by judgment, order,
settlement, or conviction or on a plea of nolo contendere or its
equivalent is not of itself determinative that the person did not
meet the requirements set forth in Section B of this article. A
person shall be deemed to have been found liable in respect of any
claim, issue or matter only after the person shall have been so
adjudged by a court of competent jurisdiction after exhaustion of
all appeals therefrom.
E. A person may be indemnified under Section B of this article
against judgments, penalties (including excise and similar taxes),
fines, settlements, and reasonable expenses actually incurred by
the person in connection with the proceeding; but if the person is
found liable to the corporation or is found liable on the basis that
personal benefit was improperly received by the person, the
indemnification (1) is limited to reasonable expenses actually
incurred by the person in connection with the proceeding, and (2)
shall not be made in respect of any proceeding in which the person
shall have been found liable for willful or intentional misconduct
in the performance of his duty to the corporation.
F. A determination of indemnification under Section B of this
article must be made:
(1) by a majority vote of a quorum consisting of directors who
at the time of the vote are not named defendants or respondents in
the proceeding;
(2) if such a quorum cannot be obtained, by a majority vote of
a committee of the board of directors, designated to act in the
matter by a majority vote of all directors, consisting solely of two
or more directors who at the time of the vote are not named
defendants or respondents in the proceeding;
(3) by special legal counsel selected by the board of
directors or a committee of the board by vote as set forth in
Subsection (1) or (2) of this section, or, if such a quorum cannot
be obtained and such a committee cannot be established, by a
majority vote of all directors; or
(4) by the members in a vote that excludes the vote of
directors who are named defendants or respondents in the
proceeding.
G. Authorization of indemnification and determination as to
reasonableness of expenses must be made in the same manner as the
determination that indemnification is permissible, except that if
the determination that indemnification is permissible is made by
special legal counsel, authorization of indemnification and
determination as to reasonableness of expenses must be made in the
manner specified by Subsection (3) of Section F of this article for
the selection of special legal counsel. A provision contained in
the articles of incorporation, the bylaws, a resolution of members
or directors, or an agreement that makes mandatory the
indemnification permitted under Section B of this article shall be
deemed to constitute authorization of indemnification in the manner
required by this section even though such provision may not have
been adopted or authorized in the same manner as the determination
that indemnification is permissible.
H. A corporation shall indemnify a director against
reasonable expenses incurred by him in connection with a proceeding
in which he is a named defendant or respondent because he is or was a
director if he has been wholly successful, on the merits or
otherwise, in the defense of the proceeding.
I. If, in a suit for the indemnification required by Section H
of this article, a court of competent jurisdiction determines that
the director is entitled to indemnification under that section, the
court shall order indemnification and shall award to the director
the expenses incurred in securing the indemnification.
J. If, upon application of a director, a court of competent
jurisdiction determines, after giving any notice the court
considers necessary, that the director is fairly and reasonably
entitled to indemnification in view of all the relevant
circumstances, whether or not he has met the requirements set forth
in Section B of this article or has been found liable in the
circumstances described by Section C of this article, the court may
order the indemnification that the court determines is proper and
equitable; but if the person is found liable to the corporation or
is found liable on the basis that personal benefit was improperly
received by the person, the indemnification shall be limited to
reasonable expenses actually incurred by the person in connection
with the proceeding.
K. Reasonable expenses incurred by a director who was, is, or
is threatened to be made a named defendant or respondent in a
proceeding may be paid or reimbursed by the corporation, in advance
of the final disposition of the proceeding and without the
determination specified in Section F of this article or the
authorization or determination specified in Section G of this
article, after the corporation receives a written affirmation by
the director of his good faith belief that he has met the standard
of conduct necessary for indemnification under this article and a
written undertaking by or on behalf of the director to repay the
amount paid or reimbursed if it is ultimately determined that he has
not met that standard or if it is ultimately determined that
indemnification of the director against expenses incurred by him in
connection with that proceeding is prohibited by Section E of this
article. A provision contained in the articles of incorporation,
the bylaws, a resolution of members or directors, or an agreement
that makes mandatory the payment or reimbursement permitted under
this section shall be deemed to constitute authorization of that
payment or reimbursement.
L. The written undertaking required by Section K of this
article must be an unlimited general obligation of the director but
need not be secured. It may be accepted without reference to
financial ability to make repayment.
M. A provision for a corporation to indemnify or to advance
expenses to a director who was, is, or is threatened to be made a
named defendant or respondent in a proceeding, whether contained in
the articles of incorporation, the bylaws, a resolution of members
or directors, an agreement, or otherwise, except in accordance with
Section R of this article, is valid only to the extent it is
consistent with this article as limited by the articles of
incorporation, if such a limitation exists.
N. Notwithstanding any other provision of this article, a
corporation may pay or reimburse expenses incurred by a director in
connection with his appearance as a witness or other participation
in a proceeding at a time when he is not a named defendant or
respondent in the proceeding.
O. An officer of the corporation shall be indemnified as, and
to the same extent, provided by Sections H, I, and J of this article
for a director and is entitled to seek indemnification under those
sections to the same extent as a director. A corporation may
indemnify and advance expenses to an officer, employee, or agent of
the corporation to the same extent that it may indemnify and advance
expenses to directors under this article.
P. A corporation may indemnify and advance expenses to a
person who is not or was not an officer, employee, or agent of the
corporation but who is or was serving at the request of the
corporation as a director, officer, partner, venturer, proprietor,
trustee, employee, agent, or similar functionary of another foreign
or domestic corporation, partnership, joint venture, sole
proprietorship, trust, employee benefit plan, or other enterprise
to the same extent that it may indemnify and advance expenses to
directors under this article.
Q. A corporation may indemnify and advance expenses to an
officer, employee, agent, or person identified in Section P of this
article and who is not a director to such further extent, consistent
with law, as may be provided by its articles of incorporation,
bylaws, general or specific action of its board of directors, or
contract or as permitted or required by common law.
R. (1) A corporation may purchase and maintain insurance on
behalf of any person who is or was a director, officer, employee, or
agent of the corporation or who is or was serving at the request of
the corporation as a director, officer, partner, venturer,
proprietor, trustee, employee, agent, or similar functionary of
another foreign or domestic corporation, partnership, joint
venture, sole proprietorship, trust, employee benefit plan, or
other enterprise against any liability asserted against him and
incurred by him in such a capacity or arising out of his status as
such a person, whether or not the corporation would have the power
to indemnify him against that liability under this article.
(2)(a) In addition to the powers described in Subsection (1),
a corporation may purchase, maintain, or enter into other
arrangements on behalf of any person who is or was a director,
officer, or trustee of the corporation against any liability
asserted against him and incurred by him in such capacity or arising
out of his status as such a person, whether or not the corporation
would have the power to indemnify him against that liability under
this article.
(b) If the other arrangement is with a person or entity that
is not regularly engaged in the business of providing insurance
coverage, the arrangement may provide for payment of a liability
with respect to which the corporation would not have the power to
indemnify a person only if coverage for that liability has been
approved by the corporation's members, if the corporation has
members.
(c) Without limiting the power of the corporation to procure
or maintain any kind of other arrangement, a corporation, for the
benefit of persons described in Subsection (2)(a) may:
(i) create a trust fund;
(ii) establish any form of self-insurance;
(iii) secure its indemnity obligation by grant of a security
interest or other lien on the assets of the corporation; or
(iv) establish a letter of credit, guaranty, or surety
arrangement.
(d) For the limited purposes of Subsection (2) of this
section only, any liability indemnification arrangement, other
than coverage through an insurance carrier, is not considered to be
the business of insurance under the Insurance Code, including the
Texas Property and Casualty Insurance Guaranty Act (Article
21.28-C, Vernon's Texas Civil Statutes), or any other law of this
state.
(3) The insurance may be procured or maintained with an
insurer, or the other arrangement may be procured, maintained, or
established within the corporation or with any insurer or other
person considered appropriate by the board of directors, regardless
of whether all or part of the stock or other securities of the
insurer or other person are owned in whole or part by the
corporation. In the absence of fraud, the judgment of the board of
directors as to the terms and conditions of the insurance or other
arrangement and the identity of the insurer or other person
participating in an arrangement is conclusive, and the insurance or
arrangement is not voidable and does not subject the directors
approving the insurance or arrangement to liability, on any ground,
regardless of whether directors participating in the approval are
beneficiaries of the insurance or arrangement.
S. Any indemnification of or advance of expenses to a
director in accordance with this article shall be reported in
writing to the members of the corporation with or before the notice
or waiver of notice of the next meeting of members or with or before
the next submission to members of a consent to action without a
meeting pursuant to Section A, Article 1396-9.10 of this Act and, in
any case, within the 12-month period immediately following the date
of the indemnification or advance.
T. For purposes of this article, the corporation is deemed to
have requested a director to serve an employee benefit plan
whenever the performance by him of his duties to the corporation
also imposes duties on or otherwise involves services by him to the
plan or participants or beneficiaries of the plan. Excise taxes
assessed on a director with respect to an employee benefit plan
pursuant to applicable law are deemed fines. Action taken or
omitted by him with respect to an employee benefit plan in the
performance of his duties for a purpose reasonably believed by him
to be in the interest of the participants and beneficiaries of the
plan is deemed to be for a purpose which is not opposed to the best
interests of the corporation.
U. The articles of incorporation of a corporation may
restrict the circumstances under which the corporation is required
or permitted to indemnify a person under Section H, I, J, O, P, or Q
of this article.
Added by Acts 1985, 69th Leg., ch. 128, Sec. 30, eff. May 20, 1985.
Amended by Acts 1989, 71st Leg., ch. 801, Sec. 46, eff. Aug. 28,
1989; Acts 1989, 71st Leg., ch. 1199, Sec. 2, eff. Aug. 28, 1989.
Art. 1396-2.23. BOOKS AND RECORDS. A. Each corporation shall
keep correct and complete books and records of account and shall
keep minutes of the proceedings of its members, board of directors,
and committees having any authority of the board of directors and
shall keep at its registered office or principal office in this
State a record of the names and addresses of its members entitled to
vote.
B. A member of a corporation, on written demand stating the
purpose of the demand, has the right to examine and copy, in person
or by agent, accountant, or attorney, at any reasonable time, for
any proper purpose, the books and records of the corporation
relevant to that purpose, at the expense of the member.
Acts 1959, 56th Leg., p. 286, ch. 162, art. 2.23. Amended by Acts
1993, 73rd Leg., ch. 733, Sec. 12, eff. Jan. 1, 1994.
Art. 1396-2.23A. FINANCIAL RECORDS AND ANNUAL REPORTS. A. A
corporation shall maintain current true and accurate financial
records with full and correct entries made with respect to all
financial transactions of the corporation, including all income and
expenditures, in accordance with generally accepted accounting
practices.
B. Based on these records, the board of directors shall
annually prepare or approve a report of the financial activity of
the corporation for the preceding year. The report must conform to
accounting standards as promulgated by the American Institute of
Certified Public Accountants and must include a statement of
support, revenue, and expenses and changes in fund balances, a
statement of functional expenses, and balance sheets for all funds.
C. All records, books, and annual reports of the financial
activity of the corporation shall be kept at the registered office
or principal office of the corporation in this state for at least
three years after the closing of each fiscal year and shall be
available to the public for inspection and copying there during
normal business hours. The corporation may charge for the
reasonable expense of preparing a copy of a record or report.
D. A corporation that fails to maintain financial records,
prepare an annual report, or make a financial record or annual
report available to the public in the manner prescribed by this
article is guilty of a Class B misdemeanor.
E. This article does not apply to:
(1) a corporation that solicits funds only from its members;
(2) a corporation which does not intend to solicit and
receive and does not actually raise or receive contributions from
sources other than its own membership in excess of $10,000 during a
fiscal year;
(3) a career school or college that has received a
certificate of approval from the Texas Workforce Commission, a
public institution of higher education and foundations chartered
for the benefit of such institutions or any component part thereof,
a private or independent institution of higher education as defined
by Section 61.003, Education Code, a postsecondary educational
institution with a certificate of authority to grant a degree
issued by the Texas Higher Education Coordinating Board, or an
elementary or secondary school;
(4) religious institutions which shall be limited to
churches, ecclesiastical or denominational organizations, or other
established physical places for worship at which religious services
are the primary activity and such activities are regularly
conducted;
(5) a trade association or professional society whose income
is principally derived from membership dues and assessments, sales,
or services;
(6) any insurer licensed and regulated by the Texas
Department of Insurance;
(7) an alumni association of a public or private institution
of higher education in this state, provided that such association
is recognized and acknowledged by the institution as its official
alumni association.
Added by Acts 1977, 65th Leg., p. 1947, ch. 773, Sec. 1, eff. Jan. 1,
1978. Amended by Acts 1993, 73rd Leg., ch. 733, Sec. 13, eff. Jan.
1, 1994.
Sec. E amended by Acts 2003, 78th Leg., ch. 238, Sec. 42, eff. Sept.
1, 2003; Acts 2003, 78th Leg., ch. 364, Sec. 2.31, eff. Sept. 1,
2003; Acts 2003, 78th Leg., ch. 817, Sec. 8.45, eff. Sept. 1, 2003.
Art. 1396-2.23B. CORPORATIONS ASSISTING STATE AGENCIES. A.
In this Article state agency means:
(1) a board, commission, department, office, or other entity
that is in the executive branch of state government and that was
created by the constitution or a statute of the State, including an
institution of higher education as defined by Section 61.003, Texas
Education Code, as amended;
(2) the legislature or a legislative agency; or
(3) the Supreme Court, the Court of Criminal Appeals, a court
of appeals, or the State Bar of Texas or another state judicial
agency.
B. The books and records of a corporation except a bona fide
alumni association are subject to audit at the discretion of the
State Auditor if both of the following obtain:
(1) the corporation's charter specifically dedicates the
corporation's activities to the benefit of a particular agency of
state government; and
(2) a board member, officer, or employee of the same agency of
state government sits on the board of directors of the corporation
in other than an ex officio, nonvoting, advisory capacity.
C. If the corporation's charter specifically dedicates the
corporation's activities to the benefit of a particular agency of
state government but the conditions in Section B of this Article do
not obtain, before the 90th day after the last day of the
corporation's fiscal year, the corporation shall file with the
Secretary of State a report for the preceding fiscal year
consisting of a copy of a report as described by Section B of
Article 2.23A of this Act (Article 1396-2.23A, Vernon's Texas Civil
Statutes).
Added by Acts 1983, 68th Leg., p. 4600, ch. 779, Sec. 1, eff. Aug.
29, 1983.
Art. 1396-2.24. DIVIDENDS PROHIBITED. A. No dividend shall
be paid and no part of the income of a corporation shall be
distributed to its members, directors, or officers. A corporation
may pay compensation in a reasonable amount to its members,
directors, or officers for services rendered, may confer benefits
upon its members in conformity with its purposes, and upon
dissolution or final liquidation may make distributions to its
members, but only as permitted by this Act.
Acts 1959, 56th Leg., p. 286, ch. 162, art. 2.24.
Art. 1396-2.25. LOANS TO DIRECTORS PROHIBITED. A. No loans
shall be made by a corporation to its directors.
B. The directors of a corporation who vote for or assent to
the making of a loan to a director of the corporation, and any
officer or officers participating in the making of such loan, shall
be jointly and severally liable to the corporation for the amount of
such loan until repayment thereof.
Acts 1959, 56th Leg., p. 286, ch. 162, art. 2.25. Amended by Acts
1989, 71st Leg., ch. 1199, Sec. 3, eff. Aug. 28, 1989.
Art. 1396-2.26. LIABILITY OF DIRECTORS IN CERTAIN CASES. A.
In addition to any other liabilities imposed by law upon directors
of a corporation, the directors who vote for or assent to any
distribution of assets other than in payment of its debts, when the
corporation is insolvent or when such distribution would render the
corporation insolvent, or during the liquidation of the corporation
without the payment and discharge of or making adequate provisions
for all known debts, obligations and liabilities of the
corporation, shall be jointly and severally liable to the
corporation for the value of such assets which are thus
distributed, to the extent that such debts, obligations and
liabilities of the corporation are not thereafter paid and
discharged.
B. A director of a corporation who is present at a meeting of
its board of directors at which action was taken on such corporate
matter shall be presumed to have assented to such action unless his
dissent shall be entered in the minutes of the meeting or unless he
shall file his written dissent to such action with the person acting
as the secretary of the meeting before the adjournment thereof or
shall forward such dissent by registered mail to the secretary of
the corporation immediately after the adjournment of the meeting.
Such right to dissent shall not apply to a director who voted in
favor of the action.
C. A director shall not be liable under Section A of this
Article if, in voting for or assenting to a distribution, the
director:
(1) relied in good faith and with ordinary care on
information, opinions, reports, or statements, including financial
statements and other financial data, concerning the corporation or
another person that were prepared or presented by:
(a) one or more officers or employees of the corporation;
(b) legal counsel, public accountants, or other persons as to
matters the director reasonably believes are within the person's
professional or expert competence; or
(c) a committee of the board of directors of which the
director is not a member;
(2) acting in good faith and with ordinary care, considered
the assets of the corporation to be at least that of their book
value; or
(3) in determining whether the corporation made adequate
provision for payment, satisfaction, or discharge of all of its
liabilities and obligations as provided in Article 6.03 of this
Act, relied in good faith and with ordinary care on financial
statements of, or other information concerning, a person who was or
became contractually obligated to pay, satisfy, or discharge some
or all of those liabilities or obligations.
D. A director shall not be liable under this Article if, in
the exercise of ordinary care, he acted in good faith and in
reliance upon the written opinion of an attorney for the
corporation.
E. A director against whom a claim shall be asserted under
this Article and who shall be held liable thereon shall be entitled
to contribution from persons who accepted or received such
distribution knowing such distribution to have been made in
violation of this Article, in proportion to the amounts received by
them respectively.
Acts 1959, 56th Leg., p. 286, ch. 162, art. 2.26. Amended by Acts
1993, 73rd Leg., ch. 733, Sec. 14, eff. Jan. 1, 1994.
Art. 1396-2.27. CHARITABLE CORPORATIONS. A. Notwithstanding
any provision in this Act or in the articles of incorporation to the
contrary (except as provided in Section B), the articles of
incorporation of each corporation which is a private foundation
described in Section 509 of the Internal Revenue Code of 1986 shall
be deemed to contain the following provisions: "The corporation
shall make distributions at such time and in such manner as not to
subject it to tax under Section 4942 of the Internal Revenue Code of
1986; the corporation shall not engage in any act of self-dealing
which would be subject to tax under Section 4941 of the Code; the
corporation shall not retain any excess business holdings which
would subject it to tax under Section 4943 of the Code; the
corporation shall not make any investments which would subject it
to tax under Section 4944 of the Code; and the corporation shall
not make any taxable expenditures which would subject it to tax
under Section 4945 of the Code." With respect to any such
corporation organized prior to January 1, 1970, this Section A
shall apply only for its taxable years beginning on or after January
1, 1972.
B. The articles of incorporation of any corporation described
in Section A may be amended to expressly exclude the application of
Section A, and in the event of such amendment, Section A shall not
apply to such corporation.
C. All references in this Article to "the Code" are to the
Internal Revenue Code of 1986, and all references in this Article to
specific sections of the Code include corresponding provisions of
any subsequent Federal tax laws.
Added by Acts 1971, 62nd Leg., p. 889, ch. 119, Sec. 1, eff. May 10,
1971. Amended by Acts 1993, 73rd Leg., ch. 733, Sec. 15, eff. Jan.
1, 1994.
Art. 1396-2.28. GENERAL STANDARDS FOR DIRECTORS. A. A
director shall discharge the director's duties, including the
director's duties as a member of a committee, in good faith, with
ordinary care, and in a manner the director reasonably believes to
be in the best interest of the corporation.
B. In the discharge of any duty imposed or power conferred on
a director, including as a member of a committee, the director may
in good faith rely on information, opinions, reports, or
statements, including financial statements and other financial
data, concerning the corporation or another person that were
prepared or presented by:
(1) one or more officers or employees of the corporation;
(2) legal counsel, public accountants, or other persons as to
matters the director reasonably believes are within the person's
professional or expert competence;
(3) a committee of the board of directors of which the
director is not a member; or
(4) in the case of religious corporations, religious
authorities and ministers, priests, rabbis, or other persons whose
position or duties in the religious organization the director
believes justify reliance and confidence and whom the director
believes to be reliable and competent in the matters presented.
C. A director is not relying in good faith, within the meaning
of this article, if the director has knowledge concerning a matter
in question that makes reliance otherwise permitted by this article
unwarranted.
D. A director is not liable to the corporation, any member, or
any other person for any action taken or not taken as a director if
the director acted in compliance with this article. A person
seeking to establish liability of a director must prove that the
director has not acted:
(1) in good faith;
(2) with ordinary care; and
(3) in a manner the director reasonably believes to be in the
best interest of the corporation.
E. A director is not deemed to have the duties of a trustee of
a trust with respect to the corporation or with respect to any
property held or administered by the corporation, including
property that may be subject to restrictions imposed by the donor or
transferor of the property.
Added by Acts 1993, 73rd Leg., ch. 733, Sec. 16, eff. Jan. 1, 1994.
Art. 1396-2.29. DELEGATION OF INVESTMENT AUTHORITY. A. The
board of directors of a corporation may:
(1) from time to time contract with investment counsel, trust
companies, banks, investment advisors, or investment managers; and
(2) confer on those advisors full power and authority to:
(a) purchase or otherwise acquire stocks, bonds, securities,
and other investments on behalf of the corporation; and
(b) sell, transfer, or otherwise dispose of any of the
corporation's assets and properties at a time and for a
consideration that the advisor deems appropriate.
B. The board of directors also may:
(1) confer on an advisor described by Section A of this
article other powers regarding the corporation's investments as the
board of directors deems appropriate; and
(2) authorize the advisor to hold title to any of the
corporation's assets and properties in its own name for the benefit
of the corporation or in the name of a nominee for the benefit of the
corporation.
C. The board of directors has no liability regarding any
action taken or omitted by an advisor engaged under this article if
the board of directors acted in good faith and with ordinary care in
selecting the advisor. The board of directors may remove or replace
the advisor, with or without cause, if they deem that action
appropriate or necessary.
Added by Acts 1993, 73rd Leg., ch. 733, Sec. 16, eff. Jan. 1, 1994.
Art. 1396-2.30. INTERESTED DIRECTORS. A. A contract or
transaction between a corporation and one or more of its directors,
officers, or members, or between a corporation and any other
corporation, partnership, association, or other organization in
which one or more of its directors, officers, or members are
directors, officers, or members, or have a financial interest, is
not void or voidable solely for that reason, solely because the
director, officer, or member is present at or participates in the
meeting of the board or committee of the board or of the members
that authorizes the contract or transaction, or solely because the
director's, officer's, or member's votes are counted for that
purpose, if:
(1) the material facts as to the relationship or interest and
as to the contract or transaction are disclosed or are known to the
board of directors, the committee, or the members, and the board,
committee, or members in good faith and with ordinary care
authorizes the contract or transaction by the affirmative vote of a
majority of the disinterested directors or members, even though the
disinterested directors or members are less than a quorum;
(2) the material facts as to the relationship or interest and
as to the contract or transaction are disclosed or are known to the
members entitled to vote on the contract or transaction, and the
contract or transaction is specifically approved in good faith and
with ordinary care by vote of the disinterested members; or
(3) the contract or transaction is fair to the corporation
when it is authorized, approved, or ratified by the board of
directors, a committee of the board, or the members.
B. Common or interested directors or members may be counted
in determining the presence of a quorum at a meeting of the board of
directors, of a committee, or of the members that authorizes the
contract or transaction.
Added by Acts 1993, 73rd Leg., ch. 733, Sec. 16, eff. Jan. 1, 1994.
Art. 1396-2.31. POWER TO SERVE AS TRUSTEE. A. A corporation
that is described by Section 501(c)(3) or 170(c), Internal Revenue
Code of 1986, or a corresponding provision of a subsequent federal
tax law, or a corporation listed by the Internal Revenue Service in
the Cumulative List of Organizations Described in Section 170(c) of
the Internal Revenue Code of 1986, I.R.S. Publication 78, may serve
as the trustee of a trust:
(1) of which the corporation is a beneficiary; or
(2) benefiting another organization described by one of those
sections of the Internal Revenue Code of 1986, or a corresponding
provision of a subsequent federal tax law, or listed by the Internal
Revenue Service in the Cumulative List of Organizations Described
in Section 170(c) of the Internal Revenue Code of 1986, I.R.S.
Publication 78.
B. Any corporation (or person or entity assisting such
corporation) described in this article shall have immunity from
suit (including both a defense to liability and the right not to
bear the cost, burden, and risk of discovery and trial) as to any
claim alleging that the corporation's role as trustee of a trust
described in this article constitutes engaging in the trust
business in a manner requiring a state charter as defined in Section
181.002(a)(9), Finance Code. An interlocutory appeal may be taken
if a court denies or otherwise fails to grant a motion for summary
judgment that is based on an assertion of the immunity provided in
this subsection.
Added by Acts 1995, 74th Leg., ch. 914, Sec. 21, eff. June 16, 1995.
Amended by Acts 1997, 75th Leg., ch. 769, Sec. 9, eff. June 17,
1997; Acts 1999, 76th Leg., ch. 344, Sec. 8.001, eff. May 29, 1999;
Acts 1999, 76th Leg., ch. 1073, Sec. 1, eff. June 18, 1999; Acts
2001, 77th Leg., ch. 1420, Sec. 6.030, eff. Sept. 1, 2001.
Art. 1396-3.01. INCORPORATORS. A. Any natural person of the
age of eighteen (18) years or more without regard to the person's
place of residence or domicile may act as an incorporator of a
corporation by signing the articles of incorporation for such
corporation and delivering the original and a copy of the articles
of incorporation to the Secretary of State.
B. Any religious society, charitable, benevolent, literary,
or social association, or church may incorporate under this Act
with the consent of a majority of its members, who shall authorize
the incorporators to execute the articles of incorporation.
Acts 1959, 56th Leg., p. 286, ch. 162, art. 3.01. Amended by Acts
1979, 66th Leg., p. 214, ch. 120, Sec. 3, eff. May 9, 1979; Acts
1987, 70th Leg., ch. 93, Sec. 37, eff. Aug. 31, 1987.
Art. 1396-3.02. ARTICLES OF INCORPORATION. A. The articles
of incorporation shall set forth:
(1) The name of the corporation.
(2) A statement that the corporation is a non-profit
corporation.
(3) The period of duration, which may be perpetual.
(4) The purpose or purposes for which the corporation is
organized.
(5) If the corporation is to have no members, a statement to
that effect.
(6) If management of the affairs of the corporation is to be
vested in its members, a statement to that effect.
(7) Any provision, not inconsistent with law, including any
provision which under this Act is required or permitted to be set
forth in the by-laws, which the incorporators elect to set forth in
the articles of incorporation for the regulation of the internal
affairs of the corporation.
(8) The street address of its initial registered office and
the name of its initial registered agent at such street address.
(9) The number of directors constituting the initial board of
directors, and the names and addresses of the persons who are to
serve as the initial directors unless the management of the
corporation is vested in its members, in which event a statement to
that effect shall be set forth.
(10) The name and street or post office address of each
incorporator.
(11) If the corporation is to be authorized on its
dissolution to distribute its assets in a manner other than as
provided by Article 6.02(3) of this Act, a statement describing the
manner of distribution of the corporation's assets.
B. Provided that charters or articles of incorporation of
corporations existing on the effective date of this Act which do not
contain one or more of the requirements listed in the foregoing
Section need not be amended for the purpose of meeting such
requirements. Any subsequent amendment or restatement of the
articles of incorporation of such corporation shall include such
requirements, except that it shall not be necessary, in such
amended or restated articles, to include the information required
in Subsections (8), (9), and (10) of Section A.
C. It shall not be necessary to set forth in the articles of
incorporation any of the corporate powers enumerated in this Act.
D. Unless the articles of incorporation provide that a change
in the number of directors shall be made only by amendment to the
articles of incorporation, a change in the number of directors made
by amendment to the by-laws shall be controlling. In all other
cases, whenever a provision of the articles of incorporation is
inconsistent with a by-law, the provision of the articles of
incorporation shall be controlling.
Acts 1959, 56th Leg., p. 286, ch. 162, art. 3.02. Amended by Acts
1965, 59th Leg., p. 1294, ch. 597, Sec. 1, eff. Aug. 30, 1965; Acts
1993, 73rd Leg., ch. 733, Sec. 17, eff. Jan. 1, 1994.
Art. 1396-3.03. FILING OF ARTICLES OF INCORPORATION. A. The
original and a copy of the articles of incorporation shall be
delivered to the Secretary of State. If the Secretary of State
finds that the articles of incorporation conform to law, he shall,
when all fees have been paid as required by law:
(1) Endorse on the original and the copy the word "Filed", and
the month, day, and year of the filing thereof.
(2) File the original in his office.
(3) Issue a certificate of incorporation to which he shall
affix the copy.
B. The certificate of incorporation, together with the copy
of the articles of incorporation affixed thereto by the Secretary
of State shall be delivered to the incorporators or their
representatives.
Acts 1959, 56th Leg., p. 286, ch. 162, art. 3.03. Amended by Acts
1979, 66th Leg., p. 214, ch. 120, Sec. 4, eff. May 9, 1979.
Art. 1396-3.04. EFFECT OF ISSUANCE OF CERTIFICATE OF
INCORPORATION. A. Upon the issuance of the certificate of
incorporation, the corporate existence shall begin, and such
certificate of incorporation shall be conclusive evidence that all
conditions precedent required to be performed by the incorporators
have been complied with, and that the corporation has been
incorporated under this Act, except as against the State in a
proceeding for involuntary dissolution.
Acts 1959, 56th Leg., p. 286, ch. 162, art. 3.04.
Art. 1396-3.05. ORGANIZATION MEETING. A. After the issuance
of the certificate of incorporation, an organization meeting of the
board of directors named in the articles of incorporation shall be
held, either within or without this State, at the call of the
incorporators or the call of a majority of the directors named in
the articles of incorporation, for the purpose of adopting by-laws,
electing officers, and for such other purposes as may come before
the meeting. The incorporators or directors calling the meeting
shall give at least three (3) days' notice thereof by mail to each
director named in the articles of incorporation, which notice shall
state the time and place of the meeting.
B. A first meeting of the members may be held at the call of
the directors, or a majority of them, upon at least three (3) days'
notice, for such purposes as shall be stated in the notice of the
meeting.
C. If the management of a corporation is vested in its
members, the organization meeting shall be held by the members upon
the call of any of the incorporators. The incorporators calling the
meeting shall (a) give at least three (3) days' notice by mail to
each member stating the time and place of the meeting, or shall (b)
make an oral announcement of the time and place of meeting at a
regularly scheduled worship service prior to such meeting if the
corporation is a church, or shall (c) give such notice of the
meeting as may be provided for in the articles of incorporation.
Acts 1959, 56th Leg., p. 286, ch. 162, art. 3.05. Amended by Acts
1993, 73rd Leg., ch. 733, Sec. 18, eff. Jan. 1, 1994.
Art. 1396-4.01. RIGHT TO AMEND ARTICLES OF INCORPORATION. A.
A corporation may amend its articles of incorporation from time to
time, in any and as many respects as may be desired, so long as its
articles of incorporation as amended contain only such provisions
as are lawful under this Act.
Acts 1959, 56th Leg., p. 286, ch. 162, art. 4.01.
Art. 1396-4.02. PROCEDURE TO AMEND ARTICLES OF
INCORPORATION. A. Amendments to the articles of incorporation may
be made in the following manner:
(1) Except as provided in Section A(4) of this article, where
there are members having voting rights, the board of directors
shall adopt a resolution setting forth the proposed amendment and
directing that it be submitted to a vote at a meeting of members
having voting rights, which may be either an annual or a special
meeting. Written or printed notice setting forth the proposed
amendment or a summary of the changes to be effected thereby shall
be given to each member entitled to vote at such meeting within the
time and in the manner provided in this Act for the giving of notice
of meetings of members. The proposed amendment shall be adopted
upon receiving at least two-thirds of the votes which members
present at such meeting in person or by proxy are entitled to cast,
unless any class of members is entitled to vote as a class thereon
by the terms of the articles of incorporation or of the by-laws, in
which event the proposed amendment shall not be adopted unless it
also receives at least two-thirds of the votes which the members of
each such class who are present at such meeting in person or by
proxy are entitled to cast.
(2) Where there are no members, no members having voting
rights, or in the case of an amendment under Section A(4) of this
article, an amendment shall be adopted at a meeting of the board of
directors upon receiving the vote of a majority of the directors in
office.
(3) Where the management of the affairs of the corporation is
vested in the members pursuant to Article 2.14C of this Act, the
proposed amendment shall be submitted to a vote at a meeting of
members which may be an annual, a regular, or a special meeting.
Except as otherwise provided in the articles of incorporation or
the by-laws, notice setting forth the proposed amendment or a
summary of the changes to be effected thereby shall be given to the
members within the time and in the manner provided in this Act for
the giving of notice of meetings of members. The proposed amendment
shall be adopted upon receiving at least two-thirds of the votes of
members present at such meeting.
(4) Unless the articles of incorporation provide otherwise,
the board of directors of a corporation with members having voting
rights may adopt one or more of the following amendments to the
articles of incorporation without member approval:
(a) extend the duration of the corporation if it was
incorporated when limited duration was required by law;
(b) delete the names and addresses of the initial directors;
(c) delete the name and address of the initial registered
agent or registered office, if a statement of change is on file with
the Secretary of State; or
(d) change the corporate name by substituting the word
"corporation," "incorporated," "company," "limited," or the
abbreviation "corp.," "inc.," "co.," "ltd.," for a similar word or
abbreviation in the name, or by adding, deleting, or changing a
geographical attribution to the name.
B. Any number of amendments may be submitted and voted upon at
any one meeting.
Acts 1959, 56th Leg., p. 286, ch. 162, art. 4.02. Amended by Acts
1993, 73rd Leg., ch. 733, Sec. 19, eff. Jan. 1, 1994.
Art. 1396-4.03. ARTICLES OF AMENDMENT. A. The articles of
amendment shall be signed on behalf of the corporation by an officer
and shall set forth:
(1) The name of the corporation.
(2) If the amendment alters any provision of the original or
amended articles of incorporation, an identification by reference
or description of the altered provision and a statement of its text
as it is amended to read. If the amendment is an addition to the
original or amended articles of incorporation, a statement of that
fact and the full text of each provision added.
(3) Where there are members having voting rights, (1) a
statement setting forth the date of the meeting of members at which
the amendment was adopted, that a quorum was present at such
meeting, and that such amendment received at least two-thirds of
the votes which members present at such meeting in person or by
proxy were entitled to cast, as well as, in the case of any class
entitled to vote as a class thereon by the terms of the articles of
incorporation or of the by-laws, at least two-thirds of the votes
which members of any such class who were present at such meeting in
person or by proxy were entitled to cast, or (2) a statement that
such amendment was adopted by a consent in writing signed by all
members entitled to vote with respect thereto.
(4) Where there are no members, or no members having voting
rights, a statement of such fact, the date of the meeting of the
board of directors at which the amendment was adopted, and a
statement of the fact that such amendment received the vote of a
majority of the directors in office.
Acts 1959, 56th Leg., p. 286, ch. 162, art. 4.03. Amended by Acts
1979, 66th Leg., p. 214, ch. 120, Sec. 5, eff. May 9, 1979; Acts
1987, 70th Leg., ch. 93, Sec. 38, eff. Aug. 31, 1987.
Art. 1396-4.04. FILING OF ARTICLES OF AMENDMENT. A. The
original and a copy of the articles of amendment shall be delivered
to the Secretary of State. If the Secretary of State finds that the
articles of amendment conform to law, he shall, when all fees have
been paid as in this Act prescribed:
(1) Endorse on the original and the copy the word "Filed", and
the month, day, and year of the filing thereof.
(2) File the original in his office.
(3) Issue a certificate of amendment to which he shall affix
the copy.
B. The certificate of amendment, together with the copy of
the articles of amendment affixed thereto by the Secretary of
State, shall be delivered to the corporation or its representative.
Acts 1959, 56th Leg., p. 286, ch. 162, art. 4.04. Amended by Acts
1979, 66th Leg., p. 215, ch. 120, Sec. 6, eff. May 9, 1979.
Art. 1396-4.05. EFFECT OF CERTIFICATE OF AMENDMENT. A. Upon
the issuance of the certificate of amendment by the Secretary of
State, the amendment shall become effective and the articles of
incorporation shall be deemed to be amended accordingly.
B. No amendment shall affect any existing cause of action in
favor of or against such corporation, or any pending suit to which
such corporation shall be a party, or the existing rights of persons
other than members; and, in the event the corporate name shall be
changed by amendment, no suit brought by or against such
corporation under its former name shall abate for that reason.
Acts 1959, 56th Leg., p. 286, ch. 162, art. 4.05.
Art. 1396-4.06. RESTATED ARTICLES OF INCORPORATION. A. A
corporation may, by following the procedure to amend the articles
of incorporation provided by this Act, authorize, execute and file
restated articles of incorporation, except that member approval, if
the corporation has members with voting rights, is not required if
no amendments are made. The restated articles of incorporation may
restate either:
(1) The entire text of the articles of incorporation as
amended or supplemented by all certificates of amendment previously
issued by the Secretary of State; or
(2) The entire text of the articles of incorporation as
amended or supplemented by all certificates of amendment previously
issued by the Secretary of State, and as further amended by such
restated articles of incorporation.
B. If the restated articles of incorporation restate the
entire articles of incorporation as amended and supplemented by all
certificates of amendment previously issued by the Secretary of
State, without making any further amendment thereof, the
introductory paragraph shall contain a statement that the
instrument accurately copies the articles of incorporation and all
amendments thereto that are in effect to date and that the
instrument contains no change in the provisions thereof, provided
that the number of directors then constituting the board of
directors and the names and addresses of the persons then serving as
directors may be inserted in lieu of similar information concerning
the initial board of directors, and the name and address of each
incorporator may be omitted; and provided further that, if the
management of a church is vested in its members pursuant to Article
2.14C of this Act and if, under that Article, original articles of
incorporation are not required to contain a statement to that
effect, any restatement of the articles of incorporation shall
contain a statement to that effect.
C. If the restated articles of incorporation restate the
entire articles of incorporation as amended and supplemented by all
certificates of amendment previously issued by the Secretary of
State, and as further amended by such restated articles of
incorporation, the instrument containing such articles shall:
(1) Set forth, for any amendment made by such restated
articles of incorporation, a statement that each such amendment has
been effected in conformity with the provisions of this Act, and
shall further set forth the statements required by this act to be
contained in articles of amendment, provided that the full text of
such amendments need not be set forth except in the restated
articles of incorporation as so amended.
(2) Contain a statement that the instrument accurately copies
the articles of incorporation and all amendments thereto that are
in effect to date and as further amended by such restated articles
of incorporation and that the instrument contains no other change
in any provision thereof; provided that the number of directors
then constituting the board of directors and the names and
addresses of the persons then serving as directors may be inserted
in lieu of similar information concerning the initial board of
directors, and the names and addresses of each incorporator may be
omitted; and provided further that, if the management of a church
is vested in its members pursuant to Article 2.14C of this Act, and
if, under that Article, original articles of incorporation are not
required to contain a statement to that effect, any restatement of
the articles of incorporation shall contain a statement to that
effect.
(3) Restate the text of the entire articles of incorporation
as amended and supplemented by all certificates of amendment
previously issued by the Secretary of State and as further amended
by the restated articles of incorporation.
D. Such restated articles of incorporation shall be signed on
behalf of the corporation by an officer. The original and a copy of
the restated articles of incorporation shall be delivered to the
Secretary of State. If the Secretary of State finds that the
restated articles of incorporation conform to law, he shall, when
the appropriate filing fee is paid as required by law:
(1) Endorse on the original and the copy the word "Filed", and
the month, day, and year of the filing thereof.
(2) File the original in his office.
(3) Issue a restated certificate of incorporation to which he
shall affix the copy.
E. The restated certificate of incorporation, together with
the copy of the restated articles of incorporation affixed thereto
by the Secretary of State, shall be delivered to the corporation or
its representative.
F. Upon the issuance of the restated certificate of
incorporation by the Secretary of State, the original articles of
incorporation and all amendments thereto shall be superseded and
the restated articles of incorporation shall be deemed to be
articles of incorporation of the corporation.
Acts 1959, 56th Leg., p. 286, ch. 162, art. 4.06. Amended by Acts
1979, 66th Leg., p. 215, ch. 120, Sec. 7, eff. May 9, 1979; Acts
1981, 67th Leg., p. 832, ch. 297, Sec. 2, eff. Aug. 31, 1981; Acts
1987, 70th Leg., ch. 93, Sec. 39, eff. Aug. 31, 1987; Acts 1993,
73rd Leg., ch. 733, Sec. 20, eff. Jan. 1, 1994.
Art. 1396-5.01. PROCEDURE FOR MERGER OF DOMESTIC
CORPORATIONS. A. Any two or more domestic corporations may merge
into one of such corporations pursuant to a plan of merger approved
in the manner provided in this Act.
B. Each corporation shall adopt a plan of merger setting
forth:
(1) The name of the corporation proposing to merge.
(2) The name of the corporation into which they propose to
merge, which is hereinafter designated as the surviving
corporation.
(3) The terms and conditions of the proposed merger.
(4) A statement of any changes in the articles of
incorporation of the surviving corporation to be affected by such
merger.
(5) Such other provisions with respect to the proposed merger
as are deemed necessary or desirable.
Acts 1959, 56th Leg., p. 286, ch. 162, art. 5.01.
Art. 1396-5.02. PROCEDURE FOR CONSOLIDATION OF DOMESTIC
CORPORATIONS. A. Any two or more domestic corporations may
consolidate into a new corporation pursuant to a plan of
consolidation approved in the manner provided in this Act.
B. Each corporation shall adopt a plan of consolidation
setting forth:
(1) The names of the corporations proposing to consolidate.
(2) The name of the new corporation into which they propose to
consolidate, which is hereinafter designated as the new
corporation.
(3) The terms and conditions of the proposed consolidation.
(4) With respect to the new corporation, all of the
statements required to be set forth in articles of incorporation
for corporations organized under this Act.
(5) Such other provisions with respect to the proposed
consolidation as are deemed necessary or desirable.
Acts 1959, 56th Leg., p. 286, ch. 162, art. 5.02.
Art. 1396-5.03. APPROVAL OF MERGER OR CONSOLIDATION OF
DOMESTIC CORPORATIONS. A. A plan of merger or consolidation of
domestic corporations shall be adopted in the following manner:
(1) Where the members of any merging or consolidating
corporation have voting rights, the board of directors of such
corporations shall adopt a resolution approving the proposed plan
and directing that it be submitted to a vote at the meeting of
members having voting rights, which may be either an annual or a
special meeting. Written or printed notice setting forth the
proposed plan or a summary thereof shall be given to each member
entitled to vote at such meeting within the time and in the manner
provided in this Act for the giving of notice of meetings of
members. The proposed plan shall be adopted upon receiving at least
two-thirds of the votes which members present at such meeting in
person or by proxy are entitled to cast, unless any class of members
is entitled to vote as a class thereon by the terms of the articles
of incorporation or of the by-laws, in which event as to such
corporations the proposed plan shall not be adopted unless it also
receives at least two-thirds of the votes which members of each such
class who are present at such meeting in person or by proxy are
entitled to cast.
(2) Where any merging or consolidating corporation has no
members, or no members having voting rights, a plan of merger or
consolidation shall be adopted at a meeting of the board of
directors of such corporation upon receiving the vote of a majority
of the directors in office.
(3) Where the management of the affairs of any merging or
consolidating corporation is vested in its members pursuant to
Article 2.14C of this Act, the proposed plan shall be submitted to a
vote at a meeting of the members, which may be an annual, a regular,
or a special meeting. Except as otherwise provided in the articles
of incorporation or the by-laws, notice setting forth the proposed
plan or a summary thereof shall be given to the members within the
time and in the manner provided in this Act for the giving of notice
of meetings of members. The proposed plan shall be adopted upon
receiving at least two-thirds of the votes of the members present at
such meeting.
B. After such approval, and at any time prior to the filing of
the articles of merger or consolidation, the merger or
consolidation may be abandoned pursuant to provisions therefor, if
any, set forth in the plan of merger or consolidation.
Acts 1959, 56th Leg., p. 286, ch. 162, art. 5.03.
Art. 1396-5.04. ARTICLES OF MERGER OR CONSOLIDATION OF
DOMESTIC CORPORATIONS. A. Upon such approval, articles of merger
or articles of consolidation shall be signed on behalf of each
corporation by one of its officers and shall set forth:
(1) The plan of merger or the plan of consolidation.
(2) Where the members of any merging or consolidating
corporation have voting rights, then as to each corporation (a) a
statement setting forth the date of the meeting of members at which
the plan was adopted, that a quorum was present at such meeting, and
that such plan received at least two-thirds of the votes which
members present at such meeting in person or by proxy were entitled
to cast, as well as, in the case of any class entitled to vote as a
class thereon by the terms of the articles of incorporation or of
the by-laws, at least two-thirds of the votes which members of any
such class who were present at such meeting in person or by proxy
were entitled to cast, or (b) a statement that such amendment was
adopted by a consent in writing signed by all members entitled to
vote with respect thereto.
(3) Where any merging or consolidating corporation has no
members, or no members having voting rights, then as to each such
corporation a statement of such fact, the date of the meeting of the
board of directors at which the plan was adopted and a statement of
the fact that such plan received the vote of a majority of the
directors in office.
B. The original and a copy of the articles of merger or
articles of consolidation shall be delivered to the Secretary of
State. If the Secretary of State finds that such articles conform
to law, he shall, when all fees have been paid as in this Act
prescribed:
(1) Endorse on the original and the copy the word "Filed," and
the month, day and year of the filing thereof.
(2) File the original in his office.
(3) Issue a certificate of merger or a certificate of
consolidation to which he shall affix the copy.
C. The certificate of merger or certificate of consolidation,
together with the copy of the articles of merger or articles of
consolidation affixed thereto by the Secretary of State, shall be
returned to the surviving or new corporation, as the case may be, or
its representative.
Acts 1959, 56th Leg., p. 286, ch. 162, art. 5.04. Amended by Acts
1979, 66th Leg., p. 216, ch. 120, Sec. 8, eff. May 9, 1979; Acts
1987, 70th Leg., ch. 93, Sec. 40, eff. Aug. 31, 1987.
Art. 1396-5.05. EFFECTIVE DATE OF MERGER OR CONSOLIDATION OF
DOMESTIC CORPORATIONS. A. Except as provided by Article 10.07 of
this Act, on the issuance of the certificate of merger or the
certificate of consolidation by the Secretary of State, the merger
or consolidation of domestic corporations shall be effected.
Acts 1959, 56th Leg., p. 286, ch. 162, art. 5.05. Amended by Acts
1993, 73rd Leg., ch. 733, Sec. 21, eff. Jan. 1, 1994.
Art. 1396-5.06. EFFECT OF MERGER OR CONSOLIDATION OF DOMESTIC
CORPORATIONS. A. When such merger or consolidation of domestic
corporations has been effected:
(1) The several corporations parties to the plan of merger or
consolidation shall be a single corporation, which, in the case of a
merger, shall be that corporation designated in the plan of merger
as the surviving corporation, and, in the case of consolidation,
shall be the new corporation provided for in the plan of
consolidation.
(2) The separate existence of all corporations parties to the
plan of merger or consolidation, except the surviving or new
corporation, shall cease.
(3) Such surviving or new corporation shall have all the
rights, privileges, immunities and powers and shall be subject to
all the duties and liabilities of a corporation organized under
this Act.
(4) Such surviving or new corporation shall thereupon and
thereafter possess all the rights, privileges, immunities and
franchises, as well of a public as of a private nature, of each of
the merging or consolidating corporations; and all property, real,
personal and mixed, and all debts due on whatever account, and all
other choses in action, and all and every other interest, of or
belonging to or due to each of the corporations so merged or
consolidated, shall be taken and deemed to be transferred to and
vested in such single corporation without further act or deed.
(5) Such surviving or new corporation shall thenceforth be
responsible and liable for all the liabilities and obligations of
each of the corporations so merged or consolidated; and any claim
existing or action or proceeding pending by or against any of such
corporations may be prosecuted as if such merger or consolidation
had not taken place, or such surviving or new corporation may be
substituted in its place. Neither the rights of creditors nor any
liens upon the property of any such corporations shall be impaired
by such merger or consolidation.
(6) In the case of a merger, the articles of incorporation of
the surviving corporation shall be deemed to be amended to the
extent, if any, that changes in its articles of incorporation are
stated in the plan of merger; and, in the case of a consolidation,
the statements set forth in the articles of consolidation and which
are required or are permitted to be set forth in the articles of
incorporation of corporations organized under this Act shall be
deemed to be the articles of incorporation of the new corporation.
Acts 1959, 56th Leg., p. 286, ch. 162, art. 5.06.
Art. 1396-5.07. MERGER OR CONSOLIDATION OF DOMESTIC AND
FOREIGN CORPORATIONS. A. One or more foreign corporations and one
or more domestic corporations may be merged or consolidated, if
such merger or consolidation is permitted by the laws of the State
under which each such foreign corporation is organized. In the case
of merger, the surviving corporation may be any one of the
constituent corporations and shall be deemed to continue to exist
under the laws of the state of its incorporation. In the case of
consolidation, the new corporation may be a corporation organized
under the laws of any state under which any of the constituent
corporations was organized.
B. Such merger or consolidation shall be carried out in the
following manner:
(1) Each domestic corporation shall comply with the
provisions of this Act with respect to merger or consolidation, as
the case may be, of domestic corporations, except that if the
surviving or new corporation is to be a foreign corporation, the
plan of merger or consolidation shall specify the state under whose
laws such surviving or new corporation is to be governed and the
post office address of the registered or principal office of such
surviving or new corporation in the state under whose laws it is to
be governed; provided, however, that no domestic corporation shall
be merged or consolidated with a foreign corporation unless and
until a resolution authorizing such merger or consolidation shall
receive, at a meeting of members of the domestic corporation,
called and conducted in the same manner as provided by Article 5.03
of this Act, at least two-thirds (2/3) of the votes which members
present at such meeting in person or by proxy are entitled to cast,
and provided further that if any class of members is entitled to
vote as a class thereon by the terms of the articles of
incorporation or of the by-laws, as to such corporation the
resolution shall not be adopted unless it shall also receive at
least two-thirds of the votes which members of each such class who
are present at such meeting in person or by proxy are entitled to
cast, and provided further that if such a domestic corporation has
no members, or no members having voting rights, the plan of merger
or consolidation shall be adopted at a meeting of the board of
directors of such corporation upon receiving the vote of a majority
of the directors in office.
(2) If the surviving or new corporation, as the case may be,
is a foreign corporation, it shall comply with the provisions of
this Act with respect to foreign corporations if it is to transact
business in this State, and in every case it shall file with the
Secretary of State of this State:
(a) An agreement that it may be served with process in this
State in any proceeding for the enforcement of any obligation of any
domestic corporation which was a party to such merger or
consolidation.
(b) An irrevocable appointment of the Secretary of State of
this State as its agent to accept service of process in any such
proceeding.
(3) Upon compliance by each domestic and foreign corporation
which is a party to the merger or consolidation with the provisions
of this Act with respect to merger or consolidation, and upon
issuance by the Secretary of State of this State of the certificate
of merger or the certificate of consolidation provided for in this
Act, the merger or consolidation shall be effected in this State.
C. The effect of such merger or consolidation shall be the
same as in the case of the merger or consolidation of domestic
corporations, if the surviving or new corporation is a domestic
corporation. If the surviving or new corporation is a foreign
corporation, the effect of such merger or consolidation shall be
the same as in the case of the merger or consolidation of domestic
corporations except in so far as the laws of such other state
provide otherwise.
Acts 1959, 56th Leg., p. 286, ch. 162, art. 5.07. Amended by Acts
1981, 67th Leg., p. 832, ch. 297, Sec. 3, eff. Aug. 31, 1981.
Art. 1396-5.08. CONVEYANCE BY CORPORATION. A. Any
corporation may convey land by deed, with or without the seal of the
corporation, signed by an officer or attorney in fact of the
corporation when authorized by appropriate resolution of the board
of directors or members. Such deed, when acknowledged by such
officer or attorney in fact to be the act of the corporation, or
proved in the manner prescribed for other conveyances of lands, may
be recorded in like manner and with the same effect as other deeds.
Any such deed when recorded, if signed by an officer of the
corporation, shall constitute prima facie evidence that such
resolution of the board of directors or members was duly adopted.
Acts 1959, 56th Leg., p. 286, ch. 162, art. 5.08. Amended by Acts
1993, 73rd Leg., ch. 733, Sec. 22, eff. Jan. 1, 1994.
Art. 1396-5.09. SALE, LEASE OR EXCHANGE OF ASSETS. A. A
sale, lease or exchange of all, or substantially all, the property
and assets of a corporation, may be made upon such terms and
conditions and for such consideration, which may consist in whole
or in part of money or property, real or personal, including shares
of any corporation for profit, domestic or foreign, as may be
authorized in the following manner:
(1) Where there are members having voting rights, the board
of directors shall adopt a resolution recommending such sale,
lease, or exchange, and directing the submission thereof to a vote
at a meeting of members having voting rights, which may be either an
annual or a special meeting. Written or printed notice stating that
the purpose, or one of the purposes, of such meeting is to consider
the sale, lease, or exchange of all, or substantially all, the
property and assets of the corporation shall be given to each member
entitled to vote at such meeting, within the time and in the manner
provided by this Act for the giving of notice of meetings of
members. At such meeting the members may authorize such sale,
lease, or exchange, and may fix, or may authorize the board of
directors to fix, any or all of the terms and conditions thereof and
the consideration to be received by the corporation therefor. Such
authorization shall require at least two-thirds (2/3) of the votes
which members present at such meeting in person or by proxy are
entitled to cast, unless any class of members is entitled to vote as
a class thereon by the terms of the articles of incorporation or of
the by-laws in which event such authorization shall also require at
least two-thirds (2/3) of the votes which members of each such class
who are present at such meeting in person or by proxy are entitled
to cast. After such authorization by vote of members, the board of
directors, nevertheless, in its discretion, may abandon such sale,
lease, or exchange of assets, subject to the rights of third parties
under any contracts relating thereto, without further action or
approval by members.
(2) Unless otherwise provided in the articles of
incorporation, where there are no members, or no members having
voting rights, a sale, lease, or exchange of all, or substantially
all, the property and assets of a corporation shall be authorized
upon receiving the vote of a majority of the directors in office.
(3) Where the management of the affairs of a corporation
vested in its members pursuant to Article 2.14C of this Act, a
resolution authorizing such sale, lease, or exchange shall be
submitted to a vote at a meeting of the members, which may be an
annual, a regular, or a special meeting. Except as otherwise
provided in the articles of incorporation or the by-laws, notice
stating that the purpose or one of the purposes of such meeting is
to consider the sale, lease, or exchange of all, or substantially
all, the property and assets of the corporation shall be given to
the members, within the time and in the manner provided by this Act
for the giving of notice of meetings of members. At such meeting,
the members may authorize such sale, lease, or exchange, and may
fix, or authorize one or more of its members to fix, any or all of
the terms and conditions thereof and the consideration to be
received by the corporation therefor. Such authorization shall
require at least two-thirds of the votes of the members present at
such meeting.
(4) Except as otherwise provided in the articles of
incorporation, the board of directors may authorize any pledge,
mortgage, deed of trust, or trust indenture and no authorization or
consent of members shall be required for the validity thereof or for
any sale pursuant to the terms thereof; provided that where the
management of the affairs of the corporation is vested in its
members pursuant to Article 2.14C of this Act, the members may
authorize any pledge, mortgage, deed of trust, or trust indenture
in the same manner as provided in Subsection (3) of this Section,
and no authorization by the board of directors shall be required for
the validity thereof or for any sale pursuant to the terms thereof.
(5) Notwithstanding the provisions of Subsection (1) of this
Section, when the corporation is insolvent, a sale, lease, or
exchange of all, or substantially all, the property and assets of a
corporation shall be authorized upon receiving the vote of a
majority of the directors in office.
Acts 1959, 56th Leg., p. 286, ch. 162, art. 5.09.
Art. 1396-6.01. VOLUNTARY DISSOLUTION. A. A corporation may
dissolve and wind up its affairs in the following manner:
(1) Where there are members having voting rights, the board
of directors shall adopt a resolution recommending that the
corporation be dissolved, and directing that the question of such
dissolution be submitted to a vote at a meeting of members having
voting rights, which may be either an annual or a special meeting.
Written or printed notice stating that the purpose, or one of the
purposes, of such meeting is to consider the advisability of
dissolving the corporation, shall be given to each member entitled
to vote at such meeting, within the time and in the manner provided
in this Act for the giving of notice of meetings of members. A
resolution to dissolve the corporation shall be adopted upon
receiving at least two-thirds of the votes which members present at
such meeting in person or by proxy are entitled to cast, unless any
class of members is entitled to vote as a class thereon by the terms
of the articles of incorporation or of the by-laws, in which event
the resolution shall not be adopted unless it also receives at least
two-thirds of the votes which members of each such class who are
present at such meeting in person or by proxy are entitled to cast.
(2) Where there are no members, or no members having voting
rights, the dissolution of the corporation shall be authorized at a
meeting of the board of directors upon the adoption of a resolution
to dissolve by the vote of a majority of the directors in office.
(3) Where the management of the affairs of the corporation is
vested in the members pursuant to Article 2.14C of this Act, a
resolution that the corporation be dissolved shall be submitted to
a vote at a meeting of members, which may be an annual, a regular, or
a special meeting. Except as otherwise provided in the articles of
incorporation or the by-laws, notice stating that the purpose or
one of the purposes of such meeting is to consider the advisability
of dissolving the corporation shall be given to the members, within
the time and in the manner provided in this Act for the giving of
notice of meetings of members. A resolution to dissolve the
corporation shall be adopted upon receiving at least two-thirds of
the votes of members present at such meeting.
B. Upon the adoption of such resolution by the members, or by
the board of directors where there are no members or no members
having voting rights, the corporation shall cease to conduct its
affairs except in so far as may be necessary for the winding up
thereof, shall immediately cause a notice of the proposed
dissolution to be mailed to each known creditor of and claimant
against the corporation, and shall proceed to collect its assets
and apply and distribute them as provided in this Act.
Acts 1959, 56th Leg., p. 286, ch. 162, art. 6.01.
Art. 1396-6.02. APPLICATION AND DISTRIBUTION OF ASSETS. A.
The assets of a corporation in the process of dissolution shall be
applied and distributed as follows:
(1) All liabilities and obligations of the corporation shall
be paid, satisfied and discharged; in case its property and assets
are not sufficient to satisfy or discharge all the corporation's
liabilities and obligations, the corporation shall apply them so
far as they will go to the just and equitable payment of the
liabilities and obligations.
(2) Assets held by the corporation upon condition requiring
return, transfer or conveyance, which condition occurs by reason of
the dissolution, shall be returned, transferred or conveyed in
accordance with such requirements.
(3) Unless provided otherwise by a provision of the
corporation's articles of incorporation, the remaining assets of
the corporation shall be distributed only for tax exempt purposes
to one or more organizations which are exempt under Section
501(c)(3), Internal Revenue Code of 1986 (26 U.S.C. Section
501(c)(3)), or its successor statute, or which are described in
Section 170(c)(1) or (2), Internal Revenue Code of 1986 (26 U.S.C.
Section 170(c)(1) or (2)), or its successor statute, pursuant to a
plan of distribution adopted as provided in this Act. A district
court of the county in which the corporation's principal office is
located shall distribute to one or more organizations exempt under
Section 501(c)(3) or described in Section 170(c)(1) or (2), or
their successor statutes, the remaining assets of the corporation
not distributed under the plan of distribution. Any distribution
by the court shall be made in such manner as, in the judgment of the
court, will best accomplish the general purposes for which the
corporation was organized.
Acts 1959, 56th Leg., p. 286, ch. 162, art. 6.02. Amended by Acts
1985, 69th Leg., ch. 682, Sec. 1, eff. Sept. 1, 1985; Acts 1993,
73rd Leg., ch. 733, Sec. 23, eff. Jan. 1, 1994.
Art. 1396-6.03. PLAN OF DISTRIBUTION. A. A plan providing
for the distribution of assets, not inconsistent with the
provisions of this Act, may be adopted by a corporation in the
process of dissolution and shall be adopted by a corporation for the
purpose of authorizing any transfer or conveyance of assets for
which this Act requires a plan of distribution, in the following
manner:
(1) Where there are members having voting rights, the board
of directors shall adopt a resolution recommending a plan of
distribution and directing the submission thereof to a vote at a
meeting of members having voting rights, which may be either an
annual or a special meeting. Written or printed notice setting
forth the proposed plan of distribution or a summary thereof shall
be given to each member entitled to vote at such meeting, within the
time and in the manner provided in this Act for the giving of notice
of meetings of members. Such plan of distribution shall be adopted
upon receiving at least two-thirds (2/3) of the votes which members
present at such meeting in person or by proxy are entitled to cast,
unless any class of members is entitled to vote as a class thereon
by the terms of the articles of incorporation or of the by-laws, in
which event the proposed plan shall not be adopted unless it also
receives at least two-thirds of the votes which members of each such
class who are present at such meeting in person or by proxy are
entitled to cast.
(2) Where there are no members, or no members having voting
rights, a plan of distribution shall be adopted at a meeting of the
board of directors upon receiving the vote of a majority of the
directors in office.
(3) Where the management of the affairs of the corporation is
vested in its members pursuant to Article 2.14C of this Act, a
proposed plan of distribution shall be submitted to a vote at a
meeting of the members, which may be an annual, a regular, or a
special meeting. Except as otherwise provided in the articles of
incorporation or the by-laws, notice setting forth the proposed
plan of distribution or a summary thereof shall be given to the
members within the time and in the manner provided in this Act for
the giving of notice of meetings of members. Such plan of
distribution shall be adopted upon receiving at least two-thirds of
the votes of the members present at such meeting.
Acts 1959, 56th Leg., p. 286, ch. 162, art. 6.03.
Art. 1396-6.04. REVOCATION OF VOLUNTARY DISSOLUTION
PROCEEDINGS. A. A corporation may, at any time prior to the
issuance of a certificate of dissolution by the Secretary of State,
revoke the action theretofore taken to dissolve the corporation, in
the following manner:
(1) Where there are members having voting rights, the board
of directors shall adopt a resolution recommending that the
voluntary dissolution proceedings be revoked, and directing that
the question of such revocation be submitted to a vote at a meeting
of members having voting rights, which may be either an annual or a
special meeting. Written or printed notice stating that the
purpose, or one of the purposes, of such meeting is to consider the
advisability of revoking the voluntary dissolution proceedings,
shall be given to each member entitled to vote at such meeting,
within the time and in the manner provided in this Act for the
giving of notice of meetings of members. A resolution to revoke the
voluntary dissolution proceedings shall be adopted upon receiving
at least two-thirds (2/3) of the votes which members present at such
meeting in person or by proxy are entitled to cast, unless any class
of members is entitled to vote as a class thereon by the terms of the
articles of incorporation or of the by-laws, in which event the
proposed resolution shall not be adopted unless it also receives at
least two-thirds (2/3) of the votes which members of each such class
who are present at such meeting in person or by proxy are entitled
to cast.
(2) Where there are no members, or no members having voting
rights, a resolution to revoke the voluntary dissolution
proceedings shall be adopted at a meeting of the board of directors
upon receiving the vote of a majority of the directors in office.
(3) Where the management of the affairs of the corporation is
vested in its members pursuant to Article 2.14C of this Act, a
resolution that the voluntary dissolution proceedings be revoked
shall be submitted to a vote at a meeting of the members, which may
be an annual, a regular, or a special meeting. Except as otherwise
provided in the articles of incorporation or the by-laws, notice
stating that the purpose, or one of the purposes, of such meeting is
to consider the advisability of revoking the voluntary dissolution
proceedings shall be given to the members, within the time and in
the manner provided in this Act for the giving of notice of meetings
of members. A resolution to revoke the voluntary dissolution
proceedings shall be adopted upon receiving at least two-thirds
(2/3) of the votes of the members present at such meeting.
B. Upon the adoption of such resolution by the members, or by
the board of directors where there are no members or no members
having voting rights, the corporation may thereupon again conduct
its affairs.
Acts 1959, 56th Leg., p. 286, ch. 162, art. 6.04.
Art. 1396-6.05. ARTICLE OF DISSOLUTION. A. If voluntary
dissolution proceedings have not been revoked, then when all debts,
liabilities and obligations of the corporation have been paid and
discharged, or adequate provision has been made therefor, or, in
case its property and assets are not sufficient to satisfy and
discharge all the corporation's liabilities and obligations, then
when all the property and assets have been applied so far as they
will go to the just and equitable payment of the corporation's
liabilities and obligations, and all of the remaining property and
assets of the corporation have been transferred, conveyed or
distributed in accordance with the provisions of this Act, articles
of dissolution shall be signed on behalf of the corporation by an
officer and shall set forth:
(1) The name of the corporation.
(2) Where there are members having voting rights, (a) a
statement setting forth the date of the meeting of members at which
the resolution to dissolve was adopted, that a quorum was present at
such meeting, and that such resolution received at least two-thirds
(2/3) of the votes which members present at such meeting in person
or by proxy were entitled to cast, as well as, in the case of any
class entitled to vote as a class thereon by the terms of the
articles of incorporation or of the by-laws, at least two-thirds
(2/3) of the votes which members of any such class who were present
at such meeting in person or by proxy were entitled to cast, or (b) a
statement that such resolution was adopted by a consent in writing
signed by all members entitled to vote with respect thereto.
(3) Where there are no members, or no members having voting
rights, a statement of such fact, the date of the meeting of the
board of directors at which the resolution to dissolve was adopted
and a statement of the fact that such resolution received the vote
of a majority of the directors in office.
(4) That all debts, obligations, and liabilities of the
corporation have been paid and discharged or that adequate
provision has been made therefor, or, in case the corporation's
property and assets were not sufficient to satisfy and discharge
all its liabilities and obligations, that all the property and
assets have been applied so far as they would go to the payment
thereof in a just and equitable manner and that no property or
assets remained available for distribution among its members.
(5) That all the remaining property and assets of the
corporation have been transferred, conveyed or distributed in
accordance with the provisions of this Act; provided, however,
that if assets were received and held by the corporation subject to
limitations permitting their use only for charitable, religious,
eleemosynary, benevolent, educational or similar purposes, but not
held upon a condition requiring return, transfer or conveyance by
reason of the dissolution, there shall also be set forth a statement
that a plan of distribution has been adopted as provided in this Act
for the distribution of such assets, and a statement that
distribution has been effected in accordance with such plan.
(6) That there are no suits pending against the corporation
in any court, or that adequate provision has been made for the
satisfaction of any judgment, order or decree which may be entered
against it in any pending suit.
Acts 1959, 56th Leg., p. 286, ch. 162, art. 6.05. Amended by Acts
1979, 66th Leg., p. 216, ch. 120, Sec. 9, eff. May 9, 1979; Acts
1987, 70th Leg., ch. 93, Sec. 41, eff. Aug. 31, 1987; Subsec. A
amended by Acts 2001, 77th Leg., ch. 757, Sec. 8, eff. Sept. 1,
2001.
Art. 1396-6.06. FILING OF ARTICLES OF DISSOLUTION. A. The
original and a copy of such articles of dissolution shall be
delivered to the Secretary of State. If the Secretary of State
finds that such articles of dissolution conform to law, he shall,
when all fees have been paid as in this Act prescribed:
(1) Endorse on the original and the copy the word "Filed," and
the month, day and year of the filing thereof.
(2) File the original in his office.
(3) Issue a certificate of dissolution to which he shall
affix the copy.
B. The certificate of dissolution, together with the copy of
the articles of dissolution affixed thereto by the Secretary of
State, shall be returned to the representative of the dissolved
corporation. Upon the issuance of such certificate of dissolution
the existence of the corporation shall cease, except for the
purpose of suits, other proceedings and appropriate corporate
action by members, directors and officers as provided in this Act.
Acts 1959, 56th Leg., p. 286, ch. 162, art. 6.06. Amended by Acts
1979, 66th Leg., p. 217, ch. 120, Sec. 10, eff. May 9, 1979.
Art. 1396-6.07. FRAUDULENT TERMINATION. A. Notwithstanding
any other provision of this Act, a court may order the revocation of
dissolution of a corporation that was dissolved as a result of
actual or constructive fraud. In an action under this article, any
limitation period provided by law is tolled in accordance with the
discovery rule.
B. The secretary of state shall take any action necessary to
implement an order under this article.
Added by Acts 2003, 78th Leg., ch. 238, Sec. 43, eff. Sept. 1, 2003.
Art. 1396-7.01. INVOLUNTARY DISSOLUTION; REINSTATEMENT. A.
A corporation may be dissolved involuntarily by a decree of the
district court of the county in which the registered office of the
corporation is situated or of any district court in Travis County in
an action filed by the Attorney General when it is established that
it is in default in any of the following particulars:
(1) The corporation or its incorporators have failed to
comply with a condition precedent to incorporation; or
(2) The original articles of incorporation or any amendments
thereof were procured through fraud; or
(3) The corporation has continued to transact business beyond
the scope of the purpose or purposes of the corporation as expressed
in its articles of incorporation; or
(4) A misrepresentation has been made of any material matter
in any application, report, affidavit, or other document submitted
by such corporation pursuant to this Act.
B. A corporation may be dissolved involuntarily by order of
the Secretary of State when it is established that it is in default
in any of the following particulars:
(1) The corporation has failed to file any report within the
time required by law, or has failed to pay any fees, franchise taxes
or penalties prescribed by law when the same have become due and
payable;
(2) The corporation has failed to maintain a registered agent
in this state as required by law; or
(3) The corporation has failed to pay the filing fee for its
articles of incorporation, or the fee was paid by an instrument that
was dishonored when presented by the state for payment.
C. (1) No corporation shall be involuntarily dissolved under
Subsection (1) or (2) of Section B hereof unless the Secretary of
State, or other state agency with which such report, fees, taxes or
penalties is required to be made, gives the corporation not less
than 90 days notice of its neglect, delinquency, or omission by
certified mail addressed to its registered office or to its
principal place of business, or to the last known address of one of
its officers or directors, or to any other known place of business
of said corporation, and the corporation has failed prior to such
involuntary dissolution to correct the neglect, omission or
delinquency.
(2) When a corporation is involuntarily dissolved under
Subsection (3) of Section B of this article, the Secretary of State
shall give the corporation notice of the dissolution by regular
mail addressed to its registered office, its principal place of
business, the last known address of one of its officers or
directors, or any other known place of business of the corporation.
D. Whenever a corporation has given cause for involuntary
dissolution and has failed to correct the neglect, omission or
delinquency as provided in Sections B and C, the Secretary of State
shall thereupon dissolve the corporation by issuing a certificate
of involuntary dissolution, which shall include the fact of such
involuntary dissolution and the date and cause thereof. The
original of such certificate shall be placed in his office and a
copy thereof mailed to the corporation at its registered office, or
to its principal place of business, or to the last known address of
one of its officers or directors, or to any other known place of
business of said corporation. Upon the issuance of such
certificate of involuntary dissolution, the existence of the
corporation shall cease, except for purposes otherwise provided by
law.
E. Any corporation dissolved by the Secretary of State under
the provisions of Section B of this article may be reinstated by the
Secretary of State at any time within a period of 36 months from the
date of such dissolution, upon approval of an application for
reinstatement signed by an officer or director of the dissolved
corporation. Such application shall be filed by the Secretary of
State whenever it is established to his satisfaction that in fact
there was no cause for the dissolution, or whenever the neglect,
omission or delinquency resulting in dissolution has been corrected
and payment made of all fees, taxes, penalties and interest due
thereon which accrued before the dissolution plus an amount equal
to the total taxes from the date of dissolution to the date of
reinstatement which would have been payable had the corporation not
been dissolved. A reinstatement filing fee of $25.00 shall
accompany the application for reinstatement.
Reinstatement shall not be authorized if the corporate name
is the same as or deceptively similar to a corporate name already on
file or reserved or registered, unless the corporation being
reinstated contemporaneously amends the articles of incorporation
to change its name.
When the application for reinstatement is approved and filed
by the Secretary of State, the corporate existence shall be deemed
to have continued without interruption from the date of dissolution
except the reinstatement shall have no effect upon any issue of
personal liability of the directors, officers, or agents of the
corporation during the period between dissolution and
reinstatement.
F. When a corporation is convicted of a felony, or when a high
managerial agent is convicted of a felony in the conduct of the
affairs of the corporation, the Attorney General may file an action
to involuntarily dissolve the corporation in a district court of
the county in which the registered office of the corporation is
situated or in a district court of Travis County. The court may
dissolve the corporation involuntarily if it is established that:
(1) The corporation, or a high managerial agent acting in
behalf of the corporation, has engaged in a persistent course of
felonious conduct; and
(2) To prevent future felonious conduct of the same
character, the public interest requires such dissolution.
G. Article 7.02 of this Act does not apply to Section F of
this article.
Acts 1959, 56th Leg., p. 286, ch. 162, art. 7.01. Amended by Acts
1965, 59th Leg., p. 533, ch. 276, Sec. 1, 2, eff. Aug. 30, 1965;
Acts 1969, 61st Leg., p. 2477, ch. 834, Sec. 3, eff. June 18, 1969;
Acts 1973, 63rd Leg., p. 990, ch. 399, Sec. 2(M), eff. Jan. 1, 1974;
Acts 1981, 67th Leg., p. 833, ch. 297, Sec. 4, eff. Aug. 31, 1981;
Acts 2001, 77th Leg., ch. 757, Sec. 9, eff. Sept. 1, 2001.
Art. 1396-7.02. NOTIFICATION TO ATTORNEY GENERAL, NOTICE TO
CORPORATION AND OPPORTUNITY TO CURE DEFAULT. A. The Secretary of
State shall certify to the Attorney General, from time to time, the
names of all corporations which have given cause for judicial
dissolution of their charters or revocation of their certificates
of authority as provided in this Act, together with the facts
pertinent thereto. Every such certificate from the Secretary of
State to the Attorney General shall be taken and received in all
courts as prima facie evidence of the facts therein stated.
B. Whenever the Secretary of State shall certify the name of
any such corporation to the Attorney General as having given any
cause for dissolution or revocation of its certificate of
authority, the Secretary of State shall concurrently mail to such
corporation at its registered office in this State a notice that
such certification has been made and the grounds therefor. A record
of the date of mailing such notice shall be kept in the office of the
Secretary of State, and a certificate by the Secretary of State that
such notice was mailed as indicated by such record shall be taken
and received in all courts as prima facie evidence of the facts
therein stated.
C. If at the expiration of thirty (30) days after the date of
such mailing the corporation has not cured the defaults so
certified by the Secretary of State, the Attorney General may then
file an action in the name of the State against such corporation for
its dissolution or revocation of its certificate of authority, as
the case may be.
D. If, after any such action is filed but before judgment is
pronounced in the district court, the corporation against whom such
action has been filed shall cure its default and pay the costs of
such action, the action shall abate.
E. If, after the issues made in any such action have been
heard by the court trying same and it is found that the corporate
defendant has been guilty of any default of such nature as to
justify its dissolution or revocation of its certificate of
authority as provided in this Act, the court shall without
rendering or entering any judgment for a period of five (5) days
pending the filing of an action upon a sworn application for stay of
judgment as hereinafter provided, promptly pronounce its findings
to such effect. If the corporation has proved by a preponderance of
the evidence that the defaults of which the corporation has been
found guilty were neither willful nor the result of failure to take
reasonable precautions and has procured a finding to such effect it
may promptly make sworn application to the court for a stay of entry
of judgment in order to allow the corporation reasonable
opportunity to cure the defaults of which it has been found guilty.
If the court is reasonably satisfied on the basis of the
corporation's sworn application and any evidence heard in support
of or opposed to the application that the corporation is able and
intends in good faith to cure the defaults of which it has been
found guilty and that such stay is not applied for without just
cause, the court shall grant such application and stay entry of
judgment for such time as in the discretion of the court is
reasonably necessary to afford the corporation opportunity to cure
such defaults if it acts with reasonable diligence, but in no event
shall such stay be for more than sixty (60) days after the date of
the pronouncement of the court's findings. If during such period of
time as shall be allowed by the court the corporation shall cure its
defaults and pay the costs of such action, the court shall then
enter judgment dismissing the action. If the corporation does not
satisfy the court that it has cured its default within said period
of time, the court shall enter final judgment at the expiration
thereof.
F. If the corporation does not make application for stay of
such judgment but does appeal therefrom and the trial court's
judgment is affirmed and if the appellate court is satisfied that
the appeal was taken in good faith and not for purpose of delay or
with no sufficient cause and further finds that the defaults of
which the corporation has been adjudged guilty are capable of being
cured, it shall, if the appealing corporation has so prayed, remand
the case to the trial court with instructions to grant the
corporation opportunity to cure such defaults, such cure to be
accomplished within such time after issuance of the mandate as the
appellate court shall determine but in no event more than sixty (60)
days thereafter. If during such period of time as shall have been
so allowed the corporation shall cure such defaults and pay all
costs accrued in such action, the trial court shall then enter
judgment dismissing such action. If the corporation does not
satisfy the trial court that it has cured its defaults within such
period of time, the judgment shall thereupon become final.
Acts 1959, 56th Leg., p. 286, ch. 162, art. 7.02. Amended by Acts
1965, 59th Leg., p. 533, ch. 276, Sec. 3, eff. Aug. 30, 1965; Acts
1969, 61st Leg., p. 2477, ch. 834, Sec. 4, eff. June 18, 1969.
Art. 1396-7.03. VENUE AND PROCESS. A. Every action for the
involuntary dissolution of a domestic corporation or revocation of
the certificate of authority of a foreign corporation shall be
commenced by the Attorney General either in the district court of
the county in which the registered office of the corporation in this
State is situated, or in any district court of Travis County.
Citation shall issue and be served as provided by law. If process
is returned not found, the Attorney General shall cause publication
to be made as in other civil cases in some newspaper published in
the county where the registered office of the corporation in this
State is situated, containing a notice of the pendency of such
action, the title of the court, the title of the action, and the
date on or after which default judgment may be entered. The
Attorney General may include in one notice the name of any number of
such corporations against which such actions are then pending in
the same court. The Attorney General shall cause a copy of such
notice to be mailed to the corporation at its registered office in
this State within ten days after the first publication thereof. The
certificate of the Attorney General of the mailing of such notice
shall be prima facie evidence thereof. Such notice shall be
published at least once a week for two consecutive weeks, and the
first publication thereof may begin at any time after the citation
has been returned. Unless a corporation shall have been served with
citation, no default judgment shall be taken against it earlier
than thirty days after the first publication of such notice.
Acts 1959, 56th Leg., p. 286, ch. 162, art. 7.03.
Art. 1396-7.04. APPOINTMENT OF RECEIVER FOR SPECIFIC
CORPORATE ASSETS. A. A receiver may be appointed by any court
having jurisdiction of the subject matter for specific corporate
assets located within the State, whether owned by a domestic or a
foreign corporation, which are involved in litigation, whenever
circumstances exist deemed by the court to require the appointment
of a receiver to conserve such assets and to avoid damage to parties
at interest, but only if all other requirements of law are complied
with and if other remedies available either at law or in equity are
determined by the court to be inadequate and only in the following
instances:
(1) In an action by a vendor to vacate a fraudulent purchase
of property; or by a creditor to subject any property or fund to his
claim; or between partners or others jointly owning or interested
in any property or fund, on the application of the plaintiff or any
party whose right to or interest in the property or fund or the
proceeds thereof is probable, and where it is shown that the
property or fund is in danger of being lost, removed, or materially
injured.
(2) In an action by a mortgagee for the foreclosure of his
mortgage and sale of the mortgaged property, when it appears that
the mortgaged property is in danger of being lost, removed, or
materially injured, or that the condition to the mortgage has not
been performed and that the property is probably insufficient to
discharge the mortgage debt.
(3) In any other actions where receivers for specific assets
have heretofore been appointed by the usage of the court of equity.
B. The court appointing such receiver shall have and retain
exclusive jurisdiction over the specific assets placed in
receivership and shall determine the rights of the parties in these
assets or their proceeds.
Acts 1959, 56th Leg., p. 286, ch. 162, art. 7.04.
Art. 1396-7.05. APPOINTMENT OF RECEIVER TO REHABILITATE
CORPORATION. A. A receiver may be appointed for the assets and
business of a corporation by the district court for the county in
which the registered office of the corporation is located, whenever
circumstances exist deemed by the court to require the appointment
of a receiver to conserve the assets and affairs of the corporation
and to avoid damage to parties at interest, but only if all other
requirements of law are complied with and if all other remedies
available either at law or in equity, including the appointment of a
receiver for specific assets of the corporation, are determined by
the court to be inadequate, and only in the following instances:
(1) In an action by a member when it is established:
(a) That the corporation is insolvent or in imminent danger
of insolvency; or
(b) That the directors are deadlocked in the management of
the corporate affairs and the members are unable to break the
deadlock, and that irreparable injury to the corporation is being
suffered or is threatened by reason thereof; or
(c) That the acts of the directors or those in control of the
corporation are illegal, oppressive or fraudulent; or
(d) That the corporate assets are being misapplied or wasted.
(2) In an action by a creditor when it is established:
(a) That the corporation is insolvent and the claim of the
creditor has been reduced to judgment and an execution thereon
returned unsatisfied; or
(b) That the corporation is insolvent and the corporation has
admitted in writing that the claim of the creditor is due and owing.
(3) In any other actions where receivers have heretofore been
appointed by the usages of the court of equity.
B. In the event that the condition of the corporation
necessitating such an appointment of a receiver is remedied, the
receivership shall be terminated forthwith and the management of
the corporation shall be restored to the directors and officers,
the receiver being directed to redeliver to the corporation all its
remaining properties and assets.
Acts 1959, 56th Leg., p. 286, ch. 162, art. 7.05.
Art. 1396-7.06. JURISDICTION OF COURT TO LIQUIDATE ASSETS AND
AFFAIRS OF CORPORATION AND RECEIVERSHIPS THEREFOR. A. The district
court for the county in which the registered office of a corporation
is located may order the liquidation of the assets and affairs of
the corporation and may appoint a receiver to effect such
liquidation, whenever circumstances demand liquidation in order to
avoid damage to parties at interest, but only if all other
requirements of law are complied with and if all other remedies
available either at law or in equity, including the appointment of a
receiver of specific assets of the corporation and appointment of a
receiver to rehabilitate the corporation, are determined by the
court to be inadequate and only in the following instances:
(1) When an action has been filed by the Attorney General, as
provided in this Act, to dissolve a corporation and it is
established that liquidation of its affairs should precede the
entry of a decree of dissolution.
(2) Upon application by a corporation to have its liquidation
continued under the supervision of the court.
(3) If the corporation is in receivership and no plan for
remedying the condition of the corporation requiring appointment of
the receiver, which the court finds to be feasible, has been
presented within twelve (12) months after the appointment of the
receiver.
(4) Upon application of any creditor if it is established
that irreparable damage will ensue to the unsecured creditors of
the corporation, generally, as a class, unless there be an
immediate liquidation of the assets of the corporation.
(5) Upon application by a member or director when it is made
to appear that the corporation is unable to carry out its purposes.
B. The assets of the corporation or the proceeds resulting
from a sale, conveyance, or other disposition thereof shall be
applied and distributed as follows:
(1) All costs and expenses of the court proceedings and all
liabilities and obligations of the corporation shall be paid,
satisfied and discharged, or adequate provision shall be made
therefor;
(2) Assets held by the corporation upon condition requiring
return, transfer or conveyance, which condition occurs by reason of
the dissolution or liquidation, shall be returned, transferred or
conveyed in accordance with such requirements;
(3) Unless provided otherwise by a provision of the
corporation's articles of incorporation that refers to this
subsection, the remaining assets of the corporation shall be
distributed only for tax exempt purposes to one or more
organizations which are exempt under Section 501(c)(3), Internal
Revenue Code of 1954 (26 U.S.C. Section 501(c)(3)), or its
successor statute, or which are described in Section 170(c)(1) or
(2), Internal Revenue Code of 1954 (26 U.S.C. Section 170(c)(1) or
(2)), or its successor statute. The distribution by the court shall
be made in such manner as, in the judgment of the court, will best
accomplish the general purposes for which the corporation was
organized.
C. In the event the condition of the corporation
necessitating the appointment of a receiver is remedied, the
receivership shall be terminated forthwith and the management of
the corporation shall be restored to the directors and the
officers, the receiver being directed to re-deliver to the
corporation all its remaining properties and assets.
Acts 1959, 56th Leg., p. 286, ch. 162, art. 7.06. Amended by Acts
1985, 69th Leg., ch. 682, Sec. 2, eff. Sept. 1, 1985.
Art. 1396-7.07. QUALIFICATION, POWERS, AND DUTIES OF
RECEIVERS; OTHER PROVISIONS RELATING TO RECEIVERSHIPS. A. No
receiver shall be appointed for any corporation in which this Act
applies or for any of its assets or for its business except as
provided for and on the conditions set forth in this Act. A
receiver shall in all cases be a citizen of the United States or a
corporation authorized to act as receiver, which corporation may be
a domestic corporation or a foreign corporation authorized to
transact business in this State, and shall in all cases give such
bond as the court may direct with such sureties as the court may
require.
B. A receiver appointed by authority of this Act shall have
authority to sue and be sued in all courts in his own name and shall
have those powers and duties provided by laws of general
applicability relating to receivers and in addition thereto may be
accorded such other powers and duties as the court shall deem
appropriate to accomplish the objectives for which the receiver was
appointed. Such additional and unusual powers and duties shall be
stated in the order appointing the receiver and may be increased or
diminished at any time during the proceedings.
C. In proceedings involving any receivership of the assets or
business of a corporation, the court may require all creditors of
the corporation to file with the clerk of the court or with the
receiver, in such form as the court may prescribe, proofs of their
respective claims under oath. If the court requires the filing of
claims, it shall fix a date as the last day for the filing thereof,
which shall be not less than four months from the date of the order,
and shall prescribe the notice that shall be given to creditors and
claimants of the date so fixed. Prior to the date so fixed, the
court may extend the time for the filing of claims. Creditors and
claimants failing to file proofs of claim on or before the date
fixed therefor may be barred, by order of court (unless presenting
to the court a justifiable excuse for delay in the filing), from
participating in the distribution of the assets of the corporation
but no discharge shall be decreed or effected.
D. The court shall have power from time to time to make
allowances to the receiver or receivers and to attorneys in the
proceeding, and to direct the payment thereof out of the assets of
the corporation within the scope of the receivership or the
proceeds of any sale or disposition of such assets.
E. A court authorized to appoint a receiver for a corporation
to which this Act applies, and no other court in this State, shall
be authorized to appoint a receiver for the corporation or its
assets and business; when such a court does appoint a receiver, as
authorized by this Act, for the corporation or its assets and
business, that court shall have exclusive jurisdiction of the
corporation and all its properties, wherever situated.
F. Notwithstanding any provision of this Article or in this
Act to the contrary, the district court for the county in which the
registered office of any foreign corporation doing business in this
State is located shall have jurisdiction to appoint an ancillary
receiver for the assets and business of such corporation, to serve
ancillary to the receiver for the assets and business of the
corporation acting under orders of a court having jurisdiction to
appoint such a receiver for the corporation, located in any other
state, whenever circumstances exist deemed by the court to require
the appointment of such ancillary receiver. Moreover, such
district court, whenever circumstances exist deemed by it to
require the appointment of a receiver for all the assets in and out
of this State, and the business of a foreign corporation doing
business in this State, in accordance with the ordinary usages of
equity, may appoint such a receiver for all its assets in and out of
this State, and its business, even though no receiver has been
appointed elsewhere; such receivership shall be converted into an
ancillary receivership when deemed appropriate by such district
court in the light of orders entered by a court of competent
jurisdiction in some other state, providing for a receivership of
all assets and business of such corporation.
Acts 1959, 56th Leg., p. 286, ch. 162, art. 7.07.
Art. 1396-7.08. DIRECTORS AND MEMBERS NOT NECESSARY PARTIES
DEFENDANT TO RECEIVERSHIP OR LIQUIDATION PROCEEDINGS. A. It shall
not be necessary to make directors or members parties to any action
or proceeding for involuntary dissolution, receivership or
liquidation of the assets and business of a corporation unless
relief is sought against them personally.
Acts 1959, 56th Leg., p. 286, ch. 162, art. 7.08.
Art. 1396-7.09. DECREE OF INVOLUNTARY DISSOLUTION. A. In
proceedings to liquidate the assets and affairs of a corporation,
when the costs and expenses of such proceedings and all debts,
obligations, and liabilities of the corporation shall have been
paid and discharged, or adequate provision has been made for the
discharge, and all of its remaining property and assets distributed
in accordance with the provisions of this Act, or in case its
property and assets are not sufficient to satisfy and discharge
such costs, expenses, debts, and obligations, when all the property
and assets have been applied so far as they will go to their
payment, the court shall enter a decree dissolving the corporation,
whereupon the corporation shall cease to exist.
Acts 1959, 56th Leg., p. 286, ch. 162, art. 7.09. Amended by Acts
1993, 73rd Leg., ch. 733, Sec. 24, eff. Jan. 1, 1994.
Art. 1396-7.10. FILING OF DECREE OF DISSOLUTION. A. In any
case in which the court shall enter a decree dissolving a
corporation it shall be the duty of the clerk of such court to cause
a certified copy of the decree to be filed with the Secretary of
State. No fee shall be charged by the Secretary of State for the
filing thereof.
Acts 1959, 56th Leg., p. 286, ch. 162, art. 7.10.
Art. 1396-7.11. DEPOSIT WITH COMPTROLLER OF AMOUNT DUE
CERTAIN PERSONS. A. Upon the voluntary or involuntary dissolution
of a corporation, the portion of the assets distributable to a
creditor or member or other person who is unknown or cannot be found
after the exercise of reasonable diligence by the person or persons
responsible for the distribution in liquidation of the
corporation's assets shall be reduced to cash and deposited with
the Comptroller, together with a statement giving the name of the
person, if known, entitled to such fund, his last known address, the
amount of his distributive portion, and such other information
about such person as the Comptroller may reasonably require,
whereupon the person or persons responsible for the distribution in
liquidation of the corporation's assets shall be released and
discharged from any further liability with respect to the funds so
deposited. The Comptroller shall issue his receipt for such fund
and shall deposit same in a special account to be maintained by him.
B. On receipt of satisfactory written proof of ownership or
of right to such fund within seven (7) years from the date such fund
was so deposited, the Comptroller of Public Accounts shall issue
proper warrant therefor drawn on the State Treasury in favor of the
person or persons then entitled thereto. If no claimant has made
satisfactory proof of rights to such fund within seven (7) years
from the time of such deposit the Comptroller shall then cause to be
published in one issue of a newspaper of general circulation in
Travis County, Texas, a notice of the proposed escheat of such fund,
giving the name of the creditor, member, or other person apparently
entitled thereto, his last known address, if any, the amount of the
fund so deposited, and the name of the dissolved corporation from
whose assets such fund was derived. If no claimant makes
satisfactory proof of right to such fund within two months from the
time of such publication, the fund so unclaimed shall thereupon
automatically escheat to and become the property of the General
Revenue Fund of the State of Texas.
Acts 1959, 56th Leg., p. 286, ch. 162, art. 7.11. Amended by Acts
1993, 73rd Leg., ch. 733, Sec. 25, eff. Jan. 1, 1994; Acts 1997,
75th Leg., ch. 1423, Sec. 21.39, eff. Sept. 1, 1997.
Art. 1396-7.12. LIMITED SURVIVAL AFTER DISSOLUTION. A. A
dissolved corporation shall continue its corporate existence for a
period of three (3) years from the date of dissolution, for the
following purposes:
(1) prosecuting or defending in its corporate name any action
or proceeding by or against the corporation;
(2) permitting the survival of any remedy not otherwise
barred by limitations available to or against the corporation, its
officers, directors, members, or creditors, for any right or claim
existing, or any liability incurred, before the dissolution;
(3) holding title to and liquidating any assets or property
that remain in the corporation at the time of, or are collected by
the corporation after, its dissolution, and applying or
distributing those assets or properties, or the proceeds thereof,
as provided in Subsection (3) of Section A of Article 6.04 of this
Act; and
(4) settling any other affairs not completed before its
dissolution.
However, such a dissolved corporation may not continue its
corporate existence for the purpose of continuing the business or
affairs for which the dissolved corporation was organized, except
in the case of a corporation whose period of duration has expired
and that has chosen to revive its existence as provided in this Act
or a corporation that has been dissolved by the Secretary of State
pursuant to Section B of Article 7.01 of this Act and that has been
reinstated pursuant to Section E of Article 7.01 of this Act.
B. During the three-year period, the members of the board of
directors of a dissolved corporation serving at the time of
dissolution or the majority of them then living, however reduced in
number, or their successors selected by them, shall continue to
manage the affairs of the dissolved corporation for the limited
purpose or purposes specified in this Article, and shall have the
powers necessary to accomplish those purposes, including the power
to prosecute, pay, compromise, defend, and satisfy any action,
claim, demand, or judgment by or against the dissolved corporation,
and to administer, sell, and distribute in final liquidation any
property or assets still remaining. In the exercise of those
powers, the directors shall have the same duties to the dissolved
corporation that they had immediately prior to the dissolution of
the corporation and shall be liable to the dissolved corporation
for actions taken by them after the dissolution to the same extent
that they would have been liable had those actions been taken by
them prior to the dissolution. Additional directors may be elected
for purposes of this section in accordance with the procedures
provided in the bylaws in effect before the dissolution.
C. A corporation is not liable for any claim other than an
existing claim. An existing claim by or against a dissolved
corporation is extinguished unless an action or proceeding on the
existing claim is brought before the third anniversary of the date
of dissolution. If an action or proceeding on an existing claim by
or against a dissolved corporation is brought within the period
provided by this section and the existing claim is not extinguished
under this article, the dissolved corporation continues to survive:
(1) for purposes of that action or proceeding until all
judgments, orders, and decrees in that action or proceeding have
been fully executed; and
(2) for purposes of applying or distributing any properties
or assets of the dissolved corporation as provided in Article 6.02
of this Act, until the properties or assets are applied or
distributed.
D. A dissolved corporation may give written notice to a
person having or asserting an existing claim against the dissolved
corporation to present the existing claim to the dissolved
corporation in accordance with the notice. The notice must be sent
by registered or certified mail, return receipt requested, to the
person having or asserting the existing claim at the person's last
known address, and must:
(1) state that the person's claim against the dissolved
corporation must be presented in writing to the dissolved
corporation on or before the date stated in the notice, which shall
be not earlier than 120 days after the date the notice is sent to the
person;
(2) state that the written presentation of the claim must
describe the claim in sufficient detail to reasonably inform the
dissolved corporation of the identity of the person and to the
nature and amount of the claim;
(3) state a mailing address where the written presentation of
the person's claim against the dissolved corporation is to be sent
and state that if the written presentation of the claim is not
received at that address on or before the date stated in the notice,
the claim will be extinguished; and
(4) be accompanied by a copy of this section.
E. If a written presentation of a person's claim against the
dissolved corporation that meets the requirements of Section D of
this article has been received at the address of the dissolved
corporation stated in the notice on or before the date stated in the
notice, the dissolved corporation may give written notice to that
person that the claim is rejected by the dissolved corporation. The
notice of rejection must be sent by registered or certified mail,
return receipt requested, addressed to the person at the person's
last known address, and must state:
(1) that the claim is rejected by the dissolved corporation;
(2) that the claim will be extinguished unless an action or
proceeding on the claim is brought within 180 days after the date
the notice of rejection was sent to the person and before the third
anniversary of the date of dissolution; and
(3) the date the notice of rejection was sent and the date of
dissolution.
F. A person's claim against a dissolved corporation is
extinguished if:
(1) a written presentation of that claim meeting the
requirements of this article is not received at the address of the
dissolved corporation stated in the notice to the person on or
before the date stated in the notice; or
(2) an action or proceeding on the claim is not brought within
180 days after the date a notice of rejection was sent to the person
and before the third anniversary of the date of dissolution.
G. A dissolved corporation that was dissolved by the
expiration of the period of its duration may, during the three-year
period following the date of dissolution, amend its articles of
incorporation by following the procedure prescribed in this Act to
extend or perpetuate its period of existence. That expiration
shall not of itself create any vested right on the part of any
member or creditor to prevent such an action. No act or contract of
a dissolved corporation during a period within which it could have
extended its existence as permitted by this Article, whether or not
it has taken action so to extend its existence, shall be in any
degree invalidated by the expiration of its period of duration.
H. In this article:
(1) "Dissolved corporation" means a corporation that was
dissolved:
(a) by the issuance of a certificate of dissolution or other
action by the Secretary of State;
(b) by a decree of a court when the court has not liquidated
all the assets and affairs of the corporation as provided in this
Act; or
(c) by expiration of its period of duration if the
corporation has not revived its existence as provided in this Act.
(2) "Claim" means a right to payment, damages, or property,
whether liquidated or unliquidated, accrued or contingent, matured
or unmatured.
(3) "Existing claim" means a claim that existed before
dissolution and is not otherwise barred by limitations or a
contractual obligation incurred after dissolution.
Acts 1959, 56th Leg., p. 286, ch. 162, art. 7.12. Amended by Acts
1967, 60th Leg., p. 1824, ch. 704, Sec. 1, eff. Aug. 28, 1967; Acts
1987, 70th Leg., ch. 93, Sec. 42, eff. Aug. 31, 1987; Acts 1989,
71st Leg., ch. 801, Sec. 47, eff. Aug. 28, 1989; Acts 1993, 73rd
Leg., ch. 733, Sec. 26, eff. Jan. 1, 1994.
Art. 1396-8.01. ADMISSION OF FOREIGN CORPORATIONS. A. No
foreign corporation shall have the right to conduct affairs in this
State until it shall have procured a certificate of authority so to
do from the Secretary of State. No foreign corporation shall be
entitled to procure a certificate of authority under this Act to
conduct in this State any affairs which a corporation organized
under the laws of this State is not permitted to conduct. A foreign
corporation shall not be denied a certificate of authority by
reason of the fact that the laws of the state or country under which
such corporation is organized governing its organization and
internal affairs differ from the laws of this State, and nothing in
this Act contained shall be construed to authorize this State to
regulate the organization of such corporation, or its internal
affairs not intrastate in Texas.
B. Without excluding other activities which may not
constitute conducting affairs in this State, a foreign corporation
shall not be considered to be conducting affairs in this State, for
the purposes of this Act, by reason of carrying on in this State any
one (1) or more of the following activities:
(1) Maintaining or defending any action or suit or any
administration or arbitration proceedings, or affecting the
settlement thereof or the settlement of claims or disputes to which
it is a party.
(2) Holding meetings of its directors or members or carrying
on other activities concerning its internal affairs.
(3) Maintaining bank accounts.
(4) Maintaining offices or agencies for the transfer,
exchange, and registration of securities issued by it, or
appointing and maintaining trustees or depositaries with relation
to its securities.
(5) Voting the stock of any corporation which it has lawfully
acquired.
(6) Effecting sales through independent contractors.
(7) Creating as borrower or lender, or acquiring,
indebtedness or mortgages or other security interests in real or
personal property.
(8) Securing or collecting debts due to it or enforcing any
rights in property securing the same.
(9) Conducting any affairs in interstate commerce.
(10) Conducting an isolated transaction completed within a
period of thirty (30) days and not in the course of a number of
repeated transactions of like nature.
(11) Exercising the powers of executor or administrator of
the estate of a non-resident decedent under ancillary letters
issued by a court of this State, or exercising the powers of a
trustee under the will of a non-resident decedent, or under a trust
created by a person, corporation or association, non-resident of
this State, if the exercise of such powers in such case will not
involve activities which would be deemed to constitute the
transacting of business in this State in the case of a foreign
corporation acting in its own right.
(12) Acquiring, in transactions outside Texas, or in
interstate commerce, of debts secured by mortgages or liens on real
or personal property in Texas, collecting or adjusting of principal
and interest payments thereon, enforcing or adjusting any rights
and property securing said debts, taking any actions necessary to
preserve and protect the interest of the mortgagee in said
security, or any combinations of such transactions.
(13) Investing in or acquiring, in transactions outside of
Texas, royalties and other non-operating mineral interests, and the
execution of division orders, contracts of sale and other
instruments incidental to the ownership of such non-operating
mineral interests.
Acts 1959, 56th Leg., p. 286, ch. 162, art. 8.01. Amended by Acts
1993, 73rd Leg., ch. 733, Sec. 27, eff. Jan. 1, 1994.
Art. 1396-8.02. POWERS OF FOREIGN CORPORATIONS. A. A foreign
corporation which shall have received a certificate of authority
under this Act, shall, until its certificate of authority shall
have been revoked in accordance with the provisions of this Act or
until a certificate of withdrawal shall have been issued by the
Secretary of State as provided in this Act, enjoy the same, but no
greater, rights and privileges as a domestic corporation organized
for the purposes set forth in the application pursuant to which such
certificate of authority is issued; and, as to all matters
affecting the conduct of intrastate affairs in this State, it and
its officers and directors shall be subject to the same duties,
restrictions, penalties, and liabilities now or hereafter imposed
upon a domestic corporation of like character and its officers and
directors; provided, however, that the laws of the jurisdiction of
incorporation of a foreign corporation shall govern (1) the
internal affairs of the foreign corporation, including but not
limited to the rights, powers, and duties of its board of directors
and members and matters relating to its membership, and (2) the
liability, if any, of members of the foreign corporation for the
debts, liabilities, and obligations of the foreign corporation for
which they are not otherwise liable by statute or agreement.
Acts 1959, 56th Leg., p. 286, ch. 162, art. 8.02. Amended by Acts
1989, 71st Leg., ch. 801, Sec. 48, eff. Aug. 28, 1989.
Art. 1396-8.03. CORPORATE NAME OF FOREIGN CORPORATION.
Text of section effective until April 1, 2009
A. No certificate of authority shall be issued to a foreign
corporation if the corporate name of such corporation:
(1) Contains any word or phrase which indicates or implies
that it is organized for any purpose other than one or more of the
purposes contained in its articles of incorporation.
(2) Is the same as, or deceptively similar to, the name of any
corporation, whether for profit or not for profit, existing under
any Act of this State, or any foreign corporation, whether for
profit or not for profit, authorized to transact business or
conduct affairs in this State, or a corporate name reserved or
registered as permitted by the laws of this State; provided that a
name may be similar if written consent is obtained from the existing
corporation having the name deemed to be similar or the person, or
corporation for whom the name deemed to be similar is reserved or
registered in the office of the Secretary of State. A certificate
of authority shall be issued as provided by this Act to any foreign
corporation having a name the same as, deceptively similar to, or,
if no consent is given, similar to the name of any domestic
corporation existing under the laws of this State or of any foreign
corporation authorized to transact business or conduct affairs in
this State, or a name the exclusive right to which is, at the time,
reserved or registered in accordance with this Act, provided the
foreign corporation qualifies and does business under a name that
meets the requirements of this article. The foreign corporation
shall set forth in the application for a certificate of authority
the name under which it is qualifying and shall file an assumed name
certificate in accordance with Chapter 36, Business & Commerce
Code, as amended.
Text of section effective on April 1, 2009
A. No certificate of authority shall be issued to a foreign
corporation if the corporate name of such corporation:
(1) Contains any word or phrase which indicates or
implies that it is organized for any purpose other than one or more
of the purposes contained in its articles of incorporation.
(2) Is the same as, or deceptively similar to, the name
of any corporation, whether for profit or not for profit, existing
under any Act of this State, or any foreign corporation, whether for
profit or not for profit, authorized to transact business or
conduct affairs in this State, or a corporate name reserved or
registered as permitted by the laws of this State; provided that a
name may be similar if written consent is obtained from the existing
corporation having the name deemed to be similar or the person, or
corporation for whom the name deemed to be similar is reserved or
registered in the office of the Secretary of State. A certificate
of authority shall be issued as provided by this Act to any foreign
corporation having a name the same as, deceptively similar to, or,
if no consent is given, similar to the name of any domestic
corporation existing under the laws of this State or of any foreign
corporation authorized to transact business or conduct affairs in
this State, or a name the exclusive right to which is, at the time,
reserved or registered in accordance with this Act, provided the
foreign corporation qualifies and does business under a name that
meets the requirements of this article. The foreign corporation
shall set forth in the application for a certificate of authority
the name under which it is qualifying and shall file an assumed name
certificate in accordance with Chapter 71, Business & Commerce
Code.
B. When a foreign non-profit corporation that is authorized
to conduct affairs in this State changes its name to one under which
a certificate of authority would not be granted to it on application
for a certificate, the certificate of authority of the corporation
is suspended, and after the suspension the corporation may not
conduct any affairs in this State until it has changed its name to a
name that is available to it under the laws of this State or until it
has otherwise complied with this Act.
Acts 1959, 56th Leg., p. 286, ch. 162, art. 8.03. Amended by Acts
1981, 67th Leg., p. 834, ch. 297, Sec. 5, eff. Aug. 31, 1981.
Amended by:
Acts 2007, 80th Leg., R.S., Ch. 885, Sec. 2.45, eff. April 1,
2009.
Art. 1396-8.04. APPLICATION FOR CERTIFICATE OF AUTHORITY.
A. A foreign corporation, in order to procure a certificate of
authority to conduct affairs in this State, shall make application
therefor to the Secretary of State, which application shall set
forth:
(1) The name of the corporation and the state or country under
the laws of which it is incorporated and, if the corporation is
required to qualify under a name other than its corporate name, the
name under which the corporation is to be qualified.
(2) A statement that the corporation is a non-profit
corporation.
(3) The date of incorporation and the period of duration of
the corporation.
(4) The street address of the principal office of the
corporation in the state or country under the laws of which it is
incorporated.
(5) The street address of the proposed registered office of
the corporation in this State, and the name of its proposed
registered agent in this State at such address.
(6) The purpose or purposes of the corporation which it
proposes to pursue in conducting its affairs in this State.
(7) The names and respective addresses of the directors and
officers of the corporation.
(8) A statement of whether or not the corporation has
members.
(9) Such additional information as may be necessary or
appropriate in order to enable the Secretary of State to determine
whether such corporation is entitled to a certificate of authority
to conduct affairs in this State.
B. Such application shall be made on forms promulgated by the
Secretary of State and shall be signed on behalf of the corporation
by an officer.
Acts 1959, 56th Leg., p. 286, ch. 162, art. 8.04. Amended by Acts
1979, 66th Leg., p. 218, ch. 120, Sec. 11, eff. May 9, 1979; Acts
1981, 67th Leg., p. 835, ch. 297, Sec. 6, eff. Aug. 31, 1981; Acts
1987, 70th Leg., ch. 93, Sec. 43, eff. Aug. 31, 1987; Acts 1993,
73rd Leg., ch. 733, Sec. 28, eff. Jan. 1, 1994.
Art. 1396-8.05. FILING OF APPLICATION FOR CERTIFICATE OF
AUTHORITY. A. The original and a copy of the application of the
corporation for a certificate of authority shall be delivered to
the Secretary of State, together with a certificate issued by an
authorized officer of the jurisdiction of its incorporation
evidencing its corporate existence. If the certificate is in a
language other than English, a translation of the certificate,
under oath of the translator, must be attached to the certificate.
The certificate must be dated after the 91st day preceding the date
on which the application is filed. If the Secretary of State finds
that such application conforms to law, he shall, when all fees have
been paid as in this Act prescribed:
(1) Endorse on each of such documents the word "Filed," and
the month, day and year of the filing thereof.
(2) File in his office the original application and the
certificate evidencing corporate existence.
(3) Issue a certificate of authority to conduct affairs in
this State to which he shall affix the copy of the application.
B. The certificate of authority, together with the copy of
the application affixed thereto by the Secretary of State, shall be
delivered to the corporation or its representative.
Acts 1959, 56th Leg., p. 286, ch. 162, art. 8.05. Amended by Acts
1979, 66th Leg., p. 218, ch. 120, Sec. 12, eff. May 9, 1979; Acts
1981, 67th Leg., p. 835, ch. 297, Sec. 7, eff. Aug. 31, 1981.
Art. 1396-8.06. EFFECT OF CERTIFICATE OF AUTHORITY. A. Upon
the issuance of a certificate of authority by the Secretary of
State, the corporation shall be authorized to conduct affairs in
this State for those purposes set forth in its application and the
certificate shall be conclusive evidence of the right of the
corporation to conduct affairs in this State for that purpose,
except as against this State in a proceeding to revoke the
certificate.
Acts 1959, 56th Leg., p. 286, ch. 162, art. 8.06. Amended by Acts
1993, 73rd Leg., ch. 733, Sec. 29, eff. Jan. 1, 1994.
Art. 1396-8.07. REGISTERED OFFICE AND REGISTERED AGENT OF
FOREIGN CORPORATION. A. Each foreign corporation authorized to
conduct affairs in this State shall have and continuously maintain
in this State:
(1) A registered office which may be, but need not be, the
same as its principal office.
(2) A registered agent, which agent may be either an
individual resident in this State whose business office is
identical with such registered office, or a domestic corporation,
whether for profit or not for profit, or a foreign corporation
whether for profit or not for profit, authorized to transact
business or conduct affairs in this State, having an office
identical with such registered office.
Acts 1959, 56th Leg., p. 286, ch. 162, art. 8.07.
Art. 1396-8.08. CHANGE OF REGISTERED OFFICE OR REGISTERED
AGENT OF FOREIGN CORPORATION. A. A foreign corporation authorized
to conduct affairs in this state may change its registered office or
change its registered agent, or both, upon filing in the office of
the Secretary of State a statement setting forth:
(1) The name of the corporation.
(2) The street address of its then registered office.
(3) If the street address of its registered office is to be
changed, the street address to which the registered office is to be
changed.
(4) The name of its then registered agent.
(5) If its registered agent is to be changed, the name of its
successor registered agent.
(6) That the street address of its registered office and the
post-office address of the business office of its registered agent,
as changed, will be identical.
(7) That such change was authorized by its Board of Directors
or by an officer of the corporation so authorized by the Board of
Directors, or if the management of the corporation is vested in its
members pursuant to Article 2.14C of this Act, by the members.
B. Such statement shall be signed on behalf of the
corporation by an officer. The original and a copy of such
statement shall be delivered to the Secretary of State. If the
Secretary of State finds that such statement conforms to the
provisions of this Act, he shall, when all fees have been paid as
required by law:
(1) Endorse on the original and the copy the word "Filed," and
the month, day and year of the filing thereof.
(2) File the original in his office.
(3) Return the copy to the corporation or its representative.
C. Upon the filing of such statement by the Secretary of
State, the change of address of the registered office, or the
appointment of a new registered agent, or both, as the case may be,
shall become effective.
D. Any registered agent of a corporation may resign
(1) by giving written notice to the corporation at its last
known address
(2) and by giving written notice, in triplicate (the original
and two copies of the notice), to the Secretary of State within ten
days after mailing or delivery of said notice to the corporation.
Such notice shall include the last known address of the corporation
and shall include the statement that written notice of resignation
has been given to the corporation and the date thereof.
Upon compliance with the requirements as to written notice,
the appointment of such agent shall terminate upon the expiration
of thirty (30) days after receipt of such notice by the Secretary of
State.
If the Secretary of State finds that such written notice
conforms to the provisions of this Act, he shall:
(1) Endorse on the original and both copies the word "filed"
and the month, day and year of the filing thereof.
(2) File the original in his office.
(3) Return one copy to such resigning registered agent.
(4) Return one copy to the corporation at the last known
address of the corporation as shown in such written notice.
Acts 1959, 56th Leg., p. 286, ch. 162, art. 8.08. Amended by Acts
1969, 61st Leg., p. 2477, ch. 834, Sec. 5, 6, eff. June 18, 1969;
Acts 1979, 66th Leg., p. 218, ch. 120, Sec. 13, eff. May 9, 1979;
Acts 1987, 70th Leg., ch. 93, Sec. 44, eff. Aug. 31, 1987; Acts
1993, 73rd Leg., ch. 733, Sec. 30, eff. Jan. 1, 1994.
Art. 1396-8.09. SERVICE OF PROCESS ON FOREIGN CORPORATION.
A. The president and all vice-presidents of a foreign corporation
authorized to conduct affairs in this State and the registered
agent so appointed by a foreign corporation shall be agents of such
corporation upon whom any process, notice, or demand required or
permitted by law to be served upon the corporation may be served.
Where the chief executive function is performed by a committee,
service may be had on any member thereof.
B. Whenever a foreign corporation authorized to conduct
affairs in this State shall fail to appoint or maintain a registered
agent in this State, or whenever any such registered agent cannot
with reasonable diligence be found at the registered office, or
whenever the certificate of authority of a foreign corporation
shall be revoked, then the Secretary of State shall be an agent of
such corporation upon whom any such process, notice, or demand may
be served. Service on the Secretary of State of any such process,
notice, or demand shall be made by delivering to and leaving with
him, or with the Deputy Secretary of State, or with any clerk having
charge of the corporation department of his office, duplicate
copies of such process, notice, or demand. In the event any such
process, notice or demand is served on the Secretary of State, he
shall immediately cause one of such copies thereof to be forwarded
by registered mail, addressed to the corporation at its principal
office in the state or country under the laws of which it is
incorporated. Any service so had on the Secretary of State shall
be returnable in not less than thirty (30) days.
C. The Secretary of State shall keep a record of all
processes, notices and demands served upon him under this Article,
and shall record therein the time of such service and his action
with reference thereto.
D. Provisions of Article 2031A of Revised Civil Statutes of
Texas as amended shall not apply to any corporation to which this
Act applies.
Acts 1959, 56th Leg., p. 286, ch. 162, art. 8.09.
Amended by:
Acts 2005, 79th Leg., Ch. 41, Sec. 6, eff. September 1, 2005.
Art. 1396-8.12. AMENDED CERTIFICATE OF AUTHORITY. A. If a
foreign corporation authorized to conduct affairs in this State
changes its corporate name or desires to pursue in this State
purposes other than or in addition to the purposes authorized by its
existing certificate of authority, the corporation shall file with
the Secretary of State an application for amended certificate of
authority setting forth the change.
B. A foreign corporation may change any other statement on
its original application for certificate of authority or any
amendment to that certificate by filing with the Secretary of State
an application for an amended certificate of authority setting
forth the change.
C. An application for an amended certificate of authority
submitted because of a name change must be accompanied by a
certificate from the proper filing officer in the jurisdiction of
incorporation evidencing the name change.
D. The requirements in respect to the form and contents of
such application, the manner of its execution, the filing of the
original and a copy of the application with the Secretary of State,
the issuance of an amended certificate of authority and the effect
thereof, shall be the same as in the case of an original application
for a certificate of authority.
Acts 1959, 56th Leg., p. 286, ch. 162, art. 8.12. Amended by Acts
1979, 66th Leg., p. 219, ch. 120, Sec. 14, eff. May 9, 1979; Acts
1981, 67th Leg., p. 835, ch. 297, Sec. 8, eff. Aug. 31, 1981; Acts
1993, 73rd Leg., ch. 733, Sec. 31, eff. Jan. 1, 1994.
Art. 1396-8.13. WITHDRAWAL OR TERMINATION OF FOREIGN
CORPORATION. A. A foreign corporation authorized to conduct
affairs in this State may withdraw from this State upon procuring
from the Secretary of State a certificate of withdrawal. In order
to procure such certificate of withdrawal, such foreign corporation
shall deliver to the Secretary of State an application for
withdrawal, which shall set forth:
(1) The name of the corporation and the state or country under
the laws of which it is incorporated.
(2) That the corporation is not conducting affairs in this
State.
(3) That the corporation surrenders its authority to conduct
affairs in this State.
(4) That the corporation revokes the authority of its
registered agent in this State to accept service of process and
consents that service of process in any action, suit or proceeding
based upon any cause of action arising in this State during the time
the corporation was authorized to conduct affairs in this State may
thereafter be made on such corporation by service thereof on the
Secretary of State.
(5) A street or post office address to which the Secretary of
State may mail a copy of any process against the corporation that
may be served on him.
(6) A statement that all sums due, or accrued, to this State
have been paid, or that adequate provision has been made for the
payment thereof.
(7) A statement that all known creditors or claimants have
been paid or provided for and that the corporation is not involved
in or threatened with litigation in any court in this State, or that
adequate provision has been made for the satisfaction of any
judgment, order or decree which may be entered against it in any
pending suits.
B. The application for withdrawal shall be made on forms
promulgated by the Secretary of State and shall be signed on behalf
of the corporation by an officer, or, if the corporation is in the
hands of a receiver or trustee, it shall be signed on behalf of the
corporation by such receiver or trustee.
C. When the existence of a foreign corporation terminates
because of dissolution, merger, or any other reason, a certificate
from the proper officer in the jurisdiction of the corporation's
incorporation evidencing the termination shall be filed with the
Secretary of State.
Acts 1959, 56th Leg., p. 286, ch. 162, art. 8.13. Amended by Acts
1981, 67th Leg., p. 836, ch. 297, Sec. 9, eff. Aug. 31, 1981; Acts
1987, 70th Leg., ch. 93, Sec. 45, eff. Aug. 31, 1987; Acts 1993,
73rd Leg., ch. 733, Sec. 32, eff. Jan. 1, 1994.
Art. 1396-8.14. FILING OF APPLICATION FOR WITHDRAWAL. A. The
original and a copy of such application for withdrawal shall be
delivered to the Secretary of State. If the Secretary of State
finds that such application conforms to the provisions of this Act,
he shall, when all fees have been paid as in this Act prescribed:
(1) Endorse on the original and the copy the word "Filed", and
the month, day and year of the filing thereof.
(2) File the original in his office.
(3) Issue a certificate of withdrawal to which he shall affix
the copy.
B. The certificate of withdrawal, together with the copy of
the application for withdrawal affixed thereto by the Secretary of
State, shall be returned to the corporation or its representative.
Upon the issuance of such certificate of withdrawal, the authority
of the corporation to conduct affairs in this State shall cease.
Acts 1959, 56th Leg., p. 286, ch. 162, art. 8.14. Amended by Acts
1979, 66th Leg., p. 219, ch. 120, Sec. 15, eff. May 9, 1979.
Art. 1396-8.15. REVOCATION OF CERTIFICATE OF AUTHORITY. A.
The certificate of authority of a foreign corporation to conduct
affairs in this state may be revoked by a decree of the district
court for the county in which the registered office of the
corporation in this state is situated or of any district court in
Travis County in an action filed by the Attorney General when it is
established that:
(1) The corporation has failed to comply with a condition
precedent to the issuance of its certificate of authority or a
renewal or amendment thereof; or
(2) The certificate of authority to transact business in this
state or any amendment thereof was procured through fraud; or
(3) The corporation has continued to conduct affairs beyond
the scope of the purpose or purposes expressed in its certificate of
authority to conduct affairs in this state; or
(4) A misrepresentation has been made of any material matter
in any application, report, affidavit, or other document submitted
by such corporation as required by law.
B. The certificate of authority of a foreign corporation to
conduct affairs in this State may be revoked by order of the
Secretary of State when it is established that it is in default in
any of the following particulars:
(1) The corporation has failed to file any report within the
time required by law, or has failed to pay any fees, franchise
taxes, or penalties prescribed by law when the same have become due
and payable; or
(2) The corporation has failed to maintain a registered agent
in this State as required by law; or
(3) The corporation has changed its corporate name or the
purposes authorized by its existing certificate of authority and
has failed to file with the Secretary of State within thirty days
after such change became effective, an application for an amended
certificate of authority, or that the corporation has changed its
corporate name and that the newly adopted name is not available for
use in this State; or
(4) The corporation has failed to pay the filing fee for the
corporation's certificate of authority, or the fee was paid by an
instrument that was dishonored when presented by this State for
payment.
C. (1) No foreign corporation shall have its certificate of
authority to conduct affairs in this state revoked under
Subsections (1), (2), or (3) of Section B hereof unless the
Secretary of State, or other state agency to which such report,
taxes, fees or penalties is required to be made, gives the
corporation not less than 90 days notice of its neglect,
delinquency, or omission by certified mail addressed to its
registered office or to its principal place of business, or to the
last known address of one of its officers or directors, or to any
other known place of business of said corporation, and the
corporation has failed prior to such revocation to correct the
neglect, omission or delinquency.
(2) When the certificate of authority of a corporation to
conduct affairs in this state is revoked under Subsection (4) of
Section B of this article, the Secretary of State shall give the
corporation notice of the revocation by regular mail addressed to
its registered office, its principal place of business, the last
known address of one of its officers or directors, or any other
known place of business of the corporation.
D. Whenever a corporation has given cause for revocation of
its certificate of authority and has failed to correct the neglect,
omission or delinquency as provided in Sections B and C, the
Secretary of State shall thereupon revoke the certificate of
authority of the corporation by issuing a certificate of revocation
which shall include the fact of such revocation and the date and
cause thereof. The original of such certificate shall be placed in
his office and a copy thereof mailed to the corporation at its
registered office or to its principal place of business, or to the
last known address of one of its officers or directors, or to any
other known place of business of said corporation. Upon the
issuance of such certificate of revocation, the authority to
conduct affairs in this state shall cease.
E. Any corporation whose certificate of authority has been
revoked by the Secretary of State under the provisions of Section B
of this article may be reinstated by the Secretary of State at any
time within a period of 36 months from the date of such dissolution,
upon approval of an application for reinstatement signed by an
officer or director of the corporation. Such application shall be
filed by the Secretary of State whenever it is established to his
satisfaction that in fact there was no cause for the revocation, or
whenever the neglect, omission or delinquency resulting in
revocation has been corrected and payment made of all fees, taxes,
penalties and interest due thereon which accrued before the
revocation plus an amount equal to the total taxes from the date of
revocation to the date of reinstatement which would have been
payable had the corporation's certificate not been revoked. A
reinstatement filing fee of $25.00 shall accompany the application
for reinstatement.
Reinstatement shall not be authorized if the corporate name
is the same as or deceptively similar to a corporate name already on
file or reserved or registered, unless the corporation being
reinstated contemporaneously amends its certificate of authority
to change its name.
When the application for reinstatement is approved and filed
by the Secretary of State, the corporate authority to do business in
Texas shall be deemed to have continued without interruption from
the date of revocation, except that reinstatement shall have no
effect upon any issue of personal liability of the directors,
officers, or agents of the corporation during the period between
revocation and reinstatement.
F. When a foreign corporation is convicted of a felony, or
when a high managerial agent is convicted of a felony committed in
the conduct of the affairs of the foreign corporation, the Attorney
General may file an action to revoke the certificate of authority of
the foreign corporation to conduct affairs in this state in a
district court of the county in which the registered office of the
foreign corporation in this state is situated or in a district court
of Travis County. The court may revoke the foreign corporation's
certificate of authority if it is established that:
(1) The foreign corporation, or a high managerial agent
acting in behalf of the foreign corporation, has engaged in a
persistent course of felonious conduct; and
(2) To prevent future felonious conduct of the same
character, the public interest requires such revocation.
G. Article 7.02 of this Act does not apply to Section F of
this article.
Acts 1959, 56th Leg., p. 286, ch. 162, art. 8.15. Amended by Acts
1965, 59th Leg., p. 533, ch. 276, Sec. 4, 5, eff. Aug. 30, 1965;
Acts 1969, 61st Leg., p. 2477, ch. 834, Sec. 7, eff. June 18, 1969;
Acts 1973, 63rd Leg., p. 990, ch. 399, Sec. 2(N), eff. Jan. 1, 1974;
Acts 1981, 67th Leg., p. 837, ch. 297, Sec. 10, eff. Aug. 31, 1981;
Acts 1993, 73rd Leg., ch. 733, Sec. 33, eff. Jan. 1, 1994; Acts
2001, 77th Leg., ch. 757, Sec. 10, eff. Sept. 1, 2001.
Art. 1396-8.16. FILING OF DECREE OF REVOCATION. A. In case
the court shall enter a decree revoking the certificate of
authority of a foreign corporation to conduct affairs in this
State, it shall be the duty of the clerk of such court to cause a
certified copy of the decree to be filed with the Secretary of
State. No fee shall be charged by the Secretary of State for the
filing thereof.
Acts 1959, 56th Leg., p. 286, ch. 162, art. 8.16.
Art. 1396-8.17. CONDUCTING AFFAIRS WITHOUT CERTIFICATE OF
AUTHORITY. A. No foreign corporation which is conducting affairs
in this State without a certificate of authority shall be permitted
to maintain any action, suit or proceeding in any court of this
State until such corporation shall have obtained a certificate of
authority. Nor shall any action, suit or proceeding be maintained
in any court of this State by any successor or assignee of such
corporation on any right, claim or demand arising out of the conduct
of affairs by such corporation in this State, until a certificate of
authority shall have been obtained by such corporation or by a
corporation which has acquired all or substantially all of its
assets. It is expressly provided, however, that the provisions of
this Article shall not affect the rights of any assignee of the
foreign corporation as the holder in due course of a negotiable
promissory note, check or bill of exchange, or as the bona-fide
purchaser for value of a warehouse receipt, stock certificate, or
other instrument made negotiable by law.
B. The failure of a foreign corporation to obtain a
certificate of authority to conduct affairs in this State shall not
impair the validity of any contract or act of such corporation, and
shall not prevent such corporation from defending any action, suit
or proceeding in any court of this State.
Acts 1959, 56th Leg., p. 286, ch. 162, art. 8.17.
Art. 1396-9.01. REPORT OF DOMESTIC AND FOREIGN
CORPORATIONS. A. The Secretary of State is authorized to require
each domestic corporation and each foreign corporation authorized
to conduct affairs in this State to file, not more often than once
every four (4) years for any corporation, a report setting forth:
(1) The name of the corporation and the state or country under
the laws of which it is incorporated.
(2) The address of the registered office of the corporation
in this State, and the name of its registered agent in this State at
such address, and, in the case of a foreign corporation, the address
of its principal office in the state or country under the laws of
which it is incorporated.
(3) The names and respective addresses of the directors and
officers of the corporation.
B. Such report shall be made on forms promulgated by the
Secretary of State, and the information contained shall be given as
of the date of the execution of the report. It shall be signed on
behalf of the corporation by an officer; or, if the corporation is
in the hands of a receiver or trustee, it shall be signed on behalf
of the corporation by such receiver or trustee.
C. Such report shall be delivered to the Secretary of State
within thirty (30) days of the mailing of notice by the Secretary of
State to the corporation that such report is due. Such notice may
be either written or printed and shall be addressed to such
corporation and mailed to the address named in its articles of
incorporation as its principal place of business, or to its
registered agent, or to the last address of the corporation as it
appears on record in the office of the Secretary of State, or to any
other known place of business of such corporation.
D. Along with the notice that such report is due, the
Secretary of State shall mail to the corporation two (2) copies of a
report form which shall be prepared and filed as herein provided.
E. One (1) copy of such report shall be delivered to the
Secretary of State. If the Secretary of State finds that such
report conforms to the provisions of this Act, he shall:
(1) Endorse on such report the word "Filed," and the month,
day, and year of the filing thereof.
(2) Notify the corporation of the filing of such report.
F. Within two (2) years after September 1, 1961, the
Secretary of State shall mail such notice to each non-profit
corporation organized under the laws of this State prior to the
effective date of this Act and subject to the provisions of this
Act, and such report shall thereafter be filed as provided herein.
Acts 1959, 56th Leg., p. 286, ch. 162, art. 9.01. Amended by Acts
1987, 70th Leg., ch. 93, Sec. 46, eff. Aug. 31, 1987.
Art. 1396-9.02. FAILURE TO FILE REPORTS; FORFEITURE; RIGHT
OF CORPORATION TO CURE DEFAULT. A. Any domestic or foreign
corporation which shall fail to file the report provided for in
Article 9.01 of this Act, when the same shall become due, shall, for
such default, forfeit its right to conduct affairs in this State.
B. Such forfeiture shall be consummated without judicial
ascertainment by the Secretary of State entering upon the margin of
the record kept in his office relating to such corporation the words
"right to conduct affairs forfeited," together with the date of
such forfeiture. Notice of such forfeiture shall thereupon be
mailed to the corporation to the address named in its articles of
incorporation as its principal place of business, or to its
registered agent, or to the last address of the corporation as it
appears on record in the office of the Secretary of State, or to any
other known place of business of such corporation. Until the right
of such corporation to conduct affairs in this State shall be
revived in accordance with Sections C and D of this Article, it
shall not be permitted to maintain any action, suit or proceeding in
any court of this State. Nor shall any action, suit or proceeding
be maintained in any court of this State by any successor or
assignee of such corporation on any right, claim, or demand arising
out of the conduct of affairs by such corporation in this State,
until the right of such corporation to conduct affairs in this State
shall have been revived in accordance with Sections C and D of this
Article. It is expressly provided, however, that the provisions of
this Article shall not affect the rights of any assignee of the
corporation as the holder in due course of a negotiable promissory
note, check, or bill of exchange, or as the bona fide purchaser for
value of a warehouse receipt, stock certificate, or other
instrument negotiable by law. The forfeiture of the right to
conduct affairs in this State shall not impair the validity of any
contract or act of such corporation, and shall not prevent such
corporation from defending any action, suit, or proceeding in any
court of this State.
C. Any corporation whose right to conduct affairs may have
been forfeited as provided in this Act, shall be relieved from such
forfeiture by filing the required report with the Secretary of
State within 120 days of the date of mailing such notice of
forfeiture, together with a late filing fee of One Dollar ($1) for
each month, or fractional part thereof, which shall have elapsed
after such forfeiture of its right to conduct affairs; provided,
that such amount shall in no case be less than Five Dollars ($5) nor
more than Twenty-five Dollars ($25).
D. When such report shall be filed and the revival fee shall
be paid to the Secretary of State, he shall revive the right of the
corporation to conduct affairs in this State, cancelling the words
"right to conduct affairs forfeited" upon his record, and endorsing
thereon the word "Revived" and the date of such revival.
E. If any corporation whose right to conduct affairs within
this State shall hereafter be forfeited under the provisions of
this Act shall fail to file such report and pay to the Secretary of
State the required revival fee within one hundred and twenty (120)
days after the date of mailing of the notice of such forfeiture,
such failure shall constitute sufficient ground for the involuntary
dissolution of the corporation or the revocation of its certificate
of authority, which dissolution or revocation shall be consummated
without judicial ascertainment, by the Secretary of State entering
upon the record of such corporation filed in his office, the word
"Forfeited" giving the date thereof and citing this Act as
authority therefor.
F. Any corporation which is involuntarily dissolved or whose
certificate of authority is revoked without judicial
ascertainment, as provided in Section E hereof, and which has paid
all fees, taxes, penalties and interest due thereon which accrued
before the dissolution or revocation plus an amount equal to the
total taxes from the date of dissolution or revocation to the date
of reinstatement which would have been payable had the corporation
not been dissolved or its certificate revoked may be relieved from
such dissolution or revocation by filing the required report with
the Secretary of State together with a filing fee of Twenty-five
($25.00) Dollars.
G. When such report shall be filed and the revival fee shall
be paid to the Secretary of State, he shall reinstate the
certificate of incorporation or charter or certificate of authority
without judicial ascertainment, cancelling the word "Forfeited"
upon his record, and endorsing thereon the words "Set Aside" and the
date of such reinstatement; provided, if such dissolution or
revocation is to be set aside, the corporation shall ascertain from
the Secretary of State whether the name of the corporation is
available, and if not available, amend its corporate name pursuant
to the provisions of this Act.
Acts 1959, 56th Leg., p. 286, ch. 162, art. 9.02. Amended by Acts
1965, 59th Leg., p. 533, ch. 276, Sec. 7 to 9, eff. Aug. 30, 1965;
Acts 1969, 61st Leg., p. 2477, ch. 834, Sec. 8, eff. June 18, 1969.
Art. 1396-9.03. FEES FOR FILING DOCUMENTS AND ISSUING
CERTIFICATES. A. The Secretary of State shall charge and collect
for:
(1) Filing articles of incorporation and issuing a
certificate of incorporation, Twenty-five Dollars ($25).
(2) Filing articles of amendment and issuing a certificate of
amendment, Twenty-five Dollars ($25).
(3) Filing articles of merger or consolidation and issuing a
certificate of merger or consolidation, Fifty Dollars ($50).
(4) Filing a statement of change of address of registered
office or change of registered agent, or both, Five Dollars ($5).
(5) Filing articles of dissolution, Five Dollars ($5).
(6) Filing an application of a foreign corporation for a
certificate of authority to conduct affairs in this state and
issuing a certificate of authority, Twenty-five Dollars ($25).
(7) Filing an application of a foreign corporation for an
amended certificate of authority to conduct affairs in this state
and issuing an amended certificate of authority, Twenty-five
Dollars ($25).
(8) Filing an application for withdrawal of a foreign
corporation and issuing a certificate of withdrawal, Five Dollars
($5).
(9) Filing any other statement or report of a domestic or
foreign corporation, Five Dollars ($5).
(10) Filing restatement of articles of incorporation, Fifty
Dollars ($50).
(11) Filing a statement of change of address of registered
agent, Fifteen Dollars ($15), except that the maximum fee for
simultaneous filings by a registered agent for more than one
corporation may not exceed Two Hundred Fifty Dollars ($250).
Acts 1959, 56th Leg., p. 286, ch. 162, art. 9.03. Amended by Acts
1961, 57th Leg., p. 450, ch. 223, Sec. 1; Acts 1981, 67th Leg., p.
837, ch. 297, Sec. 11, eff. Aug. 31, 1981; Acts 1987, 70th Leg., ch.
1007, Sec. 10, eff. June 19, 1987; Acts 1993, 73rd Leg., ch. 733,
Sec. 34, eff. Jan. 1, 1994.
Art. 1396-9.03A. PENALTY FOR SIGNING FALSE DOCUMENT. A. A
person commits an offense if he signs a document he knows is false
in any material respect with intent that the document be delivered
on behalf of a corporation to the Secretary of State for filing.
B. An offense under this Article is a Class A misdemeanor.
Added by Acts 1987, 70th Leg., ch. 93, Sec. 47, eff. Aug. 31, 1987.
Art. 1396-9.04. POWERS OF SECRETARY OF STATE. A. The
Secretary of State shall have the power and authority reasonably
necessary to enable him to administer this Act efficiently and to
perform the duties therein imposed upon him.
Acts 1959, 56th Leg., p. 286, ch. 162, art. 9.04.
Art. 1396-9.05. APPEALS FROM SECRETARY OF STATE. A. If the
Secretary of State shall fail to approve any articles of
incorporation, application for certificate of authority to conduct
affairs in this State, amendment, merger, consolidation, or
dissolution, or any other document required by this Act to be
approved by the Secretary of State before the same shall be filed in
his office, he shall, within ten (10) days after the delivery
thereof to him, give written notice of his disapproval to the person
or corporation, domestic or foreign, delivering the same,
specifying in such notice the reasons therefor. From such
disapproval such person or corporation may appeal to any district
court of Travis County by filing with the clerk of such court a
petition setting forth a copy of the articles or other document
sought to be filed and a copy of the written disapproval thereof by
the Secretary of State; whereupon the matter shall be tried de novo
by the court, and the court shall either sustain the action of the
Secretary of State or direct him to take such action as the court
may deem proper.
B. Appeals from all final orders and judgments entered by the
district court under this Article in review of any ruling or
decision of the Secretary of State may be taken as in other civil
actions.
Acts 1959, 56th Leg., p. 286, ch. 162, art. 9.05.
Art. 1396-9.06. CERTIFICATES AND CERTIFIED COPIES TO BE
RECEIVED IN EVIDENCE. A. All certificates issued by the Secretary
of State in accordance with the provisions of this Act, and all
copies of documents filed in his office, in accordance with the
provisions of this Act when certified by him, shall be taken and
received in all courts, public offices, and official bodies as
prima facie evidence of the facts therein stated and may be
officially recorded. A certificate by the Secretary of State under
the state seal, as to the existence or non-existence of the facts
relating to corporations which would not appear from a certified
copy of any of the foregoing documents or certificates shall be
taken and received in all courts, public offices, and official
bodies as prima facie evidence of the existence or non-existence of
the facts therein stated.
Acts 1959, 56th Leg., p. 286, ch. 162, art. 9.06. Amended by Acts
1993, 73rd Leg., ch. 300, Sec. 13, eff. Aug. 30, 1993.
Art. 1396-9.07. FORMS TO BE PROMULGATED BY SECRETARY OF
STATE. A. Forms may be promulgated by the Secretary of State for
all reports and all other documents required to be filed in the
office of the Secretary of State. The use of such forms, however,
shall not be mandatory, except in instances in which the law may
specifically so provide.
Acts 1959, 56th Leg., p. 286, ch. 162, art. 9.07.
Art. 1396-9.08. GREATER VOTING REQUIREMENTS. A. Whenever,
with respect to any action to be taken by the members or directors
of a corporation, the articles of incorporation require the vote or
concurrence of a greater proportion of the members or directors, as
the case may be, then required by this Act with respect to such
action, the provisions of the articles of incorporation shall
control.
Acts 1959, 56th Leg., p. 286, ch. 162, art. 9.08.
Art. 1396-9.09. WAIVER OF NOTICE. A. Whenever any notice is
required to be given to any member or director of a corporation
under the provisions of this Act or under the provisions of the
articles of incorporation or by-laws of the corporation, a waiver
thereof in writing signed by the person or persons entitled to such
notice, whether before or after the time stated therein, shall be
equivalent to the giving of such notice.
Acts 1959, 56th Leg., p. 286, ch. 162, art. 9.09.
Art. 1396-9.10. ACTION WITHOUT A MEETING BY MEMBERS,
DIRECTORS OR COMMITTEES. A. Any action required by this Act to be
taken at a meeting of the members or directors of a corporation, or
any action which may be taken at a meeting of the members or
directors or of any committee, may be taken without a meeting if a
consent in writing, setting forth the action to be taken, shall be
signed by all the members entitled to vote with respect to the
subject matter thereof, or all of the directors, or all of the
members of the committee, as the case may be.
B. Such consent shall have the same force and effect as a
unanimous vote, and may be stated as such in any articles or
document filed with the Secretary of State under this Act.
C. (1) The articles of incorporation may provide that any
action required by this Act to be taken at a meeting of the members
or directors of a corporation or any action that may be taken at a
meeting of the members or directors or of any committee may be taken
without a meeting if a consent in writing, setting forth the action
to be taken, is signed by a sufficient number of members, directors,
or committee members as would be necessary to take that action at a
meeting at which all of the members, directors, or members of the
committee were present and voted.
(2) Each written consent shall bear the date of signature of
each member, director, or committee member who signs the consent. A
written consent signed by less than all of the members, directors,
or committee members is not effective to take the action that is the
subject of the consent unless, within 60 days after the date of the
earliest dated consent delivered to the corporation in the manner
required by this article, a consent or consents signed by the
required number of members, directors, or committee members is
delivered to the corporation at its registered office, registered
agent, principal place of business, transfer agent, registrar,
exchange agent, or an officer or agent of the corporation having
custody of the books in which proceedings of meetings of members,
directors, or committees are recorded. Delivery shall be by hand or
certified or registered mail, return receipt requested. Delivery
to the corporation's principal place of business shall be addressed
to the president or principal executive officer of the corporation.
(3) Prompt notice of the taking of any action by members,
directors, or a committee without a meeting by less than unanimous
written consent shall be given to all members, directors, or
committee members who did not consent in writing to the action.
(4) If any action by members, directors, or a committee is
taken by written consent signed by less than all of the members,
directors, or committee members, any articles or documents filed
with the Secretary of State as a result of the taking of the action
shall state, in lieu of any statement required by this Act
concerning any vote of the members or directors, that written
consent has been given in accordance with the provisions of this
article and that any written notice required by this article has
been given.
(5) A telegram, telex, cablegram, or similar transmission by
a member, director, or member of a committee or a photographic,
photostatic, facsimile, or similar reproduction of a writing signed
by a member, director, or member of a committee shall be regarded as
signed by the member, director, or member of a committee for
purposes of this article.
Acts 1959, 56th Leg., p. 286, ch. 162, art. 9.10. Amended by Acts
1993, 73rd Leg., ch. 733, Sec. 35, eff. Jan. 1, 1994.
Art. 1396-9.11. MEETINGS BY TELEPHONE CONFERENCE OR OTHER
REMOTE COMMUNICATIONS TECHNOLOGY. A. Subject to the provisions
required or permitted by this Act for notice of meetings, unless
otherwise restricted by the articles of incorporation or bylaws,
members of a corporation, members of the board of directors of a
corporation, or members of any committee designated by such board
may participate in and hold a meeting of such members, board, or
committee by means of:
(1) conference telephone or similar communications equipment
by which all persons participating in the meeting can hear each
other; or
(2) another suitable electronic communications system,
including videoconferencing technology or the Internet, only if:
(a) each member entitled to participate in the meeting
consents to the meeting being held by means of that system; and
(b) the system provides access to the meeting in a manner or
using a method by which each member participating in the meeting can
communicate concurrently with each other participant.
B. Participation in a meeting pursuant to this Article shall
constitute presence in person at such meeting, except where a
person participates in the meeting for the express purpose of
objecting to the transaction of any business on the ground that the
meeting is not lawfully called or convened.
Added by Acts 1985, 69th Leg., ch. 128, Sec. 32, eff. May 20, 1985.
Amended by Acts 1999, 76th Leg., ch. 696, Sec. 1, eff. June 18,
1999.
Art. 1396-10.01. APPLICATION TO FOREIGN AND INTERSTATE
AFFAIRS. A. The provisions of this Act shall apply to the conduct
of affairs with foreign nations and among the several states only in
so far as the same may be permitted under the provisions of the
Constitution of the United States.
Acts 1959, 56th Leg., p. 286, ch. 162, art. 10.01.
Art. 1396-10.02. RESERVATION OF POWER. A. The Legislature
shall at all times have power to prescribe such regulations,
provisions, and limitations as it may deem advisable, which
regulations, provisions, and limitations shall be binding upon any
and all corporations subject to the provisions of this Act, and the
Legislature shall have power to amend, repeal, or modify this Act.
Acts 1959, 56th Leg., p. 286, ch. 162, art. 10.02.
Art. 1396-10.03. EFFECT OF INVALIDITY OF PART OF THIS ACT.
A. If a court of competent jurisdiction shall adjudge to be invalid
or unconstitutional any clause, sentence, subsection, section, or
Article of this Act, such judgment or decree shall not affect,
impair, invalidate, or nullify the remainder of this Act, but the
effect thereof shall be confined to the clause, sentence,
subsection, section, or Article of this Act so adjudged to be
invalid or unconstitutional.
Acts 1959, 56th Leg., p. 286, ch. 162, art. 10.03.
Art. 1396-10.04. TO WHAT CORPORATIONS THIS ACT APPLIES;
PROCEDURE FOR ADOPTION OF ACT BY EXISTING CORPORATION. A. Except
as otherwise provided by this article, this Act does not apply to
domestic corporations organized under any statute other than this
Act or to any foreign corporations granted authority to conduct
affairs within this State under any statute other than this Act. If
any domestic corporation is organized under or is governed by a
statute that does not contain a provision regarding a matter
provided for in this Act, or any foreign corporation is granted
authority to conduct affairs within this State under a statute that
does not contain a provision regarding a matter provided for in this
Act in respect of foreign corporations, or if a statute
specifically provides that the general laws for incorporation or
for the granting of a certificate of authority to conduct affairs in
this State supplement the provisions of that statute, the
provisions of this Act apply only to the extent not inconsistent
with the provisions of the other statute.
B. Repealed by Acts 2001, 77th Leg., ch. 1419, Sec.
31(b)(16), eff. June 1, 2003.
C. This Act shall not apply to those corporations excepted
under Article 2.01 B, Subsections (3), (4), and (5) of this Act;
provided however, that if any of said excepted domestic
corporations were heretofore or are hereafter organized not for
profit under special statutes which contain no provisions in regard
to some of the matters provided for in this Act, or if such special
statutes specifically applicable provide that the general laws for
incorporation shall supplement the provisions of such statutes,
then the provisions of this Act shall apply to the extent that they
are not inconsistent with the provisions of such special statutes.
Acts 1959, 56th Leg., p. 286, ch. 162, art. 10.04. Amended by Acts
1961, 57th Leg., p. 653, ch. 302, Sec. 2; Acts 1993, 73rd Leg., ch.
733, Sec. 36, eff. Jan. 1, 1994; Acts 2001, 77th Leg., ch. 1419,
Sec. 31(b)(16), eff. June 1, 2003.
Art. 1396-10.05. EXTENT TO WHICH EXISTING LAWS SHALL REMAIN
APPLICABLE TO CORPORATIONS. A. Except as provided in the last
preceding Article, existing corporations shall continue to be
governed by the laws heretofore applicable thereto, until September
1, 1961.
B. Except as provided in Article 10.06 of this Act, any
limitations, obligations, liabilities and powers applicable to a
particular kind of corporation, for which special provision is made
by the laws of this State, shall continue to be applicable to any
such corporation, and this Act is not intended to repeal and does
not repeal the statutory provisions providing for these special
limitations, obligations, liabilities and powers.
C. Provided that nothing in this Act shall in any wise affect
or nullify the Anti-Trust laws of this State.
Acts 1959, 56th Leg., p. 286, ch. 162, art. 10.05.
Art. 1396-10.06. REPEAL OF EXISTING LAWS; EXTENT AND EFFECT
THEREOF. A. Subject to the provisions of the last two (2) preceding
Articles of this Act and of Section B of Article 2.01 of this Act,
and excluding any existing general Act not inconsistent with any
provisions of this Act, no law of this State pertaining to private
corporations, domestic or foreign, shall hereafter apply to
corporations organized under this Act, or which obtain authority to
conduct affairs in this State under this Act, or to existing
corporations which adopt this Act.
B. The repeal of a prior Act by this Act shall not affect any
right accrued or established, or any liability or penalty incurred,
under the provisions of such Act prior to the repeal thereof.
Acts 1959, 56th Leg., p. 286, ch. 162, art. 10.06.
Art. 1396-10.07. DELAYED EFFECTIVENESS OF CERTAIN FILINGS.
A. In this article the following are permitted acts:
(1) the incorporation of a corporation under this Act;
(2) an amendment to a corporation's articles of
incorporation;
(3) the restatement of articles of incorporation of a
corporation;
(4) a voluntary dissolution;
(5) the authorization or withdrawal of a foreign corporation
to conduct affairs in this State;
(6) an amendment to the certificate of authority of a foreign
corporation;
(7) a change in registered office or registered agent;
(8) a change of address of a registered agent; or
(9) a merger or consolidation of domestic corporations or of
domestic and foreign corporations.
B. A permitted act may be made effective as of a time and date
after the time and date otherwise provided in this Act or may be
made effective on the occurrence of events or facts that may occur
in the future. Those events or facts may include future acts of any
person or entity, if:
(1) the articles, statement, application, or other filing
that is required by this Act to be filed with the Secretary of State
to make the permitted act effective clearly and expressly sets
forth, in addition to any other statement or information required
to be set forth:
(a) the time and date on which the permitted act is to become
effective; or
(b) if the permitted act is to become effective on the
occurrence of events or facts that may occur in the future, the
manner in which the events or facts will operate to cause the
permitted act to become effective;
(2) in the case of a permitted act that is to become effective
on the mere passage of time as of a time or date after the time and
date otherwise provided in this Act, the subsequent time and date
must not be more than 90 days after the date of the filing of the
articles, statement, application, or other filing that is otherwise
required by this Act to be filed with the Secretary of State to make
effective the permitted act; and
(3) in the case of a permitted act that is to be made
effective on the occurrence of events or facts that may occur in the
future, other than the mere passage of time, a statement that all
the events or facts on which the effectiveness of the permitted act
is conditioned have been satisfied or waived and the date on which
the condition was satisfied or waived must be filed with the
Secretary of State within 90 days of the date of the filing of the
articles, statement, application, or other filing that is otherwise
required by this Act for the permitted act to become effective.
C. The statement required by Section A(3) of this article
shall be executed on behalf of each domestic or foreign corporation
or other entity that was required to execute the articles,
statement, application, or other filing that is otherwise required
by this Act to be filed with the Secretary of State to make
effective the permitted act by an officer or other duly authorized
representative, including an officer or duly authorized
representative of any successor domestic or foreign corporation or
other entity, and an original and copy shall be filed with the
Secretary of State. If the Secretary of State finds that the
statement conforms to the provisions of this Act, the Secretary of
State shall:
(1) endorse on the original and the copy the word "Filed" and
the month, day, and year of the filing;
(2) file the original in the Secretary of State's office; and
(3) return the copy to the filing party or its
representative.
D. If any permitted act is to become effective as of a time or
date after the time and date otherwise provided in this Act, for the
permitted act to become effective, notwithstanding any other
provision of this Act to the contrary, the permitted act shall
become, to the extent permitted by Section A of this article,
effective as of the subsequent time and date, and any certificate
issued by the Secretary of State on the filing of the articles,
statement, application, or other filing that is otherwise required
by this Act for the permitted act to become effective shall
expressly state the time and date on which the permitted act is to
become effective.
E. If a permitted act is to be made effective on the
occurrence of events or facts that may occur in the future, other
than the mere passage of time, and the statement required by Section
A(3) of this article is filed with the Secretary of State within the
time prescribed, the permitted act becomes effective as of the time
and date on which the latest specified event or fact occurs or the
time and date on which the condition is otherwise satisfied or
waived. Any certificate issued or notation, acknowledgement, or
other statement made by the Secretary of State on the filing of the
articles, statement, application, or other filing that is otherwise
required by this Act for the permitted act to become effective shall
state that "The effectiveness of the action to which this
instrument relates is conditioned on the occurrence of certain
facts or events described in the filing to which this instrument
relates" or shall make reference in a manner the Secretary of State
approves, to the fact that the effectiveness of the action is
conditioned. The time and date on which a condition to the
effectiveness of a permitted act is satisfied or waived as set forth
in a statement filed with the Secretary of State pursuant to Section
A(3) of this article shall be conclusively regarded as the time and
date on which the condition was satisfied or waived for purposes of
this article.
F. If the effectiveness of any permitted act is conditioned
on the occurrence of events or facts that may occur in the future,
other than the mere passage of time, and the statement required by
Section A(3) of this article is not filed with the Secretary of
State within the time prescribed, the permitted act is not
effective unless there is subsequently filed with the Secretary of
State the articles, statement, application, or other filing
required by this Act to be filed with the Secretary of State to make
the permitted act effective.
Added by Acts 1993, 73rd Leg., ch. 733, Sec. 37, eff. Jan. 1, 1994.
Art. 1396-11.01. EMERGENCY CLAUSE. A. The fact that existing
laws of the State of Texas have been amended from time to time over a
period of some seventy (70) years and more without any adoption
meanwhile of a complete Act relating to non-profit corporations
generally, the provisions of which are consistent with one another;
the fact that with so many amendments of the corporation laws
applicable to non-profit corporations generally over so many years
there have developed many uncertainties in the corporation laws of
this State and with the result that there is now an imperative need
for clarification of certain provisions of the existing laws; the
fact that existing Texas laws are incomplete and that there are no
existing Texas laws for many aspects of the non-profit corporation;
all such facts create an emergency and public necessity that the
Constitutional Rule requiring bills to be read on three separate
days in each House be suspended and said Rule is hereby suspended;
and require that this Act take effect and be in force from and after
its passage, and it is so enacted.
Acts 1959, 56th Leg., p. 286, ch. 162, art. 11.01.
Art. 1396-11.02. APPLICABILITY; EXPIRATION. A. Except as
provided by Title 8, Business Organizations Code, this Act does not
apply to a corporation to which the Business Organizations Code
applies.
B. This Act expires January 1, 2010.
Added by Acts 2003, 78th Leg., ch. 182, Sec. 4, eff. Jan. 1, 2006.
Text of article effective until January 1, 2010
Art. 1396-50.01. COOPERATIVE ASSOCIATION ACT.
Short Title
Sec. 1. This Act may be cited as the Cooperative Association
Act.
Definitions
Sec. 2. In this Act:
(1) "Association" means a group enterprise legally
incorporated under this Act.
(2) "Member" means a member of a nonshare or share
association.
(3) "Net savings" means the total income of an association
less the costs of operation.
(4) "Savings returns" means the amount returned to patrons in
proportion to their patronage or otherwise.
(5) "Cooperative basis" means that the net savings after
payment, if any, of investment dividends and after making
provisions for separate funds required or specifically permitted by
statute, articles, or by-laws is allocated or distributed to member
patrons, or to all patrons, in proportion to their patronage or
retained by the enterprise for the actual or potential expansion of
its services, the reduction of its charges to the patrons, or for
other purposes not inconsistent with its non-profit character.
(6) "Membership Capital" means those funds of the association
derived from the members generally either as a requirement of
membership or in lieu of patronage dividends. Deposits and loans
from members shall not be construed as "membership capital."
(7) "Invested Capital" means those funds invested in the
association by an investor with the expectation of receiving
investment dividends.
(8) "Investment Dividends" means the return on invested
capital or on membership capital derived from the net savings of the
association.
(9) "Patronage Dividends" means a share of net savings
distributed among members on a basis of extent of patronage, as
provided for in the articles of incorporation.
Applicability of Texas Non-Profit Corporation Act
Sec. 3. An association incorporated under this Act is subject
to the provisions of the Texas Non-Profit Corporation Act, as
amended (Article 1396-1.01 et seq., Vernon's Texas Civil Statutes),
to the extent that the provisions of the Texas Non-Profit
Corporation Act do not conflict with the provisions of the Act. An
association incorporated under this Act may exercise the same
powers and privileges and is subject to the same duties,
restrictions, and liabilities as non-profit corporations except to
the extent that these are limited or enlarged by this Act.
Who May Incorporate
Sec. 4. Five or more natural persons, five or more hospitals
or a hospital council or related subgroup, or two or more
associations may incorporate under this Act; provided, however, an
association may not be incorporated or organized to serve or
function as a health maintenance organization or furnish medical,
or health care nor may an association employ or contract with
providers of medical care in any manner which is prohibited by any
licensing law of this state under which such persons are licensed.
Purposes
Sec. 5. An association may be incorporated under this Act to
engage in acquiring, producing, building, operating,
manufacturing, furnishing, exchanging, or distributing any type of
property, commodities, goods, or services for the primary and
mutual benefit of the members of the association.
Powers
Sec. 6. An association may exercise all the powers granted to
a nonprofit corporation under Article 2.02, Texas Non-Profit
Corporation Act and may:
(1) own and hold membership in and share capital of other
associations or corporations, and own and exercise ownership rights
in bonds or other obligations;
(2) make agreements of mutual aid or federation with other
associations, other groups organized on a cooperative basis, and
other nonprofit groups;
(3) exercise all powers not inconsistent with this Act that
are necessary or convenient for the accomplishment of its purposes,
and to that end the enumeration of powers in this section is not
exclusive;
(4) not engage, either directly or indirectly, in insurance
companies of every type or character as the insurance business is
defined and regulated by the Insurance Code, as amended, health
maintenance organizations, or prepaid legal service corporations;
and
(5) deliver money to a scholarship fund for rural students.
Registered Office and Registered Agent
Sec. 7. An association shall maintain a registered office and
registered agent in accordance with the provisions of Article 2.05,
Texas Non-Profit Corporation Act. An association may change its
registered office and registered agent in accordance with the
provisions of Article 2.06, Texas Non-Profit Corporation Act.
Process may be served on an association in accordance with the
provisions of Article 2.07, Texas Non-Profit Corporation Act.
Articles of Incorporation; Contents
Sec. 8. (a) Articles of incorporation shall be signed and
acknowledged by each of the incorporators if they are natural
persons and by the presidents and secretaries if they are
associations.
(b) Subject to the limitations of this Act, the articles must
contain:
(1) a statement of the purpose or purposes for which the
association is formed;
(2) the name of the association, which must include the word
"cooperative" or an abbreviation or derivative of it;
(3) the term of existence of the association, which may be
perpetual;
(4) the location and street address of the initial registered
office of the association and the initial registered agent at that
address;
(5) the names and street addresses of the incorporators of
the association;
(6) the names and street addresses of the directors who shall
manage the affairs of the association for the first year, unless
sooner changed by the members;
(7) a statement of whether the association is organized with
or without shares, and the number of shares or memberships
subscribed for;
(8) if organized with shares, a statement of the amount of
authorized capital, the number and types of shares and the par
value, if any, of the shares, and the rights, preferences, and
restrictions of each type of share;
(9) the method by which a surplus is distributed on
dissolution of the association, in conformity with the requirements
of Section 38 of this Act for division of surplus.
(c) The articles may contain other provisions for the conduct
of the association's affairs not inconsistent with this Act or any
other law.
Filing, Certificate of Incorporation, Organization Meeting
Sec. 9. (a) The articles shall be delivered to the secretary
of state in accordance with the provisions of Article 3.03, Texas
Non-Profit Corporation Act. If he finds that the articles conform
to law, he shall file them on payment by the association of the fee
required by Article 9.03, Texas Non-Profit Corporation Act.
(b) After filing and recording the articles, the secretary of
state shall issue a certificate of incorporation, in accordance
with Article 3.04, Texas Non-Profit Corporation Act, at which point
the corporate existence begins.
(c) After the issuance of the certificate of incorporation,
an organization meeting shall be held in accordance with Article
3.05, Texas Non-Profit Corporation Act.
Amendments
Sec. 10. (a) An amendment to the articles may be proposed by a
two-thirds vote of the board of directors or by petition of the
association's members as provided in the by-laws. The secretary
shall send notice of a meeting to consider an amendment to each
member at the member's last known address, or shall post a written
notice of the meeting in a conspicuous place in all principal places
of activity of the association. Either type of notice shall be
accompanied by the full text of the proposal and by the text of the
part of the articles to be amended, at least 30 days before the
meeting.
(b) Two-thirds of the members voting may adopt an amendment.
When adoption of an amendment is verified by the president and
secretary, it shall be filed and recorded with the secretary of
state within 30 days after its adoption in accordance with Article
4.04, Texas Non-Profit Corporation Act.
Adoption of By-Laws
Sec. 11. By-laws may be adopted, amended, or repealed by a
simple majority vote of the members voting, unless the articles or
by-laws require a greater majority.
Contents of By-Laws
Sec. 12. Subject to the limitations of this Act, the by-laws
may provide for:
(1) the requirements for the admission to membership and
disposal of members' interests on cessation of membership;
(2) the time, place and manner of calling and conducting
meetings;
(3) the number or percentage of the members constituting a
quorum;
(4) the number, qualifications, powers, duties, method of
election, and terms of directors and officers, and the division or
classification, if any, of directors to provide for rotating or
overlapping terms;
(5) the compensation, if any, of the directors, and the
number of directors necessary to constitute a quorum;
(6) the method of distributing the net savings;
(7) the bonding of every individual acting as officer or
employee of an association handling funds or securities; and
(8) the various discretionary provisions of this Act as well
as other provisions incident to the purposes and activities of the
association.
Meetings
Sec. 13. (a) Regular meetings of members shall be held as
prescribed in the by-laws, but shall be held at least once a year.
Special meetings may be demanded by a majority vote of the directors
or by written petition of at least one-tenth of the membership.
When a meeting is demanded, it is the duty of the secretary to call
the meeting for a date 30 days after the demand.
(b) Regular or special meetings, including meetings by units,
may be held inside or outside this state as the articles may
prescribe.
Notice of Meetings
Sec. 14. The secretary shall give notice of the time and place
of meetings to members in the manner provided for in the by-laws.
In the case of a special meeting the notice shall specify the
purpose for which the meeting is called.
Meetings by Units of the Membership
Sec. 15. The articles or by-laws may provide for the holding
of meetings by units of the membership and may provide for a method
of transmitting the votes cast at unit meetings to the central
meeting, or for a method of representation of units by the election
of delegates to the central meeting, or for a combination of both
methods.
One Member--One Vote
Sec. 16. (a) Each member of an association has one vote,
except that if an association includes among its members any number
of other associations or groups organized on a cooperative basis,
the voting rights of the member associations or groups may be as
prescribed in the articles or by-laws.
(b) No voting agreement or other device to evade the
one-member-one-vote rule is enforceable.
Proxy
Sec. 17. No member may vote by proxy.
Voting By Mail
Sec. 18. (a) The articles or by-laws may provide for either or
both of the following procedures for voting by mail:
(1) the secretary may send to the members a copy of any
proposal to be offered at a meeting with the notice of the meeting,
and the mail votes cast by the members shall be counted together
with those cast at the meeting if the mail votes are returned to the
association within a specified number of days;
(2) the secretary may send to any member absent from a meeting
an exact copy of the proposal acted on at the meeting, and the mail
vote of the member on the proposal, if returned within a specified
number of days, is counted together with the votes cast at the
meeting.
(b) The articles or by-laws may also determine whether and to
what extent mail votes are counted in computing a quorum.
Application of Voting Provisions in This Act to Voting by Mail
Sec. 19. If an association has provided for voting by mail,
any provision of this Act referring to votes cast by the members
applies to votes cast by mail.
Application of Voting Provisions in This Act to Voting by Delegates
Sec. 20. If an association has provided for voting by
delegates, any provision of this Act referring to votes cast by the
members applies to votes cast by delegates, but this does not permit
delegates to vote by mail.
Directors
Sec. 21. (a) An association shall be managed by a board of not
less than five directors, who are elected for a term fixed in the
by-laws not to exceed three years, by and from the members of the
association, and who hold office until their successors are elected
or until removed. Vacancies which occur in the board of directors,
other than by removal or expiration of term, are filled in the
manner the by-laws provide.
(b) The by-laws may provide for a method of apportioning the
number of directors among the units into which the association may
be divided, and for the election of directors by the respective
units to which they are apportioned.
(c) An executive committee of the board of directors may be
elected in the manner and with the powers and duties as prescribed
by the articles or by-laws.
(d) Meetings of directors and of the executive committee may
be held inside or outside this state.
Officers
Sec. 22. The officers of an association are a president, one
or more vice-presidents, and a secretary and a treasurer or a
secretary-treasurer. Any two or more offices may be held by the
same person, except the offices of president and secretary. The
officers of an association may be designated by such other titles as
may be provided in the articles of incorporation or the by-laws. A
committee duly designated may perform the functions of any office,
and the functions of any two or more officers may be performed by a
single committee, including the functions of both president and
secretary. The officers are elected annually by the directors
unless the by-laws provide otherwise.
Removal of Directors and Officers
Sec. 23. A director or officer may be removed with cause by a
vote of a majority of the members voting at a regular or special
meeting. The director or officer involved shall be given an
opportunity to be heard at the meeting. A vacancy caused by removal
is filled by the vote provided in the by-laws for election of
directors.
Referendum
Sec. 24. The articles or by-laws may provide that within a
specified period of time any action taken by the directors must be
referred to the members for approval or disapproval if demanded by
petition of at least 10 percent of all the members or by vote of at
least a majority of the directors. Rights of third parties which
have vested between the time of the action and the referendum are
not impaired by the results of the referendum.
Limitations on the Return on Capital
Sec. 25. (a) Investment dividends will not exceed eight
percent on investment capital unless otherwise provided for in the
by-laws and the investment dividend will not be cumulative unless
otherwise provided for in the by-laws.
(b) Total investment dividends distributed for a fiscal year
may not exceed 50 percent of the net savings for the period.
Eligibility and Admission to Membership
Sec. 26. (a) A natural person, association, trust,
incorporated or unincorporated group organized on a cooperative
basis, or a nonprofit group, may be admitted to membership in an
association if it meets the qualifications for eligibility stated
in the articles or by-laws.
(b) Hospitals licensed in this state or a hospital council or
related subgroup may be admitted to membership in an association
if:
(1) the qualifications for eligibility stated in the
association's articles or by-laws are met; and
(2) the entities are not organizing to:
(A) serve or function as a health maintenance organization;
(B) provide medical or health care; or
(C) employ or contract with a medical or health care provider
in a manner that is prohibited by a licensing law of this state
under which that medical or health care provider is licensed.
Text of section 27 as amended by Acts 1991, 72nd Leg., ch. 855, Sec.
3
Subscribers
Sec. 27. A natural person, entity, or group eligible for
membership and legally obligated to purchase a share or shares of,
or membership in, an association shall be deemed a subscriber. The
articles or by-laws may determine whether and the conditions under
which voting rights or other rights of membership are granted to
subscribers.
Text of section 27 as amended by Acts 1991, 72nd Leg., ch. 897, Sec.
1
Subscribers
Sec. 27. A natural person, trust, or group eligible for
membership and legally obligated to purchase a share or shares of,
or membership in, an association shall be deemed a subscriber. The
articles or by-laws may determine whether and the conditions under
which voting rights or other rights of membership are granted to
subscribers.
Share and Membership Certificates: Issuance and Contents
Sec. 28. (a) No certificates for membership capital may be
issued until its par value, if any, has been paid in full. Each
certificate issued by an association shall bear a full or condensed
statement of the requirements of Sections 16, 17, and 29(a) of this
Act.
(b) No certificate for invested capital may be issued until
its par value, if any, has been paid in full. Each certificate for
invested capital issued by an association shall bear a full or
condensed statement of restrictions on transferability if
specifically provided for in the by-laws of the association.
Transfer of Shares and Membership: Withdrawal
Sec. 29. (a) If a member decides to withdraw from the
association, the member shall offer his membership certificates to
the directors in writing and the directors may purchase such
holdings within a 90-day period following receipt of notice by
paying the member the par value. The directors shall then reissue
or cancel those shares. A vote of the majority of the members
voting at a regular or special meeting may order the directors to
exercise this power to purchase.
(b) If an investor owning investor certificates desires to
sell, assign, or convey his certificates, he must do so in
accordance with the by-laws of the association; otherwise such
investment certificates shall be repurchased by the association
upon written notice to the directors within a 90-day period
following receipt of notice by paying the investor the par value of
the certificate, together with any investment dividend accrued.
Share and Membership Certificates: Recall
Sec. 30. (a) The by-laws may give the directors the power to
use the reserve funds to recall, at par value, the membership
certificates of any member in excess of the amount requisite for
membership, and may also provide that if any member has failed to
patronize the association during a time specified and in accordance
with the by-laws, the directors may recall the member's membership
certificates, thereby terminating his membership in the
association. When membership certificates are recalled, they shall
be either reissued or cancelled. No recall may be made if the
solvency of the association would be jeopardized.
(b) The directors shall have the power to use the reserve
funds to recall and repurchase at par value, together with any
investment dividends due on the investment certificates of any
investor. The by-laws may establish specific procedures, terms and
conditions for such recall and repurchase.
Certificates: Attachment
Sec. 31. The holdings of any member of an association, to the
extent of the minimum amount necessary for membership, but not to
exceed $50, are exempt from attachment, execution, or garnishment
for the debts of the owner. If any holdings in excess of this amount
are subjected to attachment, execution, or garnishment, the
directors of the association may either admit the purchaser to
membership, or may purchase the holdings at par value.
Liability of Members
Sec. 32. Members are not jointly or severally liable for
debts of the association, nor is a subscriber liable, except to the
extent of the unpaid amount on the membership certificates or on the
invested capital certificates subscribed by him. No subscriber may
be released from liability by assignment of his interest in the
membership capital certificates or the invested capital
certificates, but he is jointly and severally liable with the
assignee until the membership certificates or investor
certificates are fully paid up.
Expulsion
Sec. 33. A member may be expelled by the vote of a majority of
the members voting at a regular or special meeting. The member
against whom the charges are to be preferred shall be informed of
the charges in writing at least 10 days in advance of the meeting,
and shall be given an opportunity to be heard in person or by
counsel at the meeting. If the association votes to expel a member,
the board of directors shall purchase the member's capital holdings
at par value if and when such purchases may be made without
jeopardizing the solvency of the association.
Allocation and Distribution of Net Savings
Sec. 34. (a) At least once each year the members or the
directors, as the articles or by-laws may provide, shall apportion
the net savings of the association in the following order:
(1) investment dividends, within the limitations of Section
25 may be paid on invested capital, or if the by-laws so provide, on
the membership certificates, but the investment dividends may be
paid only out of the surplus of the aggregate of the assets over the
aggregate of the liabilities;
(2) a portion of the remainder, as determined by the articles
or by-laws, may be allocated to an educational fund to be used in
teaching cooperation, and a portion may also be allocated to funds
for the general welfare of the members of the association;
(3) a portion of the remainder may be allocated to retained
earnings;
(4) the remainder shall be allocated at the same uniform rate
to all patrons of the association in proportion to their individual
patronage as follows:
(A) in the case of a member patron, the proportionate amount
of savings return distributed to the member may be in the form of
cash, property, membership certificates, investment certificates
or in any combination of these;
(B) in the case of a subscriber patron, his proportionate
amount of savings returns as the articles or by-laws provide, may be
distributed to him or credited to his account until the amount of
capital subscribed for has been fully paid.
(b) This section does not prevent an association engaged in
rendering services from disposing of the net savings from the
rendering of services in a manner calculated to lower the fees
charged for services or otherwise to further the common benefit of
the members.
(c) This section does not prevent an association from
adopting a system in which the payment of savings returns which
would otherwise be distributed are deferred for a fixed period of
time, nor from adopting a system in which the savings returns
distributed are partly in cash, partly in shares, with the shares to
be retired at a fixed future date, in the order of their serial
number or date of issue.
Recordkeeping
Sec. 35. (a) To record its business operation, every
association shall keep a set of books according to standard
accounting practices.
(b) A written report shall be submitted to the annual meeting
of the association which shall include the following:
(1) a balance sheet, and income and expense statement;
(2) the amount and nature of the association's authorized,
subscribed, and paid-in capital, the number of its shareholders,
and the number of shareholders who were admitted or withdrew during
the year, the par value of its shares, and the rate at which any
return on capital has been paid; and
(3) for nonshare associations, the total number of members,
the number of members who were admitted or withdrew during the year,
and the amount of membership fees received.
(c) The directors shall appoint a review committee, composed
of members who are not principal bookkeepers, accountants, or
employees of the association.
(d) The committee shall report on the quality of the annual
report and the bookkeeping system at the annual meeting.
Annual Report
Sec. 36. (a) Every association having 100 or more members or
an annual business amounting to $20,000 or more shall prepare,
within 120 days of the close of its operations each year, a report
of its condition, sworn to by the president and secretary, which
shall be filed in its registered office. The report shall state:
(1) the name and principal address of the association;
(2) the names, addresses, occupations, and date of expiration
of the terms of the officers and directors, and their compensation,
if any;
(3) the amount and nature of the association's authorized,
subscribed, and paid-in capital, the number of its shareholders and
the number of shareholders who were admitted or withdrew during the
year, the par value of its shares, and the rate at which any
investment dividends have been paid;
(4) for nonshare associations, the total number of members,
the number of members who were admitted or withdrew during the year,
and the amount of membership fees received; and
(5) the receipts, expenditures, assets, and liabilities of
the association.
(b) Every association having 3,000 or more members or an
annual business amounting to $750,000 or more shall file a copy of
the report with the secretary of state.
(c) A person who subscribes or verifies a report containing a
materially false statement, known to the person to be false,
commits a misdemeanor punishable by a fine of not less than $25 nor
more than $200, or by confinement in the county jail for not less
than 30 days nor more than one year, or by both.
Notice of Delinquent Reports
Sec. 37. (a) If an association required by Section 36 of this
Act to file a report with the secretary of state fails to do so in
the prescribed time, the secretary of state shall notify the
association of the delinquency by registered letter mailed to its
principal office within 60 days after the report becomes
delinquent. If an association required by Section 36 of this Act to
file a report at its registered office but not required to file a
copy with the secretary of state fails to do so in the prescribed
time, the secretary of state or any member may notify the
association of the delinquency by registered letter mailed to its
principal office.
(b) If the association fails to file the report within 60 days
from the date of notice under Subsection (a) of this section, a
member of the association or the attorney general may seek a writ of
mandamus against the association and the appropriate officer or
officers to compel the filing to be made, and in the court shall
require the association or the officers at fault to pay all the
expenses of the proceeding including attorney fees.
Dissolution
Sec. 38. (a) An association may, at a regular or special
meeting legally called, be directed to dissolve by a vote of
two-thirds of the entire membership. If it is directed to dissolve,
by a vote of a majority of the members voting, three of their number
shall be designated as trustees, who shall liquidate, on behalf of
the association and within a time fixed in their designation or
within any extension of time, its assets, and shall distribute them
in the manner set forth in this section.
(b) A suit for involuntary dissolution of an association
organized under this Act may be instituted for the causes and
prosecuted in the manner set forth in Articles 7.01 to 7.12, Texas
Non-Profit Corporation Act (Articles 1396-7.01 through 1396-7.12,
Vernon's Texas Civil Statutes), except that any distribution of
assets shall be in the manner set forth in this section.
(c) When an association is dissolved, its assets shall be
distributed in the following manner and order:
(1) by paying its debts and expenses;
(2) by returning to the investors the par value of their
capital;
(3) by returning to the subscribers to invested capital the
amounts paid on their subscriptions;
(4) by returning to patrons the amount of patronage dividends
credited to their accounts;
(5) by returning to members their membership capital; and
(6) by distributing any surplus in either or both of the
following ways, as the articles may provide: either among those
patrons who have been members or subscribers at anytime during the
six years preceding dissolution, on the basis of patronage during
that period, or as a gift to any cooperative association or other
non-profit enterprise which may be designated in the articles.
Use of Name "Cooperative"
Sec. 39. (a) Only an association organized under this Act, a
group organized on a cooperative basis under any other law of this
state, or a foreign corporation operating on a cooperative basis
and authorized to do business in this state under this or any other
law of this state may use the term "cooperative," or any
abbreviation or derivation of the term "cooperative," as part of
its business name, or represent itself, in advertising or
otherwise, as conducting business on a cooperative basis.
(b) A person, firm, or corporation that violates Subsection
(a) of this section commits a misdemeanor punishable by a fine of
not less than $25 nor more than $200, with an additional fine of not
more than $200 for each month during which a violation occurs after
the first month, or by confinement in the county jail for not less
than 30 days nor more than one year, or by any combination of those
punishments.
(c) The attorney general may sue to enjoin a violation of this
section.
(d) If a court of competent jurisdiction renders judgment
that a person, firm, or corporation which employed the name
"cooperative" prior to this Act, is not organized on a cooperative
basis, but may nonetheless continue to use the word "cooperative,"
the business shall always place immediately after its name the
words "does not comply with the cooperative association law of
Texas" in the same kind of type, and in letters not less than
two-thirds as large, as those used in the word "cooperative."
Sec. 39A. [Expired].
Promotion Expenses
Sec. 40. (a) No association may use its funds, directly or
indirectly, issue shares, or incur indebtedness for the payment of
compensation for the organization of the association, except
necessary legal fees, or for the payment of promotion expenses, in
excess of five percent of the amount paid for the shares or
membership certificates involved in the promotion transaction.
(b) An officer, director, or agent of an association who
gives, or any person, firm, corporation or association who receives
a promotion commission in violation of this section commits a
misdemeanor and may be punished by a fine of not less than $25, nor
more than $200, or by confinement in the county jail for not less
than 30 days nor more than one year, or by both.
False Reports
Sec. 41. A person, firm, corporation, or association that
maliciously and knowingly spreads false reports about the
management or finances of any association commits a misdemeanor
punishable by a fine of not less than $25 and not more than $200, or
by confinement in the county jail for not less than 30 days nor more
than one year, or by both.
Existing Cooperative Groups
Sec. 42. Any group operating on a cooperative basis on the
effective date of this Act may elect by a vote of two-thirds of the
members voting to secure the benefits of and be bound by this Act.
If it elects to secure the benefits of this Act, it shall amend its
articles and by-laws to conform with this Act. A certified copy of
the amended articles shall be filed and recorded with the secretary
of state and a fee of $5 shall be paid.
Foreign Corporations and Associations
Sec. 43. A foreign corporation or association operating on a
cooperative basis and complying with the applicable laws of the
state in which it is organized may transact business in this state
as a foreign cooperative corporation or association.
Exemption From Taxes
Sec. 44. Each association organized under this Act is exempt
from the franchise tax and from license fees imposed by the state or
a political subdivision of the state. However, an association is
exempt from the franchise tax imposed by Chapter 171, Tax Code, only
if the association is exempted by that chapter.
Exemption
Sec. 45. This Act does not apply to any corporation or
association organized and now existing or in the future organized
under the Cooperative Marketing Act, as amended (Articles 5737
through 5764, Revised Civil Statutes of Texas, 1925).
Effect of Invalidity of Part of This Act
Sec. 46. If a court of competent jurisdiction shall adjudge
to be invalid or unconstitutional any clause, sentence, subsection
or section of this Act, such judgment or decree shall not affect,
impair, invalidate, or nullify the remainder of this Act, but the
effect thereof shall be confined to the clause, sentence,
subsection or section of this Act so adjudged to be invalid or
unconstitutional.
Applicability; Expiration
Sec. 47. (a) Except as provided by Title 8, Business
Organizations Code, this Act does not apply to an association to
which the Business Organizations Code applies.
(b) This Act expires January 1, 2010.
Acts 1975, 64th Leg., p. 814, ch. 318, eff. Sept. 1, 1975. Amended
by Acts 1977, 65th Leg., p. 279, ch. 134, Sec. 1, eff. May 11, 1977;
Acts 1981, 67th Leg., p. 1777, ch. 389, Sec. 27, eff. Jan. 1, 1982;
Acts 1991, 72nd Leg., ch. 855, Sec. 1 to 3, eff. Aug. 26, 1991; Acts
1991, 72nd Leg., ch. 897, Sec. 1, eff. June 16, 1991; Acts 1997,
75th Leg., ch. 904, Sec. 6, eff. Sept. 1, 1997.
Sec. 47 added by Acts 2003, 78th Leg., ch. 182, Sec. 5, eff. Jan. 1,
2006.
Text of article effective until January 1, 2010
Art. 1396-70.01. TEXAS UNIFORM UNINCORPORATED NONPROFIT
ASSOCIATION ACT.
Short Title
Sec. 1. This Act may be cited as the Texas Uniform
Unincorporated Nonprofit Association Act.
Definitions
Sec. 2. In this Act:
(1) "Member" means a person who, under the rules or practices
of a nonprofit association, may participate in the selection of
persons authorized to manage the affairs of the nonprofit
association or in the development of policy of the nonprofit
association.
(2) "Nonprofit association" means an unincorporated
organization, other than one created by a trust, consisting of
three or more members joined by mutual consent for a common,
nonprofit purpose. However, joint tenancy, tenancy in common, or
tenancy by the entireties does not by itself establish a nonprofit
association, even if the co-owners share use of the property for a
nonprofit purpose.
(3) "Person" means an individual, corporation, business
trust, estate, trust, partnership, limited liability company,
association, joint venture, government, governmental subdivision,
agency, or instrumentality, or any other legal or commercial
entity.
(4) "State" means a state of the United States, the District
of Columbia, the Commonwealth of Puerto Rico, or any territory or
insular possession subject to the jurisdiction of the United
States.
Supplementary General Principles of Law and Equity
Sec. 3. Principles of law and equity supplement this Act
unless displaced by a particular provision of it.
Territorial Application
Sec. 4. Real and personal property in this state may be
acquired, held, encumbered, and transferred by a nonprofit
association, whether or not the nonprofit association or a member
has any other relationship to this state.
Real and Personal Property; Nonprofit Association as Beneficiary
Sec. 5. (a) A nonprofit association in its name may acquire,
hold, encumber, or transfer an estate or interest in real or
personal property.
(b) A nonprofit association may be a beneficiary of a trust,
contract, or will.
Statement of Authority as to Real Property
Sec. 6. (a) A nonprofit association may execute and record a
statement of authority to transfer an estate or interest in real
property in the name of the nonprofit association.
(b) An estate or interest in real property in the name of a
nonprofit association may be transferred by a person so authorized
in a statement of authority recorded in the county clerk's office in
the county in which a transfer of the property would be recorded.
(c) A statement of authority must set forth:
(1) the name of the nonprofit association;
(2) the address in this state, including the street address,
if any, of the nonprofit association, or, if the nonprofit
association does not have an address in this state, its address out
of state; and
(3) the name or title of a person authorized to transfer an
estate or interest in real property held in the name of the
nonprofit association.
(d) A statement of authority 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.
(e) The county clerk may collect a fee for recording a
statement of authority in the amount authorized for recording a
transfer of real property.
(f) An amendment, including a cancellation, of a statement of
authority must meet the requirements for execution and recording of
an original statement. Unless canceled earlier, a recorded
statement of authority or its most recent amendment is canceled by
operation of law on the fifth anniversary of the date of the most
recent recording.
(g) If the record title to real property is in the name of a
nonprofit association and the statement of authority is recorded in
the county clerk's office of the county in which a transfer of real
property would be recorded, the authority of the person named in a
statement of authority is conclusive in favor of a person who gives
value without notice that the person lacks authority.
Liability in Tort and Contract
Sec. 7. (a) A nonprofit association is a legal entity
separate from its members for the purposes of determining and
enforcing rights, duties, and liabilities in contract and tort.
(b) A person is not liable for a breach of a nonprofit
association's contract merely because the person is a member, is
authorized to participate in the management of the affairs of the
nonprofit association, or is a person considered to be a member by
the nonprofit association.
(c) A person is not liable for a tortious act or omission for
which a nonprofit association is liable merely because the person
is a member, is authorized to participate in the management of the
affairs of the nonprofit association, or is a person considered as a
member by the nonprofit association.
(d) A tortious act or omission of a member or other person for
which a nonprofit association is liable is not imputed to a person
merely because the person is a member of the nonprofit association,
is authorized to participate in the management of the affairs of the
nonprofit association, or is a person considered as a member by the
nonprofit association.
(e) A member of, or a person considered to be a member by, a
nonprofit association may assert a claim against the nonprofit
association. A nonprofit association may assert a claim against a
member or a person considered to be a member by the nonprofit
association.
Capacity to Assert and Defend; Standing
Sec. 8. (a) A nonprofit association, in its name, may
institute, defend, intervene, or participate in a judicial,
administrative, or other governmental proceeding or in an
arbitration, mediation, or any other form of alternative dispute
resolution.
(b) A nonprofit association may assert a claim in its name on
behalf of its members if one or more members of the nonprofit
association have standing to assert a claim in their own right, the
interests 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.
Effect of Judgment or Order
Sec. 9. A judgment or order against a nonprofit association
is not by itself a judgment or order against a member or a person
considered by the nonprofit association to be a member.
Disposition of Personal Property of Inactive Nonprofit Association
Sec. 10. (a) If a nonprofit association has been inactive for
three years or longer, or a shorter period as specified in a
document of the nonprofit association, a person in possession or
control of personal property of the nonprofit association may
transfer the custody of the property:
(1) if a document of a nonprofit association specifies a
person to whom transfer is to be made under these circumstances, to
that person; or
(2) if no person is so specified, to a nonprofit association
or nonprofit corporation pursuing broadly similar purposes, or to a
government or governmental subdivision, agency, or
instrumentality.
(b) Notwithstanding the above, if a nonprofit association is
classified under the Internal Revenue Code of 1986 as a 501(c)(3)
organization or is or holds itself out to be established or
operating for a charitable, religious, or educational purpose, as
defined in Section 501(c)(3) of the Internal Revenue Code of 1986,
then any distribution must be to another nonprofit association or
nonprofit corporation with similar charitable, religious, or
educational purposes.
Books and Records
Sec. 11. (a) A nonprofit association shall keep correct and
complete books and records of account for at least three years after
the end of each fiscal year and shall make them available to the
members of the association for inspection and copying upon request.
(b) The attorney general may inspect, examine, and make
copies of the books, records, and other documents the attorney
general deems necessary and investigate the association to
determine if a violation of any law of this state has occurred.
Appointment of Agent to Receive Service of Process
Sec. 12. (a) A nonprofit association may file in the office of
the secretary of state a statement appointing an agent authorized
to receive service of process.
(b) A statement appointing an agent must set forth:
(1) the name of the nonprofit association;
(2) the federal tax identification number of the nonprofit
association, if applicable;
(3) the address in this state, including the street address,
if any, of the nonprofit association, or, if the nonprofit
association does not have an address in this state, its address out
of state; and
(4) the name of the person in this state authorized to receive
service of process and the person's address, including the street
address, in this state.
(c) A statement appointing an agent must be signed by a person
authorized to manage the affairs of the nonprofit association. The
statement must also be signed by the person appointed agent, who
thereby accepts the appointment. The appointed agent may resign by
filing a resignation in the office of the secretary of state and
giving notice to the nonprofit association.
(d) The secretary of state may collect a fee for filing a
statement appointing an agent to receive service of process, an
amendment, a cancellation, or a resignation in the amount charged
for filing similar documents.
(e) An amendment to a statement appointing an agent to
receive service of process must meet the requirements for execution
of an original statement.
(f) A statement appointing an agent may be canceled by filing
with the secretary of state a written notice of cancellation
executed by a person authorized to manage the affairs of the
nonprofit association. A notice of cancellation must contain the
name of the nonprofit association; the federal tax identification
number of the nonprofit association, if applicable; the date of
filing of its statement appointing the agent; and a current street
address of the nonprofit association in this state, and outside
this state, if applicable.
(g) The secretary of state may promulgate forms and adopt
procedural rules on filing documents under this section.
Claim Not Abated by Change
Sec. 13. A claim for relief against a nonprofit association
does not abate merely because of a change in its members or persons
authorized to manage the affairs of the nonprofit association.
Summons and Complaint; Service on Whom
Sec. 14. In an action or proceeding against a nonprofit
association, a summons and complaint must be served on an agent
authorized by appointment to receive service of process, an
officer, a managing or general agent, or a person authorized to
participate in the management of its affairs, in accordance with
the Civil Practice and Remedies Code. Within 10 days of a request
by the attorney general to an officer or board member of a nonprofit
association or to the nonprofit association, the nonprofit
association shall provide to the attorney general the names,
current addresses, and telephone numbers of:
(1) agents authorized to receive service of process on behalf
of the nonprofit association; and
(2) the officers, managing or general agents, and other
persons authorized to participate in the management of the affairs
of the nonprofit association.
Uniformity of Application and Construction
Sec. 15. This Act shall be applied and construed to
effectuate its general purpose to make uniform the law with respect
to the subject of this Act among states enacting it.
Transition Concerning Real and Personal Property
Sec. 16. If, before the effective date of this Act, an estate
or interest in real or personal property was by the terms of the
transfer purportedly transferred to a nonprofit association, but
under the law the estate or interest was vested in a fiduciary such
as officers of the nonprofit association to hold the estate or
interest for members of the nonprofit association, on or after the
effective date of this Act the fiduciary may transfer the estate or
interest to the nonprofit association in its name, or the nonprofit
association, by appropriate proceedings, may require that the
estate or interest be transferred to it in its name.
Saving Clause
Sec. 17. This Act does not affect an action or proceeding
commenced or a right accrued before this Act takes effect.
Effect on Other Law
Sec. 18. This Act replaces existing law with respect to
matters covered by this Act but does not affect other law covering
unincorporated nonprofit associations.
Applicability; Expiration
Sec. 19. (a) Except as provided by Title 8, Business
Organizations Code, this Act does not apply to a nonprofit
association to which the Business Organizations Code applies.
(b) This Act expires January 1, 2010.
Acts 1995, 74th Leg., ch. 919, eff. Sept. 1, 1995.
Sec. 19 added by Acts 2003, 78th Leg., ch. 182, Sec. 6, eff. Jan. 1,
2006.
Art. 1399. LODGES. 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 (Masonic); the grand
lodge of the Independent Order of Odd Fellows of Texas, and other
like institutions and orders organized for charitable or benevolent
purposes may, by the consent of their respective bodies expressed
by a resolution or otherwise, become bodies corporate under this
title. Except as provided by Title 8, Business Organizations Code,
this article and Articles 1400-1407, Revised Statutes, do not apply
to a grand body to which the Business Organizations Code applies.
Acts 1899, 26th Leg., p. 236, ch. 138, Sec. 1.
Amended by Acts 2003, 78th Leg., ch. 182, Sec. 13, eff. Jan. 1,
2006.
Art. 1400. LODGES: CHARTER. The incorporation of any such
grand lodge shall include all of its subordinate lodges, or bodies
holding warrant or charter under such grand body, and each of such
subordinate bodies shall have all the rights of other corporations
under and by the name given it in such warrant or charter issued by
the grand body to which it is attached, such rights being provided
for in the charter of the grand body. Such subordinate bodies
shall, at all times, be subject to the jurisdiction and control of
their respective grand bodies, and subject to have their warrants
or charters revoked by such grand body.
Acts 1899, 26th Leg., p. 236, ch. 138, Sec. 1.
Art. 1401. LODGES: TRUSTEES. Such grand bodies and their
subordinates may elect their own trustees or directors, or name
certain of their officers as such, and perform such other acts as
are directed or provided by law in the case of other corporations,
and shall have power to make constitutions and by-laws for the
government of their affairs.
Acts 1899, 26th Leg., p. 236, ch. 138, Sec. 1.
Art. 1402. LODGES: PROPERTY. Such orders, grand and
subordinate, shall have the right to acquire and hold such lands and
personalty as may be necessary or convenient for sites upon which to
erect buildings for their use and occupancy, and for homes and
schools for their widows, orphans or aged or decrepit or indigent
members, and to sell or mortgage the same, such conveyances to be
executed by the presiding officer, attested by the secretary with
the seal. The power and authority of such subordinate bodies to
sell or to mortgage shall be subject to such conditions as may be
from time to time prescribed or established by the grand body to
which the subordinate is attached.
Acts 1899, 26th Leg., p. 236, ch. 138, Sec. 1.
Art. 1403. LODGES: DEMISE. Upon the demise of any
subordinate body so incorporated, all property and rights existing
in such subordinate body shall pass to, and vest in, the grand body
to which it was attached, subject to the payment of all debts due by
such subordinate body; but the grand body shall never be liable for
any sum greater than the actual cash value of the effects of such
subordinate actually received by it, or its authority.
Acts 1899, 26th Leg., p. 236, ch. 138, Sec. 1.
Art. 1404. LODGES: LOANS. Any grand body incorporated under
this subdivision shall have the right and authority to loan any
funds held and owned by it for charitable purposes, for the
endowment of any of its institutions, or otherwise, and may secure
such loans by taking and receiving liens on real estate, or in such
other manner as it may elect. Upon sale of any real estate under
such lien, such grand body may become the purchaser thereof, and
hold title thereto.
Acts 1899, 26th Leg., p. 236, ch. 138, Sec. 1.
Art. 1405. LODGES: DURATION. Any grand body incorporating
under this subdivision may provide in its charter for the
expiration of its corporate powers at the end of any given number of
years; or it may provide in its charter for its perpetual
existence, and by its corporate name have perpetual succession of
the officers and members.
Acts 1899, 26th Leg., p. 236, ch. 138, Sec. 1.
Art. 1406. EXISTING LODGE. Any such grand body or
subordinate body now having a valid chartered existence may
continue under its present charter, or reincorporate under this
subdivision.
Acts 1899, 26th Leg., p. 236, ch. 138, Sec. 1.
Art. 1407. LODGES: TAX. Bodies incorporated under this
subdivision shall not be subject to, or required to pay a franchise
tax. However, an incorporated body is exempt from the franchise tax
imposed by Chapter 171, Tax Code, only if the body is exempted by
that chapter.
Acts 1899, 26th Leg., p. 236, ch. 138, Sec. 1. Amended by Acts 1981,
67th Leg., p. 1775, ch. 389, Sec. 21, eff. Jan. 1, 1982.
Art. 1407a. CHURCH BENEFIT PLANS AND CHURCH BENEFITS BOARDS.
Definition
Sec. 1. In this Act "church benefits board" means an
organization as described in Section 414(e)(3)(A) of the Internal
Revenue Code of 1986 (26 U.S.C. Section 414(e) ) that:
(1) has the principal purpose or function of administering or
funding a plan or program for providing retirement benefits,
welfare benefits, or both for the ministers or employees of a church
or a conference, convention, or association of churches; and
(2) is controlled by or affiliated with a church or a
conference, convention, or association of churches.
Pensions and Benefits
Sec. 2. If duly authorized by its members or as otherwise
provided by law, a domestic or foreign nonprofit corporation formed
for a religious purpose may provide, directly or through a separate
church benefits board, for the support and payment of pensions and
benefits to its ministers, teachers, employees, trustees,
directors, or other functionaries and to the ministers, teachers,
employees, trustees, directors, or functionaries of organizations
controlled by or affiliated with a church or a conference,
convention, or association of churches under its jurisdiction and
control and may provide for the payment of pensions and benefits to
the spouse, children, dependents, or other beneficiaries of those
persons.
Contributions
Sec. 3. A church benefits board may provide for the
collection of contributions and other payments to aid in providing
pensions and benefits under this Act and for the creation,
maintenance, investment, management, and disbursement of necessary
annuities, endowments, reserves, and other funds for those
purposes. Payments may be received from a trust fund or corporation
that funds a "church plan" as defined by Section 414(e), Internal
Revenue Code of 1986 (26 U.S.C. Section 414(e) ).
Documents and Agreements
Sec. 4. A church benefits board may provide certificates or
agreements of participation and debentures and indemnification
agreements to its program participants as appropriate to accomplish
its purposes, may act as trustee under a lawful trust committed to
it by contract, will, or otherwise, and may act as agent for the
performance of a lawful act relating to the purposes of the trust.
Indemnification
Sec. 5. A church benefits board, directly or through an
affiliate wholly owned by the board, may agree to indemnify against
damage or risk of loss:
(1) its affiliated ministers, teachers, employees, trustees,
functionaries, directors, and their families, dependents, and
beneficiaries; and
(2) a church, a convention, conference, or association of
churches, or an organization that is controlled by or affiliated
with it or with a church or a convention, conference, or association
of churches.
Protection of Benefits
Sec. 6. Money or other benefits that have been or will be
provided to a participant or a beneficiary under a plan or program
of retirement income, relief, welfare, or employee benefit provided
by or through a church benefits board is not subject to execution,
attachment, garnishment, or other process and may not be seized,
taken, appropriated, or applied as part of a judicial, legal, or
equitable process or operation of a law other than a constitution to
pay a debt or liability of the participant or beneficiary. This
section does not apply to a qualified domestic relations order or an
amount required by the church benefits board to recover costs or
expenses it incurred in the plan or program.
Assignment
Sec. 7. If a plan or program under this Act contains a
provision prohibiting assignment or other transfer by a beneficiary
of money or benefits to be paid or rendered or of other rights under
the plan or program without the written consent of the church
benefits board, a prohibited assignment or transfer or an attempt
to make a prohibited assignment or transfer is void if made without
that consent.
Insurance Code Not Applicable
Sec. 8. The Insurance Code does not apply to a church benefits
board or its programs, plans, benefits, activities, or affiliates.
Applicability
Sec. 9. Except as provided by Title 8, Business Organizations
Code, this Act does not apply to a church benefits board to which
the Business Organizations Code applies.
Acts 1987, 70th Leg., ch. 963, eff. June 19, 1987.
Sec. 9 added by Acts 2003, 78th Leg., ch. 182, Sec. 14, eff. Jan. 1,
2006.
________________________
