BUSINESS ORGANIZATIONS CODE
CHAPTER 22. NONPROFIT CORPORATIONS
SUBCHAPTER A. GENERAL PROVISIONS
§ 22.001. DEFINITIONS. In this chapter:
(1) "Board of directors" means the group of persons
vested with the management of the affairs of the corporation,
regardless of the name used to designate the group.
(2) "Bylaws" means the rules adopted to regulate or
manage the corporation, regardless of the name used to designate
the rules.
(3) "Corporation" or "domestic corporation" means a
domestic nonprofit corporation subject to this chapter.
(4) "Foreign corporation" means a foreign nonprofit
corporation.
(5) "Nonprofit corporation" means a corporation no
part of the income of which is distributable to a member, director,
or officer of the corporation.
(6) "Ordinary care" means the care that an ordinarily
prudent person in a similar position would exercise under similar
circumstances.
Acts 2003, 78th Leg., ch. 182, § 1, eff. Jan. 1, 2006.
§ 22.002. MEETINGS BY REMOTE COMMUNICATIONS
TECHNOLOGY. Subject to the provisions of this code and the
certificate of formation and bylaws of a corporation, a meeting of
the members of a corporation, the board of directors of a
corporation, or any committee designated by the board of directors
of a corporation may be held by means of a remote electronic
communications system, including videoconferencing technology or
the Internet, only if:
(1) each person entitled to participate in the meeting
consents to the meeting being held by means of that system; and
(2) the system provides access to the meeting in a
manner or using a method by which each person participating in the
meeting can communicate concurrently with each other participant.
Acts 2003, 78th Leg., ch. 182, § 1, eff. Jan. 1, 2006.
SUBCHAPTER B. PURPOSES AND POWERS
§ 22.051. GENERAL PURPOSES. A nonprofit corporation
may be formed for any lawful purpose or purposes not expressly
prohibited under this chapter or Chapter 2, including any purpose
described by Section 2.002.
Acts 2003, 78th Leg., ch. 182, § 1, eff. Jan. 1, 2006.
§ 22.052. DENTAL HEALTH SERVICE CORPORATION. (a) A
charitable corporation may be formed to operate a dental health
service corporation that manages and coordinates the relationship
between a dentist who contracts to perform dental services and a
patient who will receive the services as a member of a group that
contracted with the dental health service corporation to provide
dental care to group members.
(b) The certificate of formation for a charitable
corporation formed under this section must have attached as an
exhibit:
(1) an affidavit of the organizer or organizers
stating:
(A) that not less than 30 percent of the dentists
legally engaged in the practice of dentistry in this state have
signed a contract to perform the required dental services for a
period of at least one year after incorporation; and
(B) the names and addresses of those dentists;
and
(2) a certification by the State Board of Dental
Examiners that:
(A) the applicants are reputable residents of
this state of good moral character; and
(B) the corporation will be in the best interest
of the public health.
(c) A corporation formed under this section must have at
least 12 directors, including 9 directors who are licensed to
practice dentistry in this state and are actively engaged in the
practice of dentistry in this state.
(d) A corporation formed under this section shall maintain
as participating or contracting dentists at least 30 percent of the
number of dentists actually engaged in the practice of dentistry in
this state. The corporation shall file annually in September with
the State Board of Dental Examiners the name and address of each
participating or contracting dentist.
(e) A corporation formed under this section may not:
(1) prevent a patient from selecting the licensed
dentist of the patient's choice to provide dental services to the
patient;
(2) deny a 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; or
(4) authorize any person to regulate, interfere with,
or intervene in any manner in the diagnosis or treatment provided by
a licensed dentist to a patient.
(f) A corporation formed under this section may require the
attending dentist to provide a narrative oral or written
description of the dental services provided to determine benefits
or provide proof of treatment. The corporation may request but may
not require diagnostic aids used in the course of treatment.
Acts 2003, 78th Leg., ch. 182, § 1, eff. Jan. 1, 2006.
§ 22.053. DIVIDENDS PROHIBITED. A dividend may not be
paid to, and no part of the income of a corporation may be
distributed to, the corporation's members, directors, or officers.
Acts 2003, 78th Leg., ch. 182, § 1, eff. Jan. 1, 2006.
§ 22.054. AUTHORIZED BENEFITS AND DISTRIBUTIONS. A
corporation may:
(1) pay compensation in a reasonable amount to the
members, directors, or officers of the corporation for services
provided;
(2) confer benefits on the corporation's members in
conformity with the corporation's purposes; and
(3) make distributions to the corporation's members on
winding up and termination to the extent authorized by this
chapter.
Acts 2003, 78th Leg., ch. 182, § 1, eff. Jan. 1, 2006.
§ 22.055. POWER TO ASSIST EMPLOYEE OR OFFICER. (a) A
corporation may lend money to or otherwise assist an employee or
officer of the corporation, but not a director, if the loan or
assistance may reasonably be expected to directly or indirectly
benefit the corporation.
(b) A loan made to an officer must be:
(1) made for the purpose of financing the officer's
principal residence; or
(2) set in an original principal amount that does not
exceed:
(A) 100 percent of the officer's annual salary,
if the loan is made before the first anniversary of the officer's
employment; or
(B) 50 percent of the officer's annual salary, if
the loan is made in any subsequent year.
Acts 2003, 78th Leg., ch. 182, § 1, eff. Jan. 1, 2006.
§ 22.056. HEALTH ORGANIZATION
CORPORATION. (a) 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 form a
corporation 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.
(b) When doctors of medicine, osteopathy, and podiatry form
a 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, the certificate of
formation or bylaws of the corporation, 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 2003, 78th Leg., ch. 182, § 1, eff. Jan. 1, 2006.
SUBCHAPTER C. FORMATION AND GOVERNING DOCUMENTS
§ 22.101. INCORPORATION OF CERTAIN ORGANIZATIONS. A
religious society, a charitable, benevolent, literary, or social
association, or a church may incorporate as a corporation governed
by this chapter with the consent of a majority of its members.
Those members shall authorize the organizers to execute the
certificate of formation.
Acts 2003, 78th Leg., ch. 182, § 1, eff. Jan. 1, 2006.
§ 22.102. BYLAWS. (a) The initial bylaws of a
corporation shall be adopted by the corporation's board of
directors or, if the management of the corporation is vested in the
corporation's members, by the members.
(b) The bylaws may contain provisions for the regulation and
management of the affairs of the corporation that are consistent
with law and the certificate of formation.
(c) The board of directors may amend or repeal the bylaws,
or adopt new bylaws, unless:
(1) this chapter or the corporation's certificate of
formation wholly or partly reserves the power exclusively to the
corporation's members;
(2) the management of the corporation is vested in the
corporation's members; or
(3) in amending, repealing, or adopting a bylaw, the
members expressly provide that the board of directors may not amend
or repeal the bylaw.
Acts 2003, 78th Leg., ch. 182, § 1, eff. Jan. 1, 2006.
§ 22.103. INCONSISTENCY BETWEEN CERTIFICATE OF
FORMATION AND BYLAW. (a) A provision of a certificate of
formation of a corporation that is inconsistent with a bylaw
controls over the bylaw, except as provided by Subsection (b).
(b) A change in the number of directors by amendment to the
bylaws controls over the number stated in the certificate of
formation, unless the certificate of formation provides that a
change in the number of directors may be made only by amendment to
the certificate.
Acts 2003, 78th Leg., ch. 182, § 1, eff. Jan. 1, 2006.
§ 22.104. ORGANIZATION MEETING. (a) After the
certificate of formation is filed, the board of directors named in
the certificate of formation of a corporation shall hold an
organization meeting of the board, either in or out of this state,
at the call of the incorporators or a majority of the directors to
adopt bylaws and elect officers and for other purposes determined
by the board at the meeting. The incorporators or directors calling
the meeting shall send notice of the time and place of the meeting
to each director named in the certificate of formation not later
than the third day before the date of the meeting.
(b) A first meeting of the members may be held at the call of
the majority of the directors on notice provided not later than the
third day before the date of the meeting. The notice must state the
purposes of the meeting.
(c) If the management of a corporation is vested in the
corporation's members, the members shall hold the organization
meeting on the call of an incorporator. An incorporator who calls
the meeting shall:
(1) send notice of the time and place of the meeting to
each member not later than the third day before the date of the
meeting;
(2) if the corporation is a church, make an oral
announcement of the time and place of the meeting at a regularly
scheduled worship service before the meeting; or
(3) send notice of the meeting in the manner provided
by the certificate of formation.
Acts 2003, 78th Leg., ch. 182, § 1, eff. Jan. 1, 2006.
§ 22.105. PROCEDURES TO ADOPT AMENDMENT TO CERTIFICATE
OF FORMATION BY MEMBERS HAVING VOTING RIGHTS. (a) Except as
provided by Section 22.107(b), to amend the certificate of
formation of a corporation with members having voting rights, the
board of directors of the corporation must adopt a resolution
specifying the proposed amendment and directing that the amendment
be submitted to a vote at an annual or special meeting of the
members having voting rights.
(b) Written notice containing the proposed amendment or a
summary of the changes to be effected by the amendment shall be
given to each member entitled to vote at the meeting within the time
and in the manner provided by this chapter for giving notice of a
meeting of members.
(c) The proposed amendment shall be adopted on receiving the
vote required by Section 22.164.
Acts 2003, 78th Leg., ch. 182, § 1, eff. Jan. 1, 2006.
§ 22.106. PROCEDURES TO ADOPT AMENDMENT TO CERTIFICATE
OF FORMATION BY MANAGING MEMBERS. (a) To be approved, a proposed
amendment to the certificate of formation of a corporation the
management of the affairs of which is vested in the corporation's
members under Section 22.202 must be submitted to a vote at an
annual, regular, or special meeting of the members.
(b) Except as otherwise provided by the certificate of
formation or bylaws, notice containing the proposed amendment or a
summary of the changes to be effected by the amendment shall be
given to the members within the time and in the manner provided by
this chapter for giving notice of a meeting of members.
(c) The proposed amendment shall be adopted on receiving the
vote required by Section 22.164.
Acts 2003, 78th Leg., ch. 182, § 1, eff. Jan. 1, 2006.
§ 22.107. PROCEDURES TO ADOPT AMENDMENT TO CERTIFICATE
OF FORMATION BY BOARD OF DIRECTORS. (a) If a corporation has no
members or has no members with voting rights, or in the case of an
amendment under Subsection (b), an amendment to the corporation's
certificate of formation shall be adopted at a meeting of the board
of directors on receiving the vote of directors required by Section
22.164.
(b) Except as otherwise provided by the certificate of
formation, the board of directors of a corporation with members
having voting rights may, without member approval, adopt amendments
to the certificate of formation to:
(1) extend the duration of the corporation if the
corporation was incorporated when limited duration was required by
law;
(2) delete the names and addresses of the initial
directors;
(3) 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
(4) change the corporate name by:
(A) substituting the word "corporation,"
"incorporated," "company," or "limited," or the abbreviation
"corp.," "inc.," "co.," or "ltd.," for a similar word or
abbreviation in the name; or
(B) adding, deleting, or changing a geographical
attribution to the name.
Acts 2003, 78th Leg., ch. 182, § 1, eff. Jan. 1, 2006.
§ 22.108. NUMBER OF AMENDMENTS SUBJECT TO VOTE AT
MEETING. Any number of amendments to the corporation's
certificate of formation may be submitted to and voted on by a
corporation's members at any one meeting of the members.
Acts 2003, 78th Leg., ch. 182, § 1, eff. Jan. 1, 2006.
SUBCHAPTER D. MEMBERS
§ 22.151. 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 corporation's certificate of formation or bylaws must include:
(1) a designation of each class;
(2) the manner of the election or appointment of the
members of each class; and
(3) the qualifications and rights of the members of
each class.
(c) A corporation may issue a certificate, card, or other
instrument evidencing membership rights, voting rights, or
ownership rights as authorized by the certificate of formation or
bylaws.
Acts 2003, 78th Leg., ch. 182, § 1, eff. Jan. 1, 2006.
§ 22.152. IMMUNITY FROM LIABILITY. The members of a
corporation are not personally liable for a debt, liability, or
obligation of the corporation.
Acts 2003, 78th Leg., ch. 182, § 1, eff. Jan. 1, 2006.
§ 22.153. ANNUAL MEETING. (a) Except as provided by
Subsection (b), a corporation shall hold an annual meeting of the
members at a time that is stated in or determined in accordance with
the corporation's bylaws.
(b) If the bylaws provide for more than one regular meeting
of members each year, an annual meeting is not required. If an
annual meeting is not required, directors may be elected at a
meeting as provided by the bylaws.
Acts 2003, 78th Leg., ch. 182, § 1, eff. Jan. 1, 2006.
§ 22.154. FAILURE TO CALL ANNUAL MEETING. (a) If the
board of directors of a corporation fails to call the annual meeting
of members at the designated time, a member of the corporation may
demand that the meeting be held within a reasonable time. The
demand must be made in writing and sent to an officer of the
corporation by registered mail.
(b) If the annual meeting is not called before the 61st day
after the date of demand, a member of the corporation may compel the
holding of the meeting by legal action directed against the board of
directors, and each of the extraordinary writs of common law and of
courts of equity are available to the member to compel the holding
of the meeting. Each member has a justiciable interest sufficient
to enable the member to institute and prosecute the legal
proceedings.
(c) Failure to hold the annual meeting at the designated
time does not result in the winding up and termination of the
corporation.
Acts 2003, 78th Leg., ch. 182, § 1, eff. Jan. 1, 2006.
§ 22.155. SPECIAL MEETINGS OF MEMBERS. A special
meeting of the members of a corporation may be called by:
(1) the president;
(2) the board of directors;
(3) members having not less than one-tenth of the
votes entitled to be cast at the meeting; or
(4) other officers or persons as provided by the
certificate of formation or bylaws of the corporation.
Acts 2003, 78th Leg., ch. 182, § 1, eff. Jan. 1, 2006.
§ 22.156. NOTICE OF MEETING. (a) A corporation other
than a church shall provide written notice of the place, date, and
time of a meeting of the members of the corporation and, if the
meeting is a special meeting, the purpose or purposes for which the
meeting is called. The notice shall be delivered to each member
entitled to vote at the meeting not later than the 10th day and not
earlier than the 60th day before the date of the meeting. Notice
may be delivered personally or in accordance with Section 6.051(b).
(b) Notice of a meeting of the members of a corporation that
is a church is sufficient if given by oral announcement at a
regularly scheduled worship service before the meeting or as
otherwise provided by the certificate of formation or bylaws of the
corporation.
Acts 2003, 78th Leg., ch. 182, § 1, eff. Jan. 1, 2006.
§ 22.157. SPECIAL BYLAWS AFFECTING NOTICE. (a) A
corporation may provide in the corporation's bylaws that notice of
an annual or regular meeting is not required.
(b) A corporation having more than 1,000 members at the time
a meeting is scheduled or called may provide notice of a meeting by
publication in a newspaper of general circulation in the community
in which the principal office of the corporation is located, if the
corporation provides for that notice in its bylaws.
Acts 2003, 78th Leg., ch. 182, § 1, eff. Jan. 1, 2006.
§ 22.158. PREPARATION AND INSPECTION OF LIST OF VOTING
MEMBERS. (a) After setting a record date for the notice of a
meeting, a corporation shall prepare an alphabetical list of the
names of all its voting members. The list must identify:
(1) the members who are entitled to notice and the
members who are not entitled to notice of the meeting;
(2) the address of each voting member; and
(3) the number of votes each voting member is entitled
to cast at the meeting.
(b) Not later than the second business day after the date
notice is given of a meeting for which a list was prepared in
accordance with Subsection (a), and continuing through the meeting,
the list of voting members must be available at the corporation's
principal office or at a reasonable place in the municipality in
which the meeting will be held, as identified in the notice of the
meeting, for inspection by members entitled to vote at the meeting
for the purpose of communication with other members concerning the
meeting.
(c) A voting member or voting member's agent or attorney is
entitled on written demand to inspect and, at the member's expense
and subject to Section 22.351, copy the list at a reasonable time
during the period the list is available for inspection.
(d) The corporation shall make the list of voting members
available at the meeting. A voting member or voting member's agent
or attorney is entitled to inspect the list at any time during the
meeting or an adjournment of the meeting.
Acts 2003, 78th Leg., ch. 182, § 1, eff. Jan. 1, 2006.
§ 22.159. QUORUM OF MEMBERS. (a) Unless otherwise
provided by the certificate of formation or bylaws of a
corporation, members of the corporation holding one-tenth of the
votes entitled to be cast, in person or by proxy, constitute a
quorum.
(b) 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 is the act of the members meeting, unless the
vote of a greater number is required by law or the certificate of
formation or bylaws.
(c) Unless otherwise provided by the certificate of
formation or bylaws, a church incorporated before May 12, 1959, is
considered to have provided in the certificate of formation or
bylaws that members present at a meeting for which notice has been
given constitute a quorum.
Acts 2003, 78th Leg., ch. 182, § 1, eff. Jan. 1, 2006.
§ 22.160. VOTING OF MEMBERS. (a) Each member of a
corporation, regardless of class, is entitled to one vote on each
matter submitted to a vote of the corporation's members, except to
the extent that the voting rights of members of a class are limited,
enlarged, or denied by the certificate of formation or bylaws of the
corporation.
(b) A member may vote in person or, unless otherwise
provided by the certificate of formation or bylaws, by proxy
executed in writing by the member or the member's attorney-in-fact.
(c) Unless otherwise provided by the proxy, a proxy is
revocable and expires 11 months after the date of its execution. A
proxy may not be irrevocable for longer than 11 months.
(d) If authorized by the certificate of formation or bylaws
of the corporation, a member vote on any matter may be conducted by
mail, by facsimile transmission, by electronic message, or by any
combination of those methods.
Acts 2003, 78th Leg., ch. 182, § 1, eff. Jan. 1, 2006.
§ 22.161. ELECTION OF DIRECTORS. (a) A member
entitled to vote at an election of directors is entitled to vote, in
person or by proxy, for as many persons as there are directors to be
elected and for whose election the member has a right to vote.
(b) If expressly authorized by the corporation's
certificate of formation, the member may cumulate the member's vote
by:
(1) giving one candidate a number of votes equal to the
number of the directors to be elected multiplied by the member's
vote; or
(2) distributing the votes on the same principle among
any number of the candidates.
(c) A member who intends to cumulate votes under Subsection
(b) shall give written notice of the member's intention to the
secretary of the corporation not later than the day preceding the
date of the election.
Acts 2003, 78th Leg., ch. 182, § 1, eff. Jan. 1, 2006.
§ 22.162. GREATER VOTING REQUIREMENTS UNDER CERTIFICATE
OF FORMATION. If the corporation's certificate of formation
requires the vote or concurrence of a greater proportion of the
members of a corporation than is required by this chapter with
respect to an action to be taken by the members, the certificate of
formation controls.
Acts 2003, 78th Leg., ch. 182, § 1, eff. Jan. 1, 2006.
§ 22.163. RECORD DATE FOR DETERMINATION OF
MEMBERS. (a) The record date for determining members of a
corporation may be set as provided by Section 6.101.
(b) If a record date is not set under Section 6.101:
(1) members on the date of the meeting who are
otherwise eligible to vote are entitled to vote at the meeting;
(2) members at the close of business on the business
day preceding the date 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 a meeting of members; and
(3) members at the close of business on the later of
the day the board of directors adopts the resolution relating to the
action or the 60th day before the date of the action are entitled to
exercise any rights regarding any other lawful action.
(c) The board of directors of a corporation may set a new
date for determining the right to notice of or to vote at any
adjournment of a members' meeting. The board shall set a new date
if the meeting is adjourned to a date more than 90 days after the
record date for determining members entitled to notice of the
original meeting.
Acts 2003, 78th Leg., ch. 182, § 1, eff. Jan. 1, 2006.
§ 22.164. VOTE REQUIRED TO APPROVE FUNDAMENTAL
ACTION. (a) In this section, "fundamental action" means:
(1) an amendment of a certificate of formation;
(2) a voluntary winding up under Chapter 11;
(3) a revocation of a voluntary decision to wind up
under Section 11.151;
(4) a cancellation of an event requiring winding up
under Section 11.152;
(5) a reinstatement under Section 11.202;
(6) a distribution plan under Section 22.305;
(7) a plan of merger under Subchapter F;
(8) a sale of all or substantially all of the assets of
a corporation under Subchapter F;
(9) a plan of conversion under Subchapter F; or
(10) a plan of exchange under Subchapter F.
(b) Except as otherwise provided by Subsection (c) or the
certificate of formation in accordance with Section 22.162, the
vote required for approval of a fundamental action is:
(1) at least two-thirds of the votes that members
present in person or by proxy are entitled to cast at the meeting at
which the action is submitted for a vote, if the corporation has
members with voting rights;
(2) at least two-thirds of the votes of members
present at the meeting at which the action is submitted for a vote,
if the management of the affairs of the corporation is vested in the
corporation's members under Section 22.202; or
(3) the affirmative vote of the majority of the
directors in office, if the corporation has no members or has no
members with voting rights.
(c) If any class of members is entitled to vote on the
fundamental action as a class by the terms of the certificate of
formation or the bylaws, the vote required for the approval of the
fundamental action is the vote required by Subsection (b)(1) and at
least two-thirds of the votes that the members of each class in
person or by proxy are entitled to cast at the meeting at which the
action is submitted for a vote.
Acts 2003, 78th Leg., ch. 182, § 1, eff. Jan. 1, 2006.
SUBCHAPTER E. MANAGEMENT
§ 22.201. MANAGEMENT BY BOARD OF DIRECTORS. Except as
provided by Section 22.202, the affairs of a corporation are
managed by a board of directors. The board of directors may be
designated by any name appropriate to the customs, usages, or
tenets of the corporation.
Acts 2003, 78th Leg., ch. 182, § 1, eff. Jan. 1, 2006.
§ 22.202. MANAGEMENT BY MEMBERS. (a) The certificate
of formation of a corporation may vest the management of the affairs
of the corporation in the members of the corporation. If the
corporation has a board of directors, the corporation may limit the
authority of the board to the extent provided by the certificate of
formation or bylaws.
(b) A corporation is considered to have vested the
management of the corporation's affairs in the board of directors
of the corporation in the absence of a provision to the contrary in
the certificate of formation, unless the corporation is a church
organized and operating under a congregational system that:
(1) was incorporated before January 1, 1994; and
(2) has the management of its affairs vested in the
corporation's members.
Acts 2003, 78th Leg., ch. 182, § 1, eff. Jan. 1, 2006.
§ 22.203. BOARD MEMBER ELIGIBILITY REQUIREMENTS. A
director of a corporation is not required to be a resident of this
state or a member of the corporation unless the certificate of
formation or a bylaw of the corporation imposes that requirement.
The certificate of formation or bylaws may prescribe other
qualifications for directors.
Acts 2003, 78th Leg., ch. 182, § 1, eff. Jan. 1, 2006.
§ 22.204. NUMBER OF DIRECTORS. (a) If the corporation
has a board of directors, a corporation may not have fewer than
three directors. The number of directors shall be set by, or in the
manner provided by, the certificate of formation or bylaws of the
corporation, except that the number of directors on the initial
board of directors must be set by the certificate of formation.
(b) The number of directors may be increased or decreased by
amendment to, or in the manner provided by, the certificate of
formation or bylaws. A decrease in the number of directors may not
shorten the term of an incumbent director.
(c) In the absence of a provision of the certificate of
formation or a bylaw setting the number of directors or providing
for the manner in which the number of directors shall be determined,
the number of directors is the same as the number constituting the
initial board of directors.
Acts 2003, 78th Leg., ch. 182, § 1, eff. Jan. 1, 2006.
§ 22.205. DESIGNATION OF INITIAL BOARD OF DIRECTORS. If
the corporation is to be managed by a board of directors, the
certificate of formation of a corporation must state the names of
the members of the initial board of directors of the corporation.
Acts 2003, 78th Leg., ch. 182, § 1, eff. Jan. 1, 2006.
§ 22.206. ELECTION OR APPOINTMENT OF BOARD OF
DIRECTORS. Directors other than the initial directors are
elected, appointed, or designated in the manner provided by the
certificate of formation or bylaws. If the method of election,
designation, or appointment is not provided by the certificate of
formation or bylaws, directors other than the initial directors are
elected by the board of directors.
Acts 2003, 78th Leg., ch. 182, § 1, eff. Jan. 1, 2006.
§ 22.207. ELECTION AND CONTROL BY CERTAIN
ENTITIES. (a) The board of directors of a religious, charitable,
educational, or eleemosynary corporation may be affiliated with,
elected, and controlled by an incorporated or unincorporated
convention, conference, or association organized under the laws of
this or another state, the membership of which is composed of
representatives, delegates, or messengers from a church or other
religious association.
(b) The board of directors of a corporation may be wholly or
partly elected by one or more associations or corporations
organized under the laws of this or another state if:
(1) the certificate of formation or bylaws of the
corporation provide for that election; and
(2) the corporation has no members with voting rights.
Acts 2003, 78th Leg., ch. 182, § 1, eff. Jan. 1, 2006.
§ 22.208. TERM OF OFFICE. (a) A director on the
initial board of directors of a corporation holds office until the
first annual election of directors or for the period specified in
the certificate of formation or bylaws of the corporation.
Directors other than the initial directors are elected, appointed,
or designated for the terms provided by the certificate of
formation or bylaws.
(b) In the absence of a provision in the certificate of
formation or bylaws setting the term of office for directors, a
director holds office until the next annual election of directors
and until a successor is elected, appointed, or designated and
qualified.
(c) A director may be removed from office as provided in
Section 22.211.
Acts 2003, 78th Leg., ch. 182, § 1, eff. Jan. 1, 2006.
§ 22.209. CLASSIFICATION OF DIRECTORS. Directors may
be divided into classes. The terms of office of the several classes
are not required to be uniform.
Acts 2003, 78th Leg., ch. 182, § 1, eff. Jan. 1, 2006.
§ 22.210. EX OFFICIO MEMBER OF BOARD. (a) The
certificate of formation or bylaws of a corporation may provide
that a person may be an ex officio member of the board of directors
of the corporation.
(b) A person designated as an ex officio member of the board
is entitled to receive notice of and to attend board meetings.
(c) An ex officio member is not entitled to vote unless the
certificate of formation or bylaws authorize the member to vote. An
ex officio member of the board who is not entitled to vote does not
have the duties or liabilities of a director provided by this
chapter.
Acts 2003, 78th Leg., ch. 182, § 1, eff. Jan. 1, 2006.
§ 22.211. REMOVAL OF DIRECTOR. (a) A director of a
corporation may be removed from office under any procedure provided
by the certificate of formation or bylaws of the corporation.
(b) In the absence of a provision for removal in the
certificate of formation or bylaws, 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 2003, 78th Leg., ch. 182, § 1, eff. Jan. 1, 2006.
§ 22.212. VACANCY. (a) Unless otherwise provided by
the certificate of formation or bylaws of the corporation, a
vacancy in the board of directors of a corporation shall be filled
by the affirmative vote of the majority of the remaining directors,
regardless of whether that majority is less than a quorum. A
director elected to fill a vacancy is elected for the unexpired term
of the member's predecessor in office.
(b) A vacancy in the board occurring because 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 has no members with the right to
vote on the vacancy, the vacancy shall be filled as provided by the
certificate of formation or bylaws.
Acts 2003, 78th Leg., ch. 182, § 1, eff. Jan. 1, 2006.
§ 22.213. QUORUM. (a) A quorum for the transaction of
business by the board of directors of a corporation is the lesser
of:
(1) the majority of the number of directors set by the
corporation's bylaws or, in the absence of a bylaw setting the
number of directors, a majority of the number of directors stated in
the corporation's certificate of formation; or
(2) any number, not less than three, set as a quorum by
the certificate of formation or bylaws.
(b) A director present by proxy at a meeting may not be
counted toward a quorum.
Acts 2003, 78th Leg., ch. 182, § 1, eff. Jan. 1, 2006.
§ 22.214. ACTION BY DIRECTORS. The act of a majority of
the directors present in person or by proxy at a meeting at which a
quorum is present is the act of the board of directors of a
corporation, unless the act of a greater number is required by the
certificate of formation or bylaws of the corporation.
Acts 2003, 78th Leg., ch. 182, § 1, eff. Jan. 1, 2006.
§ 22.215. VOTING IN PERSON OR BY PROXY. A director of a
corporation may vote in person or, if authorized by the certificate
of formation or bylaws of the corporation, by proxy executed in
writing by the director.
Acts 2003, 78th Leg., ch. 182, § 1, eff. Jan. 1, 2006.
§ 22.216. TERM AND REVOCABILITY OF PROXY. (a) A proxy
expires three months after the date the proxy is executed.
(b) A proxy is revocable unless otherwise provided by the
proxy or made irrevocable by law.
Acts 2003, 78th Leg., ch. 182, § 1, eff. Jan. 1, 2006.
§ 22.217. NOTICE OF MEETING; WAIVER OF
NOTICE. (a) Regular meetings of the board of directors of a
corporation may be held with or without notice as prescribed by the
corporation's bylaws.
(b) Special meetings of the board of directors shall be held
with notice as prescribed by the bylaws. Attendance of a director
at a meeting constitutes a waiver of notice, unless the 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.
(c) Unless required by the bylaws, the business to be
transacted at, or the purpose of, a regular or special meeting of
the board of directors is not required to be specified in the notice
or waiver of notice of the meeting.
(d) Notice may be delivered personally or in accordance with
Section 6.051(b).
Acts 2003, 78th Leg., ch. 182, § 1, eff. Jan. 1, 2006.
§ 22.218. MANAGEMENT COMMITTEE. (a) If authorized by
the certificate of formation or bylaws of the corporation, the
board of directors of a corporation, by resolution adopted by the
majority of the directors in office, may designate one or more
committees to have and exercise the authority of the board in the
management of the corporation to the extent provided by:
(1) the resolution;
(2) the certificate of formation; or
(3) the bylaws.
(b) A committee designated under this section must consist
of at least two persons. The majority of the persons on the
committee must be directors. If provided by the certificate of
formation or bylaws, the remaining persons on the committee are not
required to be directors.
(c) The designation of a committee and the delegation of
authority to the committee does not operate to relieve the board of
directors, or an individual director, of any responsibility imposed
on the board or director by law. A committee member who is not a
director has the same responsibility with respect to the committee
as a committee member who is a director.
Acts 2003, 78th Leg., ch. 182, § 1, eff. Jan. 1, 2006.
§ 22.219. OTHER COMMITTEES. (a) The board of
directors of a corporation, by resolution adopted by the majority
of the directors at a meeting at which a quorum is present, or the
president, if authorized by a similar resolution of the board of
directors or by the certificate of formation or bylaws of the
corporation, may designate and appoint one or more committees that
do not have the authority of the board of directors in the
management of the corporation.
(b) The membership on a committee designated under this
section may be limited to directors.
Acts 2003, 78th Leg., ch. 182, § 1, eff. Jan. 1, 2006.
§ 22.220. ACTION WITHOUT MEETING OF DIRECTORS OR
COMMITTEE. (a) The certificate of formation of a corporation may
provide that an action required by this chapter to be taken at a
meeting of the corporation's directors or an action that may be
taken at a meeting of the directors or a committee may be taken
without a meeting if a written consent, stating the action to be
taken, is signed by the number of directors or committee members
necessary to take that action at a meeting at which all of the
directors or committee members are present and voting. The consent
must state the date of each director's or committee member's
signature.
(b) A written consent signed by less than all of the
directors or committee members is not effective to take the action
that is the subject of the consent unless, not later than the 60th
day after the date of the earliest dated consent delivered to the
corporation in the manner required by this section, a consent or
consents signed by the required number of directors or committee
members are delivered to the corporation:
(1) at the registered office or principal place of
business of the corporation; or
(2) through the corporation's registered agent,
transfer agent, registrar, or exchange agent or an officer or agent
of the corporation having custody of the books in which proceedings
of meetings of directors or committees are recorded.
(c) Delivery under Subsection (b) must be by hand or by
certified or registered mail, return receipt requested. Delivery
to the corporation's principal place of business must be addressed
to the president or principal executive officer of the corporation.
(d) Prompt notice of the taking of an action by directors or
a committee without a meeting by less than unanimous written
consent shall be given to each director or committee member who did
not consent in writing to the action.
Acts 2003, 78th Leg., ch. 182, § 1, eff. Jan. 1, 2006.
§ 22.221. GENERAL STANDARDS FOR DIRECTORS. (a) A
director shall discharge the director's duties, including duties as
a committee member, in good faith, with ordinary care, and in a
manner the director reasonably believes to be in the best interest
of the corporation.
(b) A director is not liable to the corporation, a member,
or another person for an action taken or not taken as a director if
the director acted in compliance with this section. A person
seeking to establish liability of a director must prove that the
director did not act:
(1) in good faith;
(2) with ordinary care; and
(3) in a manner the director reasonably believed to be
in the best interest of the corporation.
Acts 2003, 78th Leg., ch. 182, § 1, eff. Jan. 1, 2006.
§ 22.222. RELIGIOUS CORPORATION DIRECTOR'S GOOD FAITH
RELIANCE ON CERTAIN INFORMATION. A director of a religious
corporation, in the discharge of a duty imposed or power conferred
on the director, including a duty imposed or power conferred as a
committee member, may rely in good faith on information or on an
opinion, report, or statement, including a financial statement or
other financial data, concerning the corporation or another person
that was prepared or presented by:
(1) a religious authority; or
(2) a minister, priest, rabbi, or other person whose
position or duties in the corporation the director believes justify
reliance and confidence and whom the director believes to be
reliable and competent in the matters presented.
Acts 2003, 78th Leg., ch. 182, § 1, eff. Jan. 1, 2006.
§ 22.223. NOT A TRUSTEE. A director of a corporation is
not considered to have the duties of a trustee of a trust with
respect to the corporation or with respect to property held or
administered by the corporation, including property subject to
restrictions imposed by the donor or transferor of the property.
Acts 2003, 78th Leg., ch. 182, § 1, eff. Jan. 1, 2006.
§ 22.224. DELEGATION OF INVESTMENT AUTHORITY. (a) The
board of directors of a corporation may:
(1) contract with an advisor who is an investment
counsel or a trust company, bank, investment advisor, or investment
manager; and
(2) confer on that advisor the authority to:
(A) purchase or otherwise acquire a stock, bond,
security, or other investment on behalf of the corporation; and
(B) sell, transfer, or otherwise dispose of an
asset or property of the corporation at a time and for a
consideration the advisor considers appropriate.
(b) The board of directors may:
(1) confer on an advisor described by Subsection (a)
other powers regarding the corporation's investments as the board
considers appropriate; and
(2) authorize the advisor to hold title to an asset or
property of the corporation, in the advisor's own name or in the
name of a nominee, for the benefit of the corporation.
(c) The board of directors is not liable for an action taken
or not taken by an advisor under this section if the board 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 the board considers that action appropriate or
necessary.
Acts 2003, 78th Leg., ch. 182, § 1, eff. Jan. 1, 2006.
§ 22.225. LOAN TO DIRECTOR PROHIBITED. (a) A
corporation may not make a loan to a director.
(b) The directors of a corporation who vote for or assent to
the making of a loan to a director, and any officer who participates
in making the loan, are jointly and severally liable to the
corporation for the amount of the loan until the loan is repaid.
Acts 2003, 78th Leg., ch. 182, § 1, eff. Jan. 1, 2006.
§ 22.226. DIRECTOR LIABILITY FOR CERTAIN DISTRIBUTIONS
OF ASSETS. (a) In addition to any other liability imposed by law
on the directors of a corporation, the directors who vote for or
assent to a distribution of assets other than in payment of the
corporation's debts, when the corporation is insolvent or when
distribution would render the corporation insolvent, or during the
liquidation of the corporation, without the payment and discharge
of or making adequate provisions for any known debt, obligation, or
liability of the corporation, are jointly and severally liable to
the corporation for the value of the assets distributed, to the
extent that the debt, obligation, or liability is not paid and
discharged.
(b) A director is not liable under this section if, in
voting for or assenting to a distribution, the director:
(1) relied in good faith and with ordinary care on
information or an opinion, report, or statement in accordance with
Section 3.102;
(2) acting in good faith and with ordinary care,
considered the assets of the corporation to be at least equal to
their book value; or
(3) in determining whether the corporation made
adequate provision for the discharge of all of its liabilities and
obligations as provided in Section 11.053, 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
discharge some or all of those liabilities or obligations.
Acts 2003, 78th Leg., ch. 182, § 1, eff. Jan. 1, 2006.
§ 22.227. DISSENT TO ACTION. (a) A director of a
corporation who is present at a meeting of the board of directors at
which action is taken on a corporate matter described by Section
22.226(a) is presumed to have assented to the action unless:
(1) the director's dissent has been entered in the
minutes of the meeting;
(2) the director has filed a written dissent to the
action with the person acting as the secretary of the meeting before
the meeting is adjourned; or
(3) the director has sent a written dissent by
registered mail to the secretary of the corporation immediately
after the meeting has been adjourned.
(b) The right to dissent under this section does not apply
to a director who voted in favor of the action.
Acts 2003, 78th Leg., ch. 182, § 1, eff. Jan. 1, 2006.
§ 22.228. RELIANCE ON WRITTEN OPINION OF ATTORNEY. A
director is not liable under Section 22.226 or 22.227 if, in the
exercise of ordinary care, the director acted in good faith and in
reliance on the written opinion of an attorney for the corporation.
Acts 2003, 78th Leg., ch. 182, § 1, eff. Jan. 1, 2006.
§ 22.229. RIGHT TO CONTRIBUTION. A director against
whom a claim is asserted under Section 22.226 or 22.227 and who is
held liable on the claim is entitled to contribution from persons
who accepted or received the distribution knowing the distribution
to have been made in violation of that section, in proportion to the
amounts received by those persons.
Acts 2003, 78th Leg., ch. 182, § 1, eff. Jan. 1, 2006.
§ 22.230. CONTRACTS OR TRANSACTIONS INVOLVING
INTERESTED DIRECTORS, OFFICERS, AND MEMBERS. (a) This section
applies only to a contract or transaction between a corporation
and:
(1) one or more of the corporation's directors,
officers, or members; or
(2) an entity or other organization in which one or
more of the corporation's directors, officers, or members:
(A) is a managerial official or a member; or
(B) has a financial interest.
(b) An otherwise valid contract or transaction is valid
notwithstanding that a director, officer, or member of the
corporation is present at or participates in the meeting of the
board of directors, of a committee of the board, or of the members
that authorizes the contract or transaction, or votes to authorize
the contract or transaction, if:
(1) the material facts as to the relationship or
interest and as to the contract or transaction are disclosed to or
known by:
(A) the corporation's board of directors, a
committee of the board of directors, or the members, and the board,
the committee, or the members in good faith and with ordinary care
authorize the contract or transaction by the affirmative vote of
the majority of the disinterested directors, committee members or
members, regardless of whether the disinterested directors,
committee members or members constitute a quorum; or
(B) the members entitled to vote on the
authorization of the contract or transaction, and the contract or
transaction is specifically approved in good faith and with
ordinary care by a vote of the members; or
(2) the contract or transaction is fair to the
corporation when the contract or transaction is authorized,
approved, or ratified by the board of directors, a committee of the
board of directors, or the members.
(c) Common or interested directors or members of a
corporation may be included in determining the presence of a quorum
at a meeting of the board, a committee of the board, or members that
authorizes the contract or transaction.
Acts 2003, 78th Leg., ch. 182, § 1, eff. Jan. 1, 2006.
§ 22.231. OFFICERS. (a) The officers of a corporation
shall include a president and a secretary and may include one or
more vice presidents, a treasurer, and other officers and assistant
officers as considered necessary. Any two or more offices, other
than the offices of president and secretary, may be held by the same
person.
(b) A properly designated committee may perform the
functions of an officer. A single committee may perform the
functions of any two or more officers, including the functions of
president and secretary.
(c) The officers of a corporation may be designated by other
or additional titles as provided by the certificate of formation or
bylaws of the corporation.
Acts 2003, 78th Leg., ch. 182, § 1, eff. Jan. 1, 2006.
§ 22.232. ELECTION OR APPOINTMENT OF OFFICERS. (a) An
officer of a corporation shall be elected or appointed at the time,
in the manner, and for the terms prescribed by the certificate of
formation or bylaws of the corporation. The term of an officer may
not exceed three years.
(b) If the certificate of formation or bylaws do not include
provisions for the election or appointment of officers, the
officers shall be elected or appointed annually by the board of
directors or, if the management of the corporation is vested in the
corporation's members, by the members.
Acts 2003, 78th Leg., ch. 182, § 1, eff. Jan. 1, 2006.
§ 22.233. APPLICATION TO CHURCH. A corporation that is
a church is not required to have officers as provided by this
subchapter. The duties and responsibilities of the officers may be
vested in the corporation's board of directors or other designated
body in any manner provided for by the certificate of formation or
bylaws of the corporation.
Acts 2003, 78th Leg., ch. 182, § 1, eff. Jan. 1, 2006.
§ 22.234. RELIGIOUS CORPORATION OFFICER'S GOOD FAITH
RELIANCE ON CERTAIN INFORMATION. An officer of a religious
corporation, in the discharge of a duty imposed or power conferred
on the officer, may rely in good faith and with ordinary care on
information or on an opinion, report, or statement concerning the
corporation or another person that was prepared or presented by:
(1) a religious authority or another religious
corporation; or
(2) a minister, priest, rabbi, or other person whose
position or duties in the religious authority or religious
corporation the officer believes justify reliance and confidence
and whom the officer believes to be reliable and competent in the
matters presented.
Acts 2003, 78th Leg., ch. 182, § 1, eff. Jan. 1, 2006.
§ 22.235. 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 section shall not affect the liability of the
corporation for an act or omission of the officer.
Acts 2003, 78th Leg., ch. 182, § 1, eff. Jan. 1, 2006.
SUBCHAPTER F. FUNDAMENTAL BUSINESS TRANSACTIONS
§ 22.251. APPROVAL OF MERGER. (a) A domestic
corporation that is a party to a merger under Chapter 10 must
approve the merger by complying with this section.
(b) If the corporation that is a party to the merger has no
members or has no members with voting rights, the plan of merger
must be approved by the vote of directors required by Section
22.164.
(c) If the management of the affairs of the corporation that
is a party to the merger is vested in its members under Section
22.202, the plan of merger:
(1) must be submitted to a vote at an annual, regular,
or special meeting of the members; and
(2) must be approved by the members by the vote
required by Section 22.164.
(d) If the corporation that is a party to the merger has
members with voting rights:
(1) the board of directors must adopt a resolution
that:
(A) approves the plan of merger; and
(B) directs that the plan be submitted to a vote
at an annual or special meeting of the members having voting rights;
and
(2) the members must approve the plan of merger by the
vote required by Section 22.164.
Acts 2003, 78th Leg., ch. 182, § 1, eff. Jan. 1, 2006.
§ 22.252. APPROVAL OF SALE OF ALL OR SUBSTANTIALLY ALL OF
ASSETS. (a) A corporation must approve the sale of all or
substantially all of its assets by complying with this section.
(b) If the corporation has no members or has no members with
voting rights, the sale of all or substantially all of the assets of
the corporation must be authorized by the vote of directors
required by Section 22.164.
(c) If the management of the affairs of the corporation is
vested in its members under Section 22.202, a resolution
authorizing a sale of all or substantially all of the assets of the
corporation:
(1) must be submitted to a vote at an annual, regular,
or special meeting of the members; and
(2) must be approved by the members by the vote
required by Section 22.164.
(d) If the corporation has members with voting rights:
(1) the board of directors of the corporation must
adopt a resolution that:
(A) recommends the sale; and
(B) directs that the resolution be submitted to a
vote at an annual or special meeting of the members having voting
rights; and
(2) the members must approve the resolution by the
vote required by Section 22.164.
(e) At the meeting required by Subsection (c) or (d), in
addition to approving the resolution authorizing the sale, the
members may set, or authorize the board of directors to set, the
terms and conditions of the sale and the consideration to be
received by the corporation for the sale by the same vote of
members.
(f) After the members authorize a sale under Subsection (d),
the board of directors may abandon the sale, subject to the rights
of third parties under any contracts relating to the sale, without
further action or approval by members.
(g) Notwithstanding Subsection (d), if a corporation is
insolvent, a sale of all or substantially all of the assets of the
corporation may be authorized on receiving the affirmative vote of
the majority of the directors in office.
(h) The phrase "sale of all or substantially all of the
assets" means the sale, lease, exchange, or other disposition,
other than a pledge, mortgage, deed of trust, or trust indenture
unless otherwise provided by the certificate of formation, of all
or substantially all of the property and assets of a domestic
corporation that is not made in the usual and regular course of the
corporation's activities without regard to whether the disposition
is made with the goodwill of the corporation's activities. The term
does not include a transaction that results in the corporation
directly or indirectly:
(1) continuing to engage in one or more activities; or
(2) applying a portion of the consideration received
in connection with the transaction to the conduct of an activity
that the corporation engages in after the transaction.
Acts 2003, 78th Leg., ch. 182, § 1, eff. Jan. 1, 2006.
§ 22.253. MEETING OF MEMBERS; NOTICE. (a) The
corporation must give to each member entitled to vote at a meeting
described by Section 22.251(c) or (d) or Section 22.252(c) or (d) a
written notice stating that the purpose or one of the purposes of
the meeting is to consider the plan of merger or the sale of all or
substantially all of the assets of the corporation. The notice must
be given in the time and manner provided by Chapter 6 and this
chapter for giving notice of a meeting to members.
(b) A vote of members entitled to vote at the meeting shall
be taken on the plan of merger or the resolution authorizing the
sale of all or substantially all of the assets of the corporation.
The members must approve the plan or resolution by the vote required
by Section 22.164.
(c) For a meeting to vote on a plan of merger, the notice of
the meeting must contain the plan of merger or a summary of the plan
of merger.
(d) For a corporation the management of the affairs of which
is vested in its members under Section 22.202, the notice of the
meeting is subject to the provisions of the certificate of
formation or bylaws of the corporation.
Acts 2003, 78th Leg., ch. 182, § 1, eff. Jan. 1, 2006.
§ 22.254. PLEDGE, MORTGAGE, DEED OF TRUST, OR TRUST
INDENTURE. (a) Except as otherwise provided by Subsection (b) or
by the corporation's certificate of formation:
(1) the board of directors of a corporation may
authorize a pledge, mortgage, deed of trust, or trust indenture;
and
(2) an authorization or consent of members is not
required for the validity of the transaction or for any sale under
the terms of the transaction.
(b) If the management of the affairs of a corporation is
vested in the corporation's members under Section 22.202:
(1) the members may authorize a pledge, mortgage, deed
of trust, or trust indenture in the manner provided by Section
22.252(c) for a sale of all or substantially all of the assets of a
corporation; and
(2) an authorization by the board of directors is not
required for the validity of the transaction or for any sale under
the terms of the transaction.
Acts 2003, 78th Leg., ch. 182, § 1, eff. Jan. 1, 2006.
§ 22.255. CONVEYANCE BY CORPORATION. A corporation may
convey real property of the corporation when authorized by
appropriate resolution of the board of directors or members.
Acts 2003, 78th Leg., ch. 182, § 1, eff. Jan. 1, 2006.
§ 22.256. APPROVAL OF CONVERSION. (a) A domestic
corporation must approve a conversion under Chapter 10 by complying
with this section.
(b) If the corporation has no members or has no members with
voting rights, the plan of conversion must be approved by the vote
of directors required by Section 22.164.
(c) If the management of the affairs of the corporation is
vested in its members under Section 22.202, the plan of conversion:
(1) must be submitted to a vote at an annual, regular,
or special meeting of the members; and
(2) must be approved by the members by the vote
required by Section 22.164.
(d) If the corporation has members with voting rights:
(1) the board of directors must adopt a resolution
that:
(A) approves the plan of conversion; and
(B) directs that the plan be submitted to a vote
at an annual or special meeting of the members having voting rights;
and
(2) the members must approve the plan of conversion by
the vote required by Section 22.164.
Acts 2003, 78th Leg., ch. 182, § 1, eff. Jan. 1, 2006.
§ 22.257. APPROVAL OF EXCHANGE. (a) A domestic
corporation must approve an exchange under Chapter 10 by complying
with this section.
(b) If the corporation has no members or has no members with
voting rights, the plan of exchange must be approved by the vote of
directors required by Section 22.164.
(c) If the management of the affairs of the corporation is
vested in its members under Section 22.202, the plan of exchange:
(1) must be submitted to a vote at an annual, regular,
or special meeting of the members; and
(2) must be approved by the members by the vote
required by Section 22.164.
(d) If the corporation has members with voting rights:
(1) the board of directors must adopt a resolution
that:
(A) approves the plan of exchange; and
(B) directs that the plan be submitted to a vote
at an annual or special meeting of the members having voting rights;
and
(2) the members must approve the plan of exchange by
the vote required by Section 22.164.
Acts 2003, 78th Leg., ch. 182, § 1, eff. Jan. 1, 2006.
SUBCHAPTER G. WINDING UP AND TERMINATION
§ 22.301. APPROVAL OF VOLUNTARY WINDING UP,
REINSTATEMENT, REVOCATION OF VOLUNTARY WINDING UP, OR DISTRIBUTION
PLAN. A corporation must approve a voluntary winding up in
accordance with Chapter 11, a reinstatement in accordance with
Section 11.202, a cancellation of an event requiring winding up
under Section 11.152, a revocation of a voluntary decision to wind
up in accordance with Section 11.151, or a distribution plan in
accordance with Section 22.305 by complying with the procedures
prescribed by this subchapter.
Acts 2003, 78th Leg., ch. 182, § 1, eff. Jan. 1, 2006.
§ 22.302. CERTAIN PROCEDURES FOR APPROVAL. To approve a
voluntary winding up, a reinstatement, a cancellation of an event
requiring winding up, a revocation of a voluntary decision to wind
up, or a distribution plan, a corporation must follow the following
procedures:
(1) if the corporation has no members or has no members
with voting rights, the corporation's board of directors must adopt
a resolution to wind up, to reinstate, to cancel the event requiring
winding up, to revoke a voluntary decision to wind up, or to effect
the distribution plan by the vote of directors required by Section
22.164;
(2) if the management of the affairs of the
corporation is vested in the corporation's members under Section
22.202, the winding up, reinstatement, cancellation of event
requiring winding up, revocation of voluntary decision to wind up,
or distribution plan:
(A) must be submitted to a vote at an annual,
regular, or special meeting of members; and
(B) must be approved by the members by the vote
required by Section 22.164; or
(3) if the corporation has members with voting rights:
(A) the corporation's board of directors must
approve a resolution:
(i) recommending the winding up,
reinstatement, cancellation of event requiring winding up,
revocation of a voluntary decision to wind up, or distribution
plan; and
(ii) directing that the winding up,
reinstatement, cancellation of event requiring winding up,
revocation of a voluntary decision to wind up, or distribution plan
of the corporation be submitted to a vote at an annual or special
meeting of members; and
(B) the members must approve the action described
by Paragraph (A) in accordance with Section 22.303.
Acts 2003, 78th Leg., ch. 182, § 1, eff. Jan. 1, 2006.
§ 22.303. MEETING OF MEMBERS; NOTICE. (a) The
corporation must give to each member entitled to vote at a meeting
described by Section 22.302(2) or (3) a written notice stating that
the purpose or one of the purposes of the meeting is to consider the
winding up, reinstatement, cancellation of event requiring winding
up, revocation of the voluntary decision to wind up, or
distribution plan of the corporation. The notice must be given in
the time and manner provided by Chapter 6 and this chapter for the
giving of notice of a meeting to members.
(b) A vote of members entitled to vote at the meeting shall
be taken on the resolution to wind up, reinstate, cancel the event
requiring winding up, revoke the voluntary decision to wind up, or
effect the distribution plan of the corporation. The members must
approve the resolution by the vote required under Section 22.164.
(c) For a meeting to vote on a distribution plan, the notice
of the meeting must contain the proposed plan of distribution or a
summary of the plan.
(d) For a corporation the management of the affairs of which
is vested in its members under Section 22.202, the notice of the
meeting is subject to the provisions of the certificate of
formation or bylaws of the corporation.
Acts 2003, 78th Leg., ch. 182, § 1, eff. Jan. 1, 2006.
§ 22.304. APPLICATION AND DISTRIBUTION OF
PROPERTY. (a) After all liabilities and obligations of a
corporation in the process of winding up are paid, satisfied, and
discharged in accordance with Section 11.053, the property of the
corporation shall be applied and distributed as follows:
(1) property held by the corporation on a condition
requiring return, transfer, or conveyance because of the winding up
or termination shall be returned, transferred, or conveyed in
accordance with that requirement; and
(2) unless otherwise provided by the corporation's
certificate of formation, the remaining property of the corporation
shall be distributed only for tax-exempt purposes to one or more
organizations that are exempt under Section 501(c)(3), Internal
Revenue Code, or described by Section 170(c)(1) or (2), Internal
Revenue Code, under a plan of distribution adopted under this
chapter.
(b) 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), Internal
Revenue Code, or described by Section 170(c)(1) or (2), Internal
Revenue Code, the property of the corporation remaining after a
distribution of property under the plan of distribution. The court
shall make the distribution in the manner the court determines will
best accomplish the general purposes for which the corporation was
organized.
Acts 2003, 78th Leg., ch. 182, § 1, eff. Jan. 1, 2006.
§ 22.305. DISTRIBUTION PLAN. A plan providing for the
distribution of property may be adopted by a corporation in the
process of winding up, and shall be adopted by a corporation to
authorize a transfer or conveyance of assets for which this chapter
requires a plan of distribution, in the manner provided by this
subchapter.
Acts 2003, 78th Leg., ch. 182, § 1, eff. Jan. 1, 2006.
§ 22.306. LIMITED SURVIVAL AFTER NATURAL
EXPIRATION. (a) A corporation that was terminated by the
expiration of the period of its duration may, during the three-year
period following the date of termination, amend the corporation's
certificate of formation by following the procedures prescribed by
Chapter 11 and this chapter to extend or perpetuate the
corporation's period of duration. The expiration of a
corporation's period of duration does not give a member or creditor
of the corporation a vested right to prevent the corporation from
taking action under this subsection.
(b) An act or contract of a terminated corporation during a
period within which the corporation could have extended the
corporation's existence under this section, regardless of whether
the corporation has taken action to extend its existence, is not
invalidated by the expiration of the period of duration.
Acts 2003, 78th Leg., ch. 182, § 1, eff. Jan. 1, 2006.
§ 22.307. RESPONSIBILITY FOR WINDING UP. If a
corporation determines or is required to wind up, the winding up of
the corporation's affairs shall be managed by:
(1) the directors, if management of the affairs is not
vested in the corporation's members under Section 22.202; or
(2) the members, if management of the affairs is
vested in the corporation's members under Section 22.202.
Acts 2003, 78th Leg., ch. 182, § 1, eff. Jan. 1, 2006.
SUBCHAPTER H. RECORDS AND REPORTS
§ 22.351. MEMBER'S RIGHT TO INSPECT BOOKS AND
RECORDS. A member of a corporation, on written demand stating the
purpose of the demand, is entitled to examine and copy at the
member's expense, in person or by agent, accountant, or attorney,
at any reasonable time and for a proper purpose, the books and
records of the corporation relevant to that purpose.
Acts 2003, 78th Leg., ch. 182, § 1, eff. Jan. 1, 2006.
§ 22.352. FINANCIAL RECORDS AND ANNUAL REPORTS. (a) A
corporation shall maintain current and accurate financial records
with complete entries as to each financial transaction of the
corporation, including income and expenditures, in accordance with
generally accepted accounting principles.
(b) Based on the records maintained under Subsection (a),
the board of directors of the corporation shall annually prepare or
approve a financial report for the corporation for the preceding
year. The report must conform to accounting standards as adopted by
the American Institute of Certified Public Accountants and must
include:
(1) a statement of support, revenue, and expenses;
(2) a statement of changes in fund balances;
(3) a statement of functional expenses; and
(4) a balance sheet for each fund.
Acts 2003, 78th Leg., ch. 182, § 1, eff. Jan. 1, 2006.
§ 22.353. AVAILABILITY OF FINANCIAL INFORMATION FOR
PUBLIC INSPECTION. (a) A corporation shall keep records, books,
and annual reports of the corporation's financial activity at the
corporation's registered or principal office in this state for at
least three years after the close of the fiscal year.
(b) The corporation shall make the records, books, and
reports available to the public for inspection and copying at the
corporation's registered or principal office during regular
business hours. The corporation may charge a reasonable fee for
preparing a copy of a record or report.
Acts 2003, 78th Leg., ch. 182, § 1, eff. Jan. 1, 2006.
§ 22.354. FAILURE TO MAINTAIN FINANCIAL RECORD OR
PREPARE ANNUAL REPORT; OFFENSE. (a) A corporation commits an
offense if the corporation fails to maintain a financial record,
prepare an annual report, or make the record or report available to
the public in the manner required by Section 22.353.
(b) An offense under this section is a Class B misdemeanor.
Acts 2003, 78th Leg., ch. 182, § 1, eff. Jan. 1, 2006.
§ 22.355. EXEMPTIONS FROM CERTAIN REQUIREMENTS RELATING
TO FINANCIAL RECORDS AND ANNUAL REPORTS. Sections 22.352, 22.353,
and 22.354 do not apply to:
(1) a corporation that solicits funds only from
members of the corporation;
(2) a corporation that does not intend to solicit and
receive and does not actually raise or receive during a fiscal year
contributions in an amount exceeding $10,000 from a source other
than its own membership;
(3) a private institution of higher education
described by Section 61.003(15), Education Code, accredited by a
recognized accrediting agency as defined by Section 61.003(13),
Education Code, or authorized to grant degrees under a certificate
of authority issued by the Texas Higher Education Coordinating
Board or a foundation chartered for the benefit of the institution
or any component part of the institution, a proprietary school that
has received a certificate of approval from the commissioner of
education, a public institution of higher education or a foundation
chartered for the benefit of the institution or any component part
of the institution, or an elementary or secondary school;
(4) a religious institution that is a church, an
ecclesiastical or denominational organization, or another
established physical place for worship at which religious services
are the primary activity and are regularly conducted;
(5) a trade association or professional society the
income of which is principally derived from membership dues and
assessments, sales, or services;
(6) an insurer licensed and regulated by the Texas
Department of Insurance;
(7) an organization the charitable activities of which
relate to public concern in the conservation and protection of
wildlife, fisheries, and allied natural resources; or
(8) an alumni association of a public or private
institution of higher education in this state that is recognized
and acknowledged as the official alumni association by the
institution.
Acts 2003, 78th Leg., ch. 182, § 1, eff. Jan. 1, 2006.
§ 22.356. CORPORATIONS ASSISTING STATE
AGENCIES. (a) In this section, "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 this state,
including an institution of higher education as defined by Section
61.003, Education Code;
(2) the legislature or a legislative agency; or
(3) the supreme court, the court of criminal appeals,
a court of appeals, the state bar, or another state judicial agency.
(b) The books and records of a corporation other than a bona
fide alumni association are subject to audit at the discretion of
the state auditor if:
(1) the corporation's charter specifically dedicates
the corporation's activities to the benefit of a particular state
agency; and
(2) a board member, officer, or employee of that state
agency sits on the board of directors of the corporation in other
than an ex officio capacity.
(c) If the corporation's charter specifically dedicates the
corporation's activities to the benefit of a particular state
agency but the conditions described by Subsection (b)(2) do not
exist, a corporation shall file with the secretary of state a copy
of the report required by Section 22.352(b) for the preceding
fiscal year not later than the 89th day after the last day of the
corporation's fiscal year.
Acts 2003, 78th Leg., ch. 182, § 1, eff. Jan. 1, 2006.
§ 22.357. REPORT OF DOMESTIC AND FOREIGN
CORPORATIONS. (a) The secretary of state may require a domestic
corporation or a foreign corporation registered to conduct affairs
in this state to file a report in accordance with Chapter 4 not more
than once every four years as required by this subchapter. The
report must state:
(1) the name of the corporation;
(2) the state or country under the laws of which the
corporation is incorporated;
(3) the address of the registered office of the
corporation in this state and the name of the registered agent at
that address;
(4) if the corporation is a foreign corporation, the
address of the principal office of the corporation in the state or
country under the laws of which the corporation is incorporated;
and
(5) the names and addresses of the directors and
officers of the corporation.
(b) A corporation required to prepare a report under this
section shall prepare the report on a form adopted by the secretary
of state for that purpose and shall include in the report
information that is accurate as of the date the report is executed.
An officer or, if the corporation is in the hands of a receiver or
trustee, the receiver or trustee shall sign the report on behalf of
the corporation.
Acts 2003, 78th Leg., ch. 182, § 1, eff. Jan. 1, 2006.
§ 22.358. NOTICE REGARDING REPORT. (a) The secretary
of state shall send written notice that the report required by
Section 22.357 is due. The notice must be:
(1) addressed to the corporation; and
(2) mailed to the corporation's registered agent or to
the corporation at:
(A) the last known address of the corporation as
it appears on record in the office of the secretary of state; or
(B) any other known place of business of the
corporation.
(b) The secretary of state shall include with the notice a
report form to be prepared and filed as provided by this subchapter.
Acts 2003, 78th Leg., ch. 182, § 1, eff. Jan. 1, 2006.
§ 22.359. FILING OF REPORT. A copy of the report must be
filed with the secretary of state in accordance with Chapter 4 not
later than the 30th day after the date notice is mailed under
Section 22.358.
Acts 2003, 78th Leg., ch. 182, § 1, eff. Jan. 1, 2006.
§ 22.360. FAILURE TO FILE REPORT. (a) A domestic or
foreign corporation that fails to file a report under Sections
22.357 and 22.359 when the report is due forfeits the corporation's
right to conduct affairs in this state.
(b) The forfeiture takes effect, without judicial action,
when the secretary of state enters on the record of the corporation
kept in the office of the secretary of state:
(1) the words "right to conduct affairs forfeited";
and
(2) the date of forfeiture.
Acts 2003, 78th Leg., ch. 182, § 1, eff. Jan. 1, 2006.
§ 22.361. NOTICE OF FORFEITURE. Notice of forfeiture
under Section 22. 360 shall be mailed to the corporation's
registered agent at the registered office or to the corporation at:
(1) the address of the principal place of business of
the corporation as it appears in the certificate of formation;
(2) the last known address of the corporation as it
appears on record in the office of the secretary of state; or
(3) any other known place of business of the
corporation.
Acts 2003, 78th Leg., ch. 182, § 1, eff. Jan. 1, 2006.
§ 22.362. EFFECT OF FORFEITURE. (a) Unless the right
of the corporation to conduct affairs in this state is revived under
Section 22.363:
(1) the corporation may not maintain an action, suit,
or proceeding in a court of this state; and
(2) a successor or assignee of the corporation may not
maintain an action, suit, or proceeding in a court of this state on
a right, claim, or demand arising from the conduct of affairs by the
corporation in this state.
(b) This section does not affect the right of an assignee of
the corporation as:
(1) the holder in due course of a negotiable
promissory note, check, or bill of exchange; or
(2) the bona fide purchaser for value of a warehouse
receipt, stock certificate, or other instrument negotiable by law.
(c) The forfeiture of the right to conduct affairs in this
state does not:
(1) impair the validity of a contract or act of the
corporation; or
(2) prevent the corporation from defending an action,
suit, or proceeding in a court of this state.
Acts 2003, 78th Leg., ch. 182, § 1, eff. Jan. 1, 2006.
§ 22.363. REVIVAL OF RIGHT TO CONDUCT AFFAIRS. (a) A
corporation may be relieved from a forfeiture under Section 22.360
by filing the required report, accompanied by the revival fee, not
later than the 120th day after the date of mailing of the notice of
forfeiture under Section 22.361.
(b) If a corporation complies with Subsection (a), the
secretary of state shall:
(1) revive the right of the corporation to conduct
affairs in this state;
(2) cancel the words regarding the forfeiture on the
record of the corporation; and
(3) endorse on that record the word "revived" and the
date of revival.
Acts 2003, 78th Leg., ch. 182, § 1, eff. Jan. 1, 2006.
§ 22.364. FAILURE TO REVIVE; TERMINATION OR
REVOCATION. (a) The failure of a corporation that has forfeited
its right to conduct affairs in this state to revive that right
under Section 22.363 is grounds for:
(1) the involuntary termination of the domestic
corporation; or
(2) the revocation of the foreign corporation's
registration to transact business in this state.
(b) The termination or revocation takes effect, without
judicial action, when the secretary of state enters on the record of
the corporation filed in the office of the secretary of state the
word "forfeited" and the date of forfeiture and cites this chapter
as authority for that forfeiture.
Acts 2003, 78th Leg., ch. 182, § 1, eff. Jan. 1, 2006.
§ 22.365. REINSTATEMENT. (a) A corporation that is
terminated or the registration of which has been revoked as
provided by Section 22.364 may be relieved of the termination or
revocation by filing the report required by Section 22.357,
accompanied by the filing fee for the report, if the corporation has
paid:
(1) all fees, taxes, penalties, and interest due and
accruing before the termination or revocation; and
(2) an amount equal to the total taxes from the date of
termination or revocation to the date of reinstatement that would
have been payable if the corporation had not been terminated or had
its registration revoked.
(b) When the report is filed and the filing fee is paid to
the secretary of state, the secretary of state shall:
(1) reinstate the certificate of formation or
registration without judicial action;
(2) cancel the word "forfeited" on the record; and
(3) endorse on the record kept in the secretary's
office relating to the corporation the words "set aside" and the
date of the reinstatement.
(c) If a termination or revocation is set aside under this
section, the corporation shall determine from the secretary of
state whether the name of the corporation is available. If the name
of the corporation is not available at the time of reinstatement,
the corporation shall amend its corporate name under this code.
Acts 2003, 78th Leg., ch. 182, § 1, eff. Jan. 1, 2006.
SUBCHAPTER I. CHURCH BENEFITS BOARDS
§ 22.401. DEFINITION. In this chapter, "church
benefits board" means an organization described by Section
414(e)(3)(A), Internal Revenue Code, that:
(1) has the principal purpose or function of
administering or funding a plan or program to provide 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.
Acts 2003, 78th Leg., ch. 182, § 1, eff. Jan. 1, 2006.
§ 22.402. PENSIONS AND BENEFITS. When authorized by the
corporation's 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 benefits and pensions to:
(1) the ministers, teachers, employees, trustees,
directors, or other functionaries of the corporation;
(2) the ministers, teachers, employees, trustees,
directors, or other functionaries of organizations controlled by or
affiliated with a church or a conference, convention, or
association of churches under the jurisdiction and control of the
corporation; and
(3) the spouse, children, dependents, or other
beneficiaries of the persons described by Subdivisions (1) and (2).
Acts 2003, 78th Leg., ch. 182, § 1, eff. Jan. 1, 2006.
§ 22.403. CONTRIBUTIONS. (a) A church benefits board
may provide for:
(1) the collection of contributions and other payments
to assist in providing pensions and benefits under this subchapter;
and
(2) the creation, maintenance, investment,
management, and disbursement of necessary annuities, endowments,
reserves, or other funds for a purpose under Subdivision (1).
(b) A church benefits board may receive payments from a
trust fund or corporation that funds a church plan as defined by
Section 414(e), Internal Revenue Code.
Acts 2003, 78th Leg., ch. 182, § 1, eff. Jan. 1, 2006.
§ 22.404. POWER TO ACT AS TRUSTEE. A church benefits
board may act as:
(1) a trustee under a lawful trust committed to the
board by contract, will, or otherwise; and
(2) an agent for the performance of a lawful act
relating to the purposes of the trust.
Acts 2003, 78th Leg., ch. 182, § 1, eff. Jan. 1, 2006.
§ 22.405. DOCUMENTS AND AGREEMENTS. A church benefits
board may provide to a program participant a certificate or
agreement of participation, a debenture, or an indemnification
agreement, as appropriate to accomplish the purposes of the board.
Acts 2003, 78th Leg., ch. 182, § 1, eff. Jan. 1, 2006.
§ 22.406. INDEMNIFICATION. A church benefits board, or
an affiliate wholly owned by the board, may agree to indemnify
against damage or risk of loss:
(1) a minister, teacher, employee, trustee,
functionary, or director affiliated with the board or a family
member, dependent, or beneficiary of one of those persons;
(2) a church or a convention, conference, or
association of churches; or
(3) an organization that is controlled by or
affiliated with the board or with a church or a convention,
conference, or association of churches.
Acts 2003, 78th Leg., ch. 182, § 1, eff. Jan. 1, 2006.
§ 22.407. PROTECTION OF BENEFITS. (a) Money or other
benefits that have been or will be provided to a participant or a
beneficiary under a plan or program provided by or through a church
benefits board under this subchapter are not subject to execution,
attachment, garnishment, or other process and may not be
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.
(b) 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 incurred in the plan or program.
Acts 2003, 78th Leg., ch. 182, § 1, eff. Jan. 1, 2006.
§ 22.408. ASSIGNMENT OF BENEFITS. An assignment or
transfer or an attempt to make an assignment or transfer by a
beneficiary of money, benefits, or other rights under a plan or
program under this subchapter is void if:
(1) the plan or program contains a provision
prohibiting the assignment or other transfer without the written
consent of the church benefits board; and
(2) the beneficiary assigns or transfers or attempts
to make an assignment or transfer without that consent.
Acts 2003, 78th Leg., ch. 182, § 1, eff. Jan. 1, 2006.
§ 22.409. INSURANCE CODE NOT APPLICABLE. The Insurance
Code does not apply to a church benefits board or a program, plan,
benefit, or activity of the board or a person affiliated with the
board.
Acts 2003, 78th Leg., ch. 182, § 1, eff. Jan. 1, 2006.
