Title BO, Business Organizations Code

Sec. 21.054. ADOPTION OF AMENDMENT BY SHAREHOLDERS. If a corporation has issued and outstanding shares: (1) a resolution described by Section 21.052 must also direct that the proposed amendment be submitted to a vote of the shareholders at a meeting; and (2) the shareholders must…

Sec. 21.055. NOTICE OF AND MEETING TO CONSIDER PROPOSED AMENDMENT. (a) Each shareholder of record entitled to vote shall be given written notice containing the proposed amendment or a summary of the changes to be effected within the time and in the manner provided by this code fo…

Sec. 21.056. RESTATED CERTIFICATE OF FORMATION. (a) A corporation may adopt a restated certificate of formation as provided by Subchapter B, Chapter 3, by following the same procedures to amend its certificate of formation under Sections 21.052-21.055, except that: (1) shareholde…

Sec. 21.057. BYLAWS. (a) The board of directors of a corporation shall adopt initial bylaws. (b) The bylaws may contain provisions for the regulation and management of the affairs of the corporation that are consistent with law and the corporation's certificate of formation. (c) …

Sec. 21.058. DUAL AUTHORITY. Unless the certificate of formation or a bylaw adopted by the shareholders provides otherwise as to all or a part of a corporation's bylaws, a corporation's shareholders may amend, repeal, or adopt the corporation's bylaws regardless of whether the by…

Sec. 21.059. ORGANIZATION MEETING. (a) This section does not apply to a corporation created as a result of a conversion or merger the plan of which states the bylaws and names the officers of the corporation. (b) After the filing of a certificate of formation takes effect, an org…

Sec. 21.101. SHAREHOLDERS' AGREEMENT. (a) The shareholders of a corporation may enter into an agreement that: (1) restricts the discretion or powers of the board of directors; (2) eliminates the board of directors and authorizes the business and affairs of the corporation to be m…

Sec. 21.102. TERM OF AGREEMENT. Any limit on the term or duration of a shareholders' agreement under this subchapter must be set forth in the agreement. A shareholders' agreement under this subchapter that was in effect before September 1, 2015, remains in effect for 10 years, un…

Sec. 21.103. DISCLOSURE OF AGREEMENT; RECALL OF CERTAIN CERTIFICATES. (a) The existence of an agreement authorized by this subchapter shall be noted conspicuously on the front or back of each certificate for outstanding shares or on the information statement required for uncertif…

Sec. 21.104. EFFECT OF SHAREHOLDERS' AGREEMENT. A shareholders' agreement that complies with this subchapter is effective among the shareholders and between the shareholders and the corporation even if the terms of the agreement are inconsistent with this code. Acts 2003, 78th Le…

Sec. 21.105. RIGHT OF RESCISSION; KNOWLEDGE OF PURCHASER OF SHARES. (a) A purchaser of shares who does not have knowledge at the time of purchase of the existence of a shareholders' agreement authorized by this subchapter is entitled to rescind the purchase. (b) A purchaser is co…

Sec. 21.106. AGREEMENT LIMITING AUTHORITY OF AND SUPPLANTING BOARD OF DIRECTORS; LIABILITY. (a) A shareholders' agreement authorized by this subchapter that limits the discretion or powers of the board of directors or supplants the board of directors relieves the directors of, an…

Sec. 21.107. LIABILITY OF SHAREHOLDER. The existence of or a performance under a shareholders' agreement authorized by this subchapter is not a ground for imposing personal liability on a shareholder for an act or obligation of the corporation by disregarding the separate existen…

Sec. 21.108. PERSONS ACTING IN PLACE OF SHAREHOLDERS. An organizer or a subscriber for shares may act as a shareholder with respect to a shareholders' agreement authorized by this subchapter if no shares have been issued when the agreement is signed. Acts 2003, 78th Leg., ch. 182…

Sec. 21.109. AGREEMENT NOT EFFECTIVE. (a) A shareholders' agreement authorized by this subchapter ceases to be effective when shares of the corporation are: (1) listed on a national securities exchange; or (2) regularly traded in a market maintained by one or more members of a na…

Sec. 21.110. OTHER SHAREHOLDER AGREEMENTS PERMITTED. This subchapter does not prohibit or impair any agreement between two or more shareholders, or between the corporation and one or more of the corporation's shareholders, permitted by Title 1, this chapter, or other law. Added b…

Sec. 21.151. NUMBER OF AUTHORIZED SHARES. A corporation may issue the number of authorized shares stated in the corporation's certificate of formation. Acts 2003, 78th Leg., ch. 182, Sec. 1, eff. Jan. 1, 2006.

Sec. 21.152. CLASSES AND SERIES OF SHARES. (a) A corporation's certificate of formation may divide the corporation's authorized shares into one or more classes and may divide one or more classes into one or more series. If more than one class or series of shares is authorized, th…

Sec. 21.153. DESIGNATIONS, PREFERENCES, LIMITATIONS, AND RIGHTS OF A CLASS OR SERIES. (a) If more than one class or series of shares is authorized under Section 21.152(d), the certificate of formation must state the designations, preferences, limitations, and relative rights, inc…

Sec. 21.154. CERTAIN OPTIONAL CHARACTERISTICS OF SHARES. (a) Subject to Sections 21.152 and 21.153, if authorized by the corporation's certificate of formation, a corporation may issue shares that: (1) are redeemable, at the option of the corporation, shareholder, or other person…

Sec. 21.155. SERIES OF SHARES ESTABLISHED BY BOARD OF DIRECTORS. (a) If expressly authorized by the corporation's certificate of formation and subject to the certificate of formation, the board of directors of a corporation may establish series of unissued shares of any class by …

Sec. 21.156. ACTIONS WITH RESPECT TO SERIES OF SHARES. (a) To effect an action authorized under Section 21.155, the corporation must file with the secretary of state a statement that contains: (1) the name of the corporation; (2) if the statement relates to the establishment of a…

Sec. 21.157. ISSUANCE OF SHARES. (a) Except as provided by Section 21.158, a corporation may issue shares for consideration if authorized by the board of directors of the corporation. Shares may be issued in one or more transactions in the number, at the time, and for the conside…

Sec. 21.158. ISSUANCE OF SHARES UNDER PLAN OF MERGER OR CONVERSION. (a) A converted corporation under a plan of conversion or a corporation created by a plan of merger may issue shares for consideration if authorized by the plan of conversion or plan of merger, as appropriate. (b…

Sec. 21.159. TYPES OF CONSIDERATION FOR SHARES. Shares with or without par value may be issued for the following types of consideration: (1) a tangible or intangible benefit to the corporation; (2) cash; (3) a promissory note; (4) services performed or a contract for services to …

Sec. 21.160. DETERMINATION OF CONSIDERATION FOR SHARES. (a) Subject to Subsection (b) and Section 21.157, consideration to be received for shares must be determined: (1) by the board of directors; (2) by a plan of conversion, if the shares are to be issued by a converted corporat…

Sec. 21.161. AMOUNT OF CONSIDERATION FOR ISSUANCE OF CERTAIN SHARES. (a) Consideration to be received by a corporation for the issuance of shares with par value may not be less than the par value of the shares. (b) The part of the surplus of a corporation that is transferred to s…

Sec. 21.162. VALUE AND SUFFICIENCY OF CONSIDERATION. In the absence of fraud in the transaction, the judgment of the board of directors, the shareholders, or the party approving the plan of conversion or the plan of merger, as appropriate, is conclusive in determining the value a…

Sec. 21.163. ISSUANCE AND DISPOSITION OF FRACTIONAL SHARES OR SCRIP. (a) A corporation may: (1) issue fractions of a share, either certificated or uncertificated; (2) arrange for the disposition of fractional interests by persons entitled to the interests; (3) pay cash for the fa…

Sec. 21.164. RIGHTS OF HOLDERS OF FRACTIONAL SHARES OR SCRIP. (a) A holder of a certificated or uncertificated fractional share is entitled to exercise voting rights, receive distributions, and make a claim with respect to the assets of the corporation in the event of winding up …

Sec. 21.165. SUBSCRIPTIONS. (a) A corporation may accept a subscription by notifying the subscriber in writing. (b) A subscription to purchase shares in a corporation in the process of being formed is irrevocable for six months if the subscription is in writing and signed by the …

Sec. 21.166. PREFORMATION SUBSCRIPTION. (a) The corporation may determine the payment terms of a preformation subscription unless the payment terms are specified by the subscription. The payment terms may authorize payment in full on acceptance or by installments. (b) Unless the …

Sec. 21.167. COMMITMENT TO PURCHASE SHARES. (a) A person who contemplates the acquisition of shares in a corporation may commit to act in a specified manner with respect to the shares after the acquisition, including the voting of the shares or the retention or disposition of the…

Sec. 21.168. STOCK RIGHTS, OPTIONS, AND CONVERTIBLE INDEBTEDNESS. (a) Except as provided by the corporation's certificate of formation and regardless of whether done in connection with the issuance and sale of any other share or security of the corporation, a corporation may crea…

Sec. 21.169. TERMS AND CONDITIONS OF RIGHTS AND OPTIONS. (a) The terms and conditions of rights or options may include restrictions or conditions that: (1) prohibit or limit the exercise, transfer, or receipt of the rights or options by certain persons or classes of persons, incl…

Sec. 21.170. CONSIDERATION FOR RIGHTS, OPTIONS, AND CONVERTIBLE INDEBTEDNESS. (a) In the absence of fraud in the transaction, the judgment of the board of directors of a corporation as to the adequacy of the consideration received for rights, options, or convertible indebtedness …

Sec. 21.171. OUTSTANDING OR TREASURY SHARES. (a) Shares that are issued are outstanding shares unless the shares are treasury shares or are canceled. (b) If there are outstanding shares, one or more shares that together have unlimited voting rights and one or more shares that tog…

Sec. 21.172. EXPENSES OF ORGANIZATION, REORGANIZATION, AND FINANCING OF CORPORATION. A corporation may pay or authorize to be paid from the consideration received by the corporation as payment for the corporation's shares the reasonable charges and expenses of the organization or…

Sec. 21.173. SUPPLEMENTAL REQUIRED RECORDS. In addition to the books and records required to be kept under Section 3.151, a corporation shall keep at its registered office or principal place of business, or at the office of its transfer agent or registrar, a record of: (1) the or…

Sec. 21.201. REGISTERED HOLDERS AS OWNERS; SHARES HELD BY NOMINEES. (a) Except as otherwise provided by this code and subject to Chapter 8, Business & Commerce Code, a corporation may consider the person registered as the owner of a share in the share transfer records of the corp…

Sec. 21.202. DEFINITION OF SHARES. In Sections 21.203-21.208, "shares" includes a security: (1) that is convertible into shares; or (2) that carries a right to subscribe for or acquire shares. Acts 2003, 78th Leg., ch. 182, Sec. 1, eff. Jan. 1, 2006.

Sec. 21.203. NO STATUTORY PREEMPTIVE RIGHT UNLESS PROVIDED BY CERTIFICATE OF FORMATION. (a) Except as provided by Section 21.208, a shareholder of a corporation does not have a preemptive right under this subchapter to acquire the corporation's unissued or treasury shares except …

Sec. 21.204. STATUTORY PREEMPTIVE RIGHTS. (a) If the shareholders of a corporation have a preemptive right under this subchapter, the shareholders have a preemptive right to acquire proportional amounts of the corporation's unissued or treasury shares on the decision of the corpo…

Sec. 21.205. WAIVER OF PREEMPTIVE RIGHT. (a) A shareholder may waive a preemptive right granted to the shareholder. (b) A written waiver of a preemptive right is irrevocable regardless of whether the waiver is supported by consideration. Acts 2003, 78th Leg., ch. 182, Sec. 1, eff…

Sec. 21.206. LIMITATION ON ACTION TO ENFORCE PREEMPTIVE RIGHT. (a) An action brought against a corporation, the board of directors or an officer, shareholder, or agent of the corporation, or an owner of a beneficial interest in shares of the corporation for the violation of a pre…

Sec. 21.207. DISPOSITION OF SHARES HAVING PREEMPTIVE RIGHTS. The transferee or successor of a share that has been transferred or otherwise disposed of by a shareholder of a corporation whose preemptive right to acquire shares in the corporation has been violated does not acquire …