Bill Text: TX SB1517 | 2017-2018 | 85th Legislature | Enrolled
Bill Title: Relating to partnerships, limited liability companies, and other domestic and foreign entities and to series of limited liability companies and foreign entities.
Spectrum: Bipartisan Bill
Status: (Passed) 2017-05-22 - Effective on 9/1/17 [SB1517 Detail]
Download: Texas-2017-SB1517-Enrolled.html
S.B. No. 1517 |
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relating to partnerships, limited liability companies, and other | ||
domestic and foreign entities and to series of limited liability | ||
companies and foreign entities. | ||
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS: | ||
SECTION 1. Section 1.002(69-b), Business Organizations | ||
Code, is amended to read as follows: | ||
(69-b) "Person" means an individual or a corporation, | ||
partnership, limited liability company, business trust, trust, | ||
association, or other organization, estate, government or | ||
governmental subdivision or agency, or other legal entity, or a | ||
series of a domestic limited liability company or foreign entity. | ||
SECTION 2. Section 5.053(b), Business Organizations Code, | ||
is amended to read as follows: | ||
(b) Subsection (a) does not apply if the other entity or the | ||
person for whom the name is reserved or registered, as appropriate, | ||
provides to the secretary of state a notarized written statement of | ||
the entity's or person's consent to the use of the similar name. | ||
Sections 4.007 and 4.008 apply to a written consent to the use of a | ||
similar name under this subsection to the same extent those | ||
sections apply to filing instruments. | ||
SECTION 3. The heading to Subchapter F, Chapter 5, Business | ||
Organizations Code, is amended to read as follows: | ||
SUBCHAPTER F. SERVICE OF PROCESS ON ENTITY | ||
SECTION 4. Chapter 5, Business Organizations Code, is | ||
amended by adding Subchapter F-1 to read as follows: | ||
SUBCHAPTER F-1. SERVICE OF PROCESS ON SERIES OF LIMITED LIABILITY | ||
COMPANY OR FOREIGN ENTITY | ||
Sec. 5.301. APPLICABILITY OF SUBCHAPTER. This subchapter | ||
applies to service of process, notice, or demand on a series of a | ||
domestic limited liability company or a series of a foreign entity. | ||
Sec. 5.302. AGENT FOR SERIES. (a) The registered agent | ||
designated and maintained by a domestic limited liability company | ||
or foreign entity under Subchapter E is an agent of each series of | ||
the company or entity for the purpose of service of process, notice, | ||
or demand required or permitted by law to be served on a particular | ||
series of the company or entity. | ||
(b) A process, notice, or demand required or permitted by | ||
law to be served on a series of a domestic limited liability company | ||
or foreign entity that is served on the company's or entity's | ||
registered agent must include: | ||
(1) the name of the company or entity; and | ||
(2) the name of the series on which the process, | ||
notice, or demand is required or permitted to be served. | ||
Sec. 5.303. DUTIES OF REGISTERED AGENT. (a) For purposes | ||
of Section 5.206, on service or receipt of process, notice, or | ||
demand that complies with the requirements of Section 5.302(b), the | ||
only duties of the registered agent are to: | ||
(1) receive or accept, and forward to the represented | ||
domestic limited liability company or foreign entity at the address | ||
most recently provided to the registered agent by the represented | ||
company or entity, the process, notice, or demand that is served on | ||
or received by the registered agent under Section 5.302(b); or | ||
(2) otherwise notify the represented company or entity | ||
at the address described by Subdivision (1) regarding the process, | ||
notice, or demand that is served on or received by the registered | ||
agent under Section 5.302(b). | ||
(b) The registered agent is not required to send a copy of | ||
the process, notice, or demand directly to the series of the | ||
represented domestic limited liability company or foreign entity. | ||
Sec. 5.304. SERVICE ON SECRETARY OF STATE. (a) The | ||
secretary of state is an agent of a series of a domestic limited | ||
liability company or foreign entity for purposes of service of | ||
process, notice, or demand on the series of the company or entity if | ||
the secretary of state is the agent of the company or entity | ||
pursuant to Section 5.251. | ||
(b) The duplicate copies of a process, notice, or demand | ||
that are delivered to the secretary of state pursuant to Section | ||
5.252(a) as agent for a series of a domestic limited liability | ||
company or foreign entity must include: | ||
(1) the name of the company or entity; and | ||
(2) the name of the series of the company or entity on | ||
which the process, notice, or demand is to be served. | ||
(c) For purposes of Section 5.253, after service on the | ||
secretary of state in compliance with the requirements of | ||
Subsection (b), the secretary of state shall send to the domestic | ||
limited liability company or foreign entity named in the process, | ||
notice, or demand one of the copies of the process, notice, or | ||
demand as provided in Section 5.253. | ||
(d) The secretary of state is not required to send a copy of | ||
the process, notice, or demand directly to the series of the named | ||
domestic limited liability company or foreign entity. | ||
Sec. 5.305. SERVICE ON GOVERNING PERSONS. (a) Each | ||
governing person of a series of a domestic limited liability | ||
company as described by Section 101.608 is an agent of the series | ||
for the purpose of service of process, notice, or demand required or | ||
permitted by law to be served on the series. | ||
(b) Each governing person of a series of a foreign entity is | ||
an agent of the series for the purpose of service of process, | ||
notice, or demand required or permitted by law to be served on the | ||
series. | ||
Sec. 5.306. SERVICE OF PROCESS BY POLITICAL SUBDIVISION. | ||
(a) For purposes of Section 5.257, a process, notice, or demand | ||
may be served on a series of a domestic limited liability company by | ||
delivery of the process, notice, or demand to any governing person | ||
of the series as described by Section 101.608. | ||
(b) For purposes of Section 5.257, a process, notice, or | ||
demand may be served on a series of a foreign entity by delivery of | ||
the process, notice, or demand to any governing person of the | ||
series. | ||
(c) If the governing persons of a series of a domestic | ||
limited liability company or foreign entity are unknown or cannot | ||
be found, service on the series of the company or entity may be made | ||
in the same manner as service is made on unknown shareholders under | ||
law. | ||
(d) Notwithstanding any disability or reinstatement of a | ||
domestic limited liability company or foreign entity, service of | ||
process under this section is sufficient for a judgment against a | ||
series of the company or entity or a judgment in rem against any | ||
property to which a series of the company or entity holds title. | ||
SECTION 5. Section 9.105, Business Organizations Code, is | ||
amended to read as follows: | ||
Sec. 9.105. USE OF NAME SIMILAR TO PREVIOUSLY REGISTERED | ||
NAME. If the secretary of state determines that a foreign filing | ||
entity's name or the name under which it is registered to transact | ||
business in this state is the same as, deceptively similar to, or | ||
similar to a name of a filing entity or foreign filing entity as | ||
provided by or reserved or registered under this code, the | ||
secretary of state may not accept for filing the certificate of | ||
reinstatement unless the foreign filing entity amends its | ||
registration to change its name or obtains written consent for the | ||
use of the similar name. Sections 4.007 and 4.008 apply to a | ||
written consent for the use of a similar name under this section to | ||
the same extent those sections apply to filing instruments. | ||
SECTION 6. Section 11.203, Business Organizations Code, is | ||
amended to read as follows: | ||
Sec. 11.203. USE OF NAME SIMILAR TO PREVIOUSLY REGISTERED | ||
NAME. If the secretary of state determines that a filing entity's | ||
name contained in a certificate of reinstatement filed under | ||
Section 11.202 is the same as, deceptively similar to, or similar to | ||
a name of a filing entity or foreign entity on file as provided by or | ||
reserved or registered under this code, the secretary of state may | ||
not accept for filing the certificate of reinstatement unless the | ||
filing entity contemporaneously amends its certificate of | ||
formation to change its name or obtains written consent for the use | ||
of the similar name. Sections 4.007 and 4.008 apply to a written | ||
consent for the use of a similar name under this section to the same | ||
extent those sections apply to filing instruments. | ||
SECTION 7. Section 11.314, Business Organizations Code, is | ||
amended to read as follows: | ||
Sec. 11.314. INVOLUNTARY WINDING UP AND TERMINATION OF | ||
PARTNERSHIP OR LIMITED LIABILITY COMPANY. A district court in the | ||
county in which the registered office or principal place of | ||
business in this state of a domestic partnership or limited | ||
liability company is located has jurisdiction to order the winding | ||
up and termination of the domestic partnership or limited liability | ||
company on application by an owner of[ |
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liability company if the court determines that: | ||
(1) [ |
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[ |
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(2) [ |
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conduct relating to the entity's [ |
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makes it not reasonably practicable to carry on the business [ |
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(3) [ |
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reasonably practicable to carry on the entity's business in | ||
conformity with its governing documents. | ||
SECTION 8. Section 101.052, Business Organizations Code, is | ||
amended by adding Subsection (f) to read as follows: | ||
(f) A company agreement is enforceable by or against the | ||
limited liability company, regardless of whether the company has | ||
signed or otherwise expressly adopted the agreement. | ||
SECTION 9. Section 101.054(a), Business Organizations | ||
Code, is amended to read as follows: | ||
(a) Except as provided by this section, the following | ||
provisions may not be waived or modified in the company agreement of | ||
a limited liability company: | ||
(1) this section; | ||
(2) Section 101.101, 101.151, 101.206, 101.501, | ||
101.602(b), or 101.613; | ||
(3) Chapter 1, if the provision is used to interpret a | ||
provision or define a word or phrase contained in a section listed | ||
in this subsection; | ||
(4) Chapter 2, except that Section 2.104(c)(2), | ||
2.104(c)(3), or 2.113 may be waived or modified in the company | ||
agreement; | ||
(5) Chapter 3, except that Subchapters C and E may be | ||
waived or modified in the company agreement; or | ||
(6) Chapter 4, 5, [ |
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Section 11.056. | ||
SECTION 10. Section 101.305, Business Organizations Code, | ||
is amended to read as follows: | ||
Sec. 101.305. MANAGER VACANCY. (a) Subject to Section | ||
101.306(b), a vacancy in the position of a manager of a limited | ||
liability company may be filled by: | ||
(1) the affirmative vote of the majority of the | ||
remaining managers of the company, without regard to whether the | ||
remaining managers constitute a quorum; or | ||
(2) the members [ |
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(b) A person elected to fill a vacancy in the position of a | ||
manager serves for the unexpired term, if any, of the person's | ||
predecessor. | ||
SECTION 11. Subchapter K, Chapter 101, Business | ||
Organizations Code, is amended by adding Section 101.503 to read as | ||
follows: | ||
Sec. 101.503. PENALTY FOR REFUSAL TO PERMIT EXAMINATION OF | ||
CERTAIN RECORDS. (a) A limited liability company that refuses to | ||
allow a member to examine and copy, on written request that complies | ||
with Section 101.502(a), records or other information described by | ||
that section is liable to the member for any cost or expense, | ||
including attorney's fees, incurred in enforcing the member's | ||
rights under Section 101.502. The liability imposed on a limited | ||
liability company under this subsection is in addition to any other | ||
damages or remedy afforded to the member by law. | ||
(b) It is a defense to an action brought under this section | ||
that the person suing: | ||
(1) has improperly used information obtained through a | ||
prior examination of the records or other information of the | ||
limited liability company or any other limited liability company, | ||
under Section 101.502; or | ||
(2) was not acting in good faith or for a proper | ||
purpose in making the person's request for examination. | ||
SECTION 12. Section 101.602, Business Organizations Code, | ||
is amended by adding Subsection (c) to read as follows: | ||
(c) Subsection (a) or any provision contained in a limited | ||
liability company agreement or certificate of formation pursuant to | ||
Subsection (a) does not restrict: | ||
(1) a particular series or a limited liability company | ||
on behalf of a particular series from expressly agreeing in the | ||
company agreement or other written agreement that any or all of the | ||
debts, liabilities, obligations, and expenses incurred, contracted | ||
for, or otherwise existing with respect to the company generally or | ||
any other series of the company shall be enforceable against the | ||
assets of that particular series; or | ||
(2) a limited liability company from expressly | ||
agreeing in the company agreement or other written agreement that | ||
any or all of the debts, liabilities, obligations, and expenses | ||
incurred, contracted for, or otherwise existing with respect to a | ||
particular series shall be enforceable against the assets of the | ||
company generally. | ||
SECTION 13. Section 101.605, Business Organizations Code, | ||
is amended to read as follows: | ||
Sec. 101.605. GENERAL POWERS OF SERIES. A series | ||
established under this subchapter has the power and capacity, in | ||
the series' own name, to: | ||
(1) sue and be sued; | ||
(2) contract; | ||
(3) acquire, sell, and hold title to assets of the | ||
series, including real property, personal property, and intangible | ||
property; | ||
(4) grant liens and security interests in assets of | ||
the series; | ||
(5) be a promoter, organizer, partner, owner, member, | ||
associate, or manager of an organization; and | ||
(6) [ |
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or appropriate to the conduct, promotion, or attainment of the | ||
business, purposes, or activities of the series. | ||
SECTION 14. Sections 152.212(b) and (c), Business | ||
Organizations Code, are amended to read as follows: | ||
(b) A partnership shall keep or make available its books and | ||
records, if any, at its chief executive office. | ||
(c) A partnership shall make available or provide access to | ||
its books and records to a partner or an agent or attorney of a | ||
partner. | ||
SECTION 15. Subchapter L, Chapter 153, Business | ||
Organizations Code, is amended by adding Section 153.5521 to read | ||
as follows: | ||
Sec. 153.5521. PENALTY FOR REFUSAL TO PERMIT EXAMINATION OF | ||
CERTAIN RECORDS. (a) A limited partnership that refuses to allow | ||
a partner or assignee of a partnership interest to examine and copy, | ||
on written request that complies with Section 153.552(a), records | ||
or other information described by that section is liable to the | ||
partner or assignee for any cost or expense, including attorney's | ||
fees, incurred in enforcing the partner's or assignee's rights | ||
under Section 153.552. The liability imposed on a limited | ||
partnership under this subsection is in addition to any other | ||
damages or remedy afforded to the partner or assignee by law. | ||
(b) It is a defense to an action brought under this section | ||
that the person suing: | ||
(1) has improperly used information obtained through a | ||
prior examination of the records or other information of the | ||
limited partnership or any other limited partnership under Section | ||
153.552; or | ||
(2) was not acting in good faith or for a proper | ||
purpose in making the person's request for examination. | ||
SECTION 16. Section 154.101(a), Business Organizations | ||
Code, is amended to read as follows: | ||
(a) A [ |
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provide for the future creation of additional classes or groups of | ||
one or more partners that have certain express relative rights, | ||
powers, and duties, including voting rights. The future creation | ||
of additional classes or groups may be expressed in the partnership | ||
agreement or at the time of creation of the class or group. | ||
SECTION 17. Section 154.102, Business Organizations Code, | ||
is amended to read as follows: | ||
Sec. 154.102. PROVISIONS RELATING TO VOTING. A [ |
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partnership agreement that grants or provides for granting a right | ||
to vote to a partner may contain a provision relating to: | ||
(1) giving notice of the time, place, or purpose of a | ||
meeting at which a matter is to be voted on by the partners; | ||
(2) waiver of notice; | ||
(3) action by consent without a meeting; | ||
(4) the establishment of a record date; | ||
(5) quorum requirements; | ||
(6) voting in person or by proxy; or | ||
(7) other matters relating to the exercise of the | ||
right to vote. | ||
SECTION 18. Subchapter B, Chapter 154, Business | ||
Organizations Code, is amended by adding Section 154.105 to read as | ||
follows: | ||
Sec. 154.105. PARTNERSHIP BOUND BY PARTNERSHIP AGREEMENT. | ||
A partnership agreement is enforceable by or against the | ||
partnership, regardless of whether the partnership has signed or | ||
otherwise expressly adopted the agreement. | ||
SECTION 19. Section 154.103, Business Organizations Code, | ||
is repealed. | ||
SECTION 20. This Act takes effect September 1, 2017. | ||
______________________________ | ______________________________ | |
President of the Senate | Speaker of the House | |
I hereby certify that S.B. No. 1517 passed the Senate on | ||
April 19, 2017, by the following vote: Yeas 31, Nays 0. | ||
______________________________ | ||
Secretary of the Senate | ||
I hereby certify that S.B. No. 1517 passed the House on | ||
May 9, 2017, by the following vote: Yeas 145, Nays 0, two present | ||
not voting. | ||
______________________________ | ||
Chief Clerk of the House | ||
Approved: | ||
______________________________ | ||
Date | ||
______________________________ | ||
Governor |