BUSINESS ORGANIZATIONS CODE
CHAPTER 12. ADMINISTRATIVE POWERS
SUBCHAPTER A. SECRETARY OF STATE
§ 12.001. AUTHORITY OF SECRETARY OF STATE. (a) The
secretary of state may adopt procedural rules for the filing of
instruments, including the filing of instruments by electronic or
other means, authorized to be filed with the secretary of state
under this code.
(b) The secretary of state has the power and authority
reasonably necessary to enable the secretary to perform the duties
imposed on the secretary under this code.
Acts 2003, 78th Leg., ch. 182, § 1, eff. Jan. 1, 2006.
§ 12.002. INTERROGATORIES BY SECRETARY OF
STATE. (a) As necessary and proper for the secretary of state to
determine whether a filing entity or a foreign filing entity has
complied with this code, the secretary of state may serve by mail
interrogatories on the entity or a managerial official.
(b) An entity or individual to whom an interrogatory is sent
by the secretary of state shall answer the interrogatory before the
later of the 31st day after the date the interrogatory is mailed or
a date set by the secretary of state. Each answer to an
interrogatory must be complete, in writing, and under oath. An
interrogatory directed to an individual shall be answered by the
individual, and an interrogatory directed to an entity shall be
answered by a managerial official.
(c) The secretary of state is not required to file any
instrument to which an interrogatory relates until the
interrogatory is answered as provided by this section and only if
the instrument conforms to the requirements of this code. The
secretary of state shall certify to the attorney general for action
as the attorney general may consider appropriate an interrogatory
and answer to the interrogatory that disclose a violation of this
code.
(d) This section and Sections 12.003 and 12.004 do not apply
to domestic real estate investment trusts.
Acts 2003, 78th Leg., ch. 182, § 1, eff. Jan. 1, 2006.
§ 12.003. INFORMATION DISCLOSED BY INTERROGATORIES. An
interrogatory sent by the secretary of state and the answer to the
interrogatory are subject to Chapter 552, Government Code.
Acts 2003, 78th Leg., ch. 182, § 1, eff. Jan. 1, 2006.
§ 12.004. APPEALS FROM SECRETARY OF STATE. (a) If the
secretary of state does not approve the filing of a filing
instrument, the secretary of state shall, before the 11th day after
the date of the delivery of the filing instrument to the secretary
of state, notify the person delivering the filing instrument of the
disapproval and specifying each reason for the disapproval. The
disapproval of a filing instrument by the secretary of state may be
appealed only to a district court of Travis County by filing with
the court clerk a petition, a copy of the filing instrument sought
to be filed, and a copy of any written disapproval by the secretary
of state of the filing instrument. The court shall try the appeal
de novo and shall sustain the action of the secretary of state or
direct the secretary to take any action the court considers to be
proper.
(b) A final order or judgment entered by the district court
under this section in review of any ruling or decision of the
secretary of state may be appealed as in other civil actions.
Acts 2003, 78th Leg., ch. 182, § 1, eff. Jan. 1, 2006.
SUBCHAPTER B. ATTORNEY GENERAL
§ 12.151. AUTHORITY OF ATTORNEY GENERAL TO EXAMINE BOOKS
AND RECORDS. Each filing entity and foreign filing entity shall
permit the attorney general to inspect, examine, and make copies,
as the attorney general considers necessary in the performance of a
power or duty of the attorney general, of any record of the entity.
A record of the entity includes minutes and a book, account, letter,
memorandum, document, check, voucher, telegram, constitution, and
bylaw.
Acts 2003, 78th Leg., ch. 182, § 1, eff. Jan. 1, 2006.
§ 12.152. REQUEST TO EXAMINE. To examine the business
of a filing entity or foreign filing entity, the attorney general
shall make a written request to a managerial official, who shall
immediately permit the attorney general to inspect, examine, and
make copies of the records of the entity.
Acts 2003, 78th Leg., ch. 182, § 1, eff. Jan. 1, 2006.
§ 12.153. AUTHORITY TO EXAMINE MANAGEMENT OF
ENTITY. The attorney general may investigate the organization,
conduct, and management of a filing entity or foreign filing entity
and determine if the entity has been or is engaged in acts or
conduct in violation of:
(1) its governing documents; or
(2) any law of this state.
Acts 2003, 78th Leg., ch. 182, § 1, eff. Jan. 1, 2006.
§ 12.154. AUTHORITY TO DISCLOSE
INFORMATION. Information held by the attorney general and derived
in the course of an examination of an entity's records or documents
is not public information, is not subject to Chapter 552,
Government Code, and may not be disclosed except:
(1) in the course of an administrative or judicial
proceeding in which the state is a party;
(2) in a suit by the state to:
(A) revoke the registration of the foreign filing
entity or terminate the certificate of formation of the filing
entity; or
(B) collect penalties for a violation of the law
of this state; or
(3) to provide information to any officer of this
state charged with the enforcement of its laws.
Acts 2003, 78th Leg., ch. 182, § 1, eff. Jan. 1, 2006.
§ 12.155. FORFEITURE OF BUSINESS PRIVILEGES. A foreign
filing entity or a filing entity that fails or refuses to permit the
attorney general to examine or make copies of a record, without
regard to whether the record is located in this or another state,
forfeits the right of the entity to do business in this state, and
the entity's registration or certificate of formation shall be
revoked or terminated.
Acts 2003, 78th Leg., ch. 182, § 1, eff. Jan. 1, 2006.
§ 12.156. CRIMINAL PENALTY. (a) A managerial official
or other individual having the authority to manage the affairs of a
filing entity or foreign filing entity commits an offense if the
official or individual fails or refuses to permit the attorney
general to make an investigation of the entity or to examine or to
make copies of a record of the entity.
(b) An offense under this section is a Class B misdemeanor.
Acts 2003, 78th Leg., ch. 182, § 1, eff. Jan. 1, 2006.
SUBCHAPTER C. ENFORCEMENT LIEN
§ 12.201. LIEN FOR LAW VIOLATIONS. (a) If a filing
entity or foreign filing entity violates a law of this state,
including the law against trusts, monopolies, and conspiracies, or
combinations or contracts in restraint of trade, for the violation
of which a fine, penalties, or forfeiture is provided, all of the
entity's property in this state at the time of the violation or that
after the violation comes into this state is, because of the
violation, liable for any fine or penalty under this chapter and for
costs of suit and costs of collection.
(b) The state has a lien on all property of a filing entity
or foreign filing entity in this state on the date a suit is
instituted by or under the direction of the attorney general in a
court of this state for the purpose of forfeiting the certificate of
formation or revoking the registration of the entity or for the
collection of a fine or penalty due to the state.
(c) The filing of a suit for a fine, penalties, or
forfeiture is notice of the lien.
(d) In addition to the property subjected to the lien under
Subsection (b), the lien applies to any property that comes into the
possession of a receiver appointed under Subchapter D.
Acts 2003, 78th Leg., ch. 182, § 1, eff. Jan. 1, 2006.
SUBCHAPTER D. ENFORCEMENT PROCEEDINGS
§ 12.251. RECEIVER. In a suit filed by this state
against a filing entity or foreign filing entity for the
termination of the entity's certificate of formation or
registration or for a fine or penalty, the court in this state in
which the suit is pending:
(1) shall appoint a receiver for the property and
business of the entity in this state or that subsequently comes into
this state during the receivership if the filing entity or foreign
filing entity commences the process of winding up its business in
this or another state or a judgment is rendered against it in this
or another state for the termination of the entity's certificate of
formation or registration; and
(2) may appoint a receiver for the entity if the
interest of the state requires the appointment.
Acts 2003, 78th Leg., ch. 182, § 1, eff. Jan. 1, 2006.
§ 12.252. FORECLOSURE. (a) The attorney general may
bring suit to foreclose a lien created by this chapter.
(b) If a filing entity or a foreign filing entity subject to
this code has commenced the winding up process or has had the
entity's certificate of formation or registration terminated by a
judgment, citation in a suit for foreclosure may be served on any
person in this state who acted and was acting as agent of the entity
in this state when the entity commenced the winding up process or
the entity's certificate of formation or registration was
terminated.
Acts 2003, 78th Leg., ch. 182, § 1, eff. Jan. 1, 2006.
§ 12.253. ACTION AGAINST INSOLVENT ENTITY. When the
attorney general is convinced that a filing entity or foreign
filing entity is insolvent, the attorney general shall institute
quo warranto or other appropriate proceedings to terminate the
certificate of formation or registration of the filing entity or
foreign filing entity that is insolvent.
Acts 2003, 78th Leg., ch. 182, § 1, eff. Jan. 1, 2006.
§ 12.254. SUITS BY DISTRICT OR COUNTY ATTORNEY. A
district or county attorney shall bring and prosecute a proceeding
under Section 12.252 or 12.253 when directed to do so by the
attorney general.
Acts 2003, 78th Leg., ch. 182, § 1, eff. Jan. 1, 2006.
§ 12.255. PERMISSION TO SUE. Before a petition may be
filed by the attorney general or by a district or county attorney in
a suit authorized by Section 12.252 or 12.253, leave must be granted
by the judge of the court in which the proceeding is to be filed.
Acts 2003, 78th Leg., ch. 182, § 1, eff. Jan. 1, 2006.
§ 12.256. EXAMINATION AND NOTICE. (a) The judge of a
court in which a proceeding under Section 12.252 or 12.253 is to be
filed shall carefully examine the petition before granting leave to
sue. The judge may also require an examination into the facts. If
it appears with reasonable certainty from the petition or from the
petition and facts that there is a prima facie showing for the
relief sought, the judge may grant leave to file.
(b) On an application for the appointment of a receiver, the
entity proceeded against is entitled to 10 days' notice before the
day set for the hearing.
Acts 2003, 78th Leg., ch. 182, § 1, eff. Jan. 1, 2006.
§ 12.257. DISMISSAL OF ACTION. (a) A suit authorized
by Section 12.253 or 12.258 may not be filed or, if filed, shall be
dismissed if the entity, through its owners or members, reduces its
indebtedness so that it is not insolvent.
(b) The respondent shall pay the costs of a dismissed suit
under this section.
Acts 2003, 78th Leg., ch. 182, § 1, eff. Jan. 1, 2006.
§ 12.258. LIQUIDATION OF INSOLVENT ENTITY. (a) A
court hearing a proceeding under Section 12.253 against an
insolvent entity may, after the entity has been shown to be
insolvent, appoint one or more receivers for the entity and its
property. The receiver may settle the affairs of the entity,
collect outstanding debts, and divide the money and property
belonging to the entity among its owners after paying the debts of
the entity and all expenses incidental to the judicial proceedings
and receivership.
(b) The court may continue the existence of the entity for
three years and for additional reasonable time as necessary to
accomplish the purposes of this subchapter.
Acts 2003, 78th Leg., ch. 182, § 1, eff. Jan. 1, 2006.
§ 12.259. EXTRAORDINARY REMEDIES; BOND. The state has
a right to a writ of attachment, garnishment, sequestration, or
injunction, without bond, to aid in the enforcement of the state's
rights created by this chapter.
Acts 2003, 78th Leg., ch. 182, § 1, eff. Jan. 1, 2006.
§ 12.260. ABATEMENT OF SUIT. An action or cause of
action for a fine, penalty, or forfeiture that this state has or may
have against a filing entity or foreign filing entity does not abate
because the entity dissolves, voluntarily or otherwise, or the
entity's certificate of formation is terminated or the entity's
registration is revoked.
Acts 2003, 78th Leg., ch. 182, § 1, eff. Jan. 1, 2006.
§ 12.261. PROVISIONS CUMULATIVE. Each right or remedy
provided by this chapter is cumulative and does not affect any other
right or remedy for the enforcement, payment, or collection of a
fine, forfeiture, or penalty or any other means provided by law for
securing or preserving testimony or inquiring into the rights or
privileges of an entity.
Acts 2003, 78th Leg., ch. 182, § 1, eff. Jan. 1, 2006.
