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  S.B. No. 1859
 
 
 
 
AN ACT
  relating to business entities.
         BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
         SECTION 1.  Section 1.002, Business Organizations Code, is
  amended by amending Subdivisions (20-a) and (81) and adding
  Subdivision (20-b) to read as follows:
               (20-a) "Electronic data system" means an electronic
  network or database. The term includes a distributed electronic
  network or database, including one that employs blockchain or
  distributed ledger technology.
               (20-b) "Electronic transmission" means a form of
  communication, including communication by use of or participation
  in one or more electronic data systems, that:
                     (A)  does not directly involve the physical
  transmission of paper;
                     (B)  creates a record that may be retained,
  retrieved, and reviewed by the recipient; and
                     (C)  may be directly reproduced in paper form by
  the recipient through an automated process.
               (81)  "Shareholder" or "holder of shares" means:
                     (A)  the person in whose name shares issued by a
  for-profit corporation, professional corporation, or real estate
  investment trust are registered in the share transfer records
  maintained by or on behalf of the for-profit corporation,
  professional corporation, or real estate investment trust; or
                     (B)  the beneficial owner of shares issued by a
  for-profit corporation, whose shares are held in a voting trust or
  by a nominee on the beneficial owner's behalf, to the extent of the
  rights granted by a nominee statement on file with the for-profit
  corporation in accordance with Sections 21.201(b) and (c).
         SECTION 2.  Sections 3.151(a) and (b), Business
  Organizations Code, are amended to read as follows:
         (a)  Each filing entity shall keep:
               (1)  books and records of accounts;
               (2)  minutes of the proceedings of the owners or
  members or governing authority of the filing entity and committees
  of the owners or members or governing authority of the filing
  entity;
               (3)  [at its registered office or principal place of
  business, or at the office of its transfer agent or registrar,] a
  current record of the name and mailing address of each owner or
  member of the filing entity; and
               (4)  other books and records as required by the title of
  this code governing the entity.
         (b)  The books, records, minutes, and ownership or
  membership records of any filing entity[, including those described
  in Subsection (a)(4),] may be:
               (1)  in written paper form; or
               (2)  maintained by or on behalf of the filing entity on,
  or by means of, an information storage device or method or one or
  more electronic data systems, provided that any books, records,
  minutes, and ownership or membership records so maintained can be
  [another form capable of being] converted into written paper form
  within a reasonable time.
         SECTION 3.  Sections 3.205(a) and (c), Business
  Organizations Code, are amended to read as follows:
         (a)  Except as provided by Subsection (c) and in accordance
  with Chapter 8, Business & Commerce Code, after an issuance 
  [issuing] or transfer of [transferring] an uncertificated
  ownership interest in a domestic entity, [a domestic entity shall
  notify] the owner of the ownership interest shall be notified in
  writing or by electronic transmission of any information required
  under this subchapter to be stated on a certificate representing
  the ownership interest.
         (c)  The owner of an uncertificated ownership interest in a 
  [A] domestic entity is not required to be notified [send a notice]
  under Subsection (a) if:
               (1)  the required information is included in the
  governing documents of the entity; and
               (2)  the owner of the uncertificated ownership interest
  is provided with a copy of the governing documents.
         SECTION 4.  Sections 4.052, 4.053, 4.054, 4.055, and 4.056,
  Business Organizations Code, are amended to read as follows:
         Sec. 4.052.  DELAYED EFFECTIVENESS OF CERTAIN FILINGS.
  (a)  Except as provided by Section 4.058, a filing instrument may
  take effect after the time the instrument would otherwise take
  effect as provided by this code for the entity filing the
  instrument.
         (b)  If the effectiveness of a filing instrument is to be
  delayed as permitted by this section, the filing instrument may
  take effect [and]:
               (1)  at a specified date;
               (2)  at a specified date and time; [or]
               (3) [(2)]  on the occurrence of a specified future
  event or fact, including an act of any person; or
               (4)  after the occurrence of a future event or fact,
  including the act of any person, at a specified date, at a specified
  date and time, or after the passage of a specified period of time.
         Sec. 4.053.  CONDITIONS FOR DELAYED EFFECTIVENESS. (a)  The
  date, or the date and time, at which a filing instrument takes
  effect is delayed if the instrument clearly and expressly states,
  in addition to any other required statement or information:
               (1)  the specified date, or the specified [specific]
  date and time, at which the instrument takes effect; or
               (2)  if the instrument takes effect on or after the
  occurrence of a future event or fact that may occur:
                     (A)  the [manner in which the] event or fact that 
  will cause the instrument to take effect; [and]
                     (B)  when the filing instrument is to take effect
  if the instrument is to take effect after the occurrence of a
  specified future event or fact; and
                     (C)  the date of the 90th day after the date the
  instrument is signed.
         (b)  If the effectiveness of a filing instrument is to be
  delayed as permitted by Section 4.052 [take effect on a specific
  date and time other than that provided by this code]:
               (1)  the effective date may not be later than the 90th
  day after the date the instrument is signed; and
               (2)  the specified [specific] time at which the
  instrument is to take effect may not be specified as "12:00 a.m." or
  "12:00 p.m."
         Sec. 4.054.  DELAYED EFFECTIVENESS ON FUTURE EVENT OR FACT.
  A filing instrument that is to take effect on or after the
  occurrence of a future event or fact in accordance with Section
  4.053(a)(2)[, other than the passage of time,] and for which the
  statement required by Section 4.055 is filed within the prescribed
  time[,] takes effect on:
               (1)  the date, or the date and time, at which the [last
  specified] event or fact occurs or is waived; or 
               (2)  the specified date, the specified date and time,
  or the passage of the specified period of time after the occurrence
  or waiver of the event or fact [or the date and time at which a
  condition is satisfied or waived].
         Sec. 4.055.  STATEMENT OF EVENT OR FACT. An entity that
  files a filing instrument that takes effect on or after the
  occurrence of a future event or fact in accordance with Section
  4.053(a)(2)[, other than the passage of time,] must sign and file as
  provided by Subchapter A, not later than the 90th day after the date
  the filing instrument is filed, a statement that:
               (1)  confirms that each event or fact on which the
  effect of the instrument is conditioned has been satisfied or
  waived; [and]
               (2)  states the date, or the date and time, on which the
  condition was satisfied or waived; and
               (3)  if the filing instrument was to take effect after
  the occurrence of a specified future event or fact, states the date,
  or the date and time, at which the filing instrument took effect.
         Sec. 4.056.  FAILURE TO FILE STATEMENT. (a)  If the [effect
  of a] filing instrument is to take effect on or after [conditioned
  on] the occurrence of a future event or fact in accordance with
  Section 4.053(a)(2)[, other than the passage of time,] and the
  statement required by Section 4.055 is not filed before the
  expiration of the prescribed time, the filing instrument does not
  take effect.  This section does not preclude the filing of a
  subsequent filing instrument required by this code to make the
  action or transaction evidenced by the original filing instrument
  effective.
         (b)  If the [effect of a] filing instrument is to take effect
  on or after [conditioned on] the occurrence of a future event or
  fact[, other than the passage of time,] and the specified event or
  fact does not occur and is not waived, the parties to the filing
  instrument must sign and file a certificate of abandonment as
  provided by Section 4.057.
         SECTION 5.  Section 4.057(e), Business Organizations Code,
  is amended to read as follows:
         (e)  If in the interim before a certificate of abandonment is
  filed the name of an entity that is a party to the action or
  transaction becomes indistinguishable from [the same as or
  deceptively similar to] the name of another entity already on file
  or reserved or registered under this code, the filing officer may
  not file the certificate of abandonment unless the entity by or for
  whom the certificate is filed changes its name in the manner
  provided by this code for that entity.
         SECTION 6.  Section 4.059, Business Organizations Code, is
  amended to read as follows:
         Sec. 4.059.  ACKNOWLEDGMENT OF FILING WITH DELAYED
  EFFECTIVENESS. (a)  An acknowledgment of filing issued or other
  action taken by the secretary of state affirming the filing of a
  filing instrument that has a specific delayed effective date, or a
  specific delayed effective date and time, must state the date, or
  the date and time, at which the instrument takes effect.
         (b)  An acknowledgment of filing issued or other action taken
  by the secretary of state affirming the filing of a filing
  instrument the effectiveness [effect] of which is delayed until on
  or after the occurrence of a future event or fact must[:
               [(1)     state that the effective date and time of the
  filing instrument is conditioned on the occurrence of a future
  event or fact as described in the filing instrument; or
               [(2)  otherwise] indicate that the effective date, or
  the effective date and time, of the instrument is conditioned on the
  occurrence of a future event or fact.
         SECTION 7.  Section 6.205(b), Business Organizations Code,
  is amended to read as follows:
         (b)  Except as otherwise provided by an entity's governing
  documents, an electronic transmission of a consent by an owner,
  member, or governing person to the taking of an action by the entity
  is considered a signed writing if the transmission contains or is
  accompanied by information from which it can be determined:
               (1)  that the electronic transmission was transmitted
  by or on behalf of the owner, member, or governing person; and
               (2)  the date on which the electronic transmission was
  transmitted by or on behalf of the owner, member, or governing
  person [transmitted the electronic transmission].
         SECTION 8.  Section 101.302(c), Business Organizations
  Code, is amended to read as follows:
         (c)  The number of managers of a limited liability company
  may be increased or decreased by amendment to, or as provided by,
  the company agreement[, except that a decrease in the number of
  managers may not shorten the term of an incumbent manager].
         SECTION 9.  Section 101.501, Business Organizations Code, is
  amended by adding Subsection (d) to read as follows:
         (d)  All books and records required to be maintained by a
  limited liability company under this section may be maintained in
  any form and manner permitted under Section 3.151(b).
         SECTION 10.  Section 101.503(a), Business Organizations
  Code, is amended to read as follows:
         (a)  A limited liability company that refuses to allow a
  member or an assignee of a membership interest 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 or assignee for any cost or expense, including attorney's
  fees, incurred in enforcing the member's or assignee'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 or assignee by law.
         SECTION 11.  Section 101.621, Business Organizations Code,
  is amended to read as follows:
         Sec. 101.621.  WINDING UP BY COURT ORDER. A district court
  in the county in which the registered office or principal place of
  business in this state of a domestic limited liability company is
  located, on application by or for a member associated with the
  series, has jurisdiction to order the winding up and termination of
  a series if the court determines that:
               (1)  it is not reasonably practicable to carry on the
  business of the series in conformity with the company agreement;
               (2)  the economic purpose of the series is likely to be
  unreasonably frustrated; or
               (3)  another member associated with the series has
  engaged in conduct relating to the series' business that makes it
  not reasonably practicable to carry on the business with that
  member.
         SECTION 12.  Sections 152.306(b) and (c), Business
  Organizations Code, are amended to read as follows:
         (b)  Except as provided by Subsection (c), a creditor may
  proceed against [one or more partners or] the property of one or
  more [the] partners to satisfy a judgment based on a claim against
  the partnership only if a judgment:
               (1)  is [also] obtained against the partner; and
               (2)  based on the same claim:
                     (A)  is obtained against the partnership;
                     (B)  has not been reversed or vacated; and
                     (C)  remains unsatisfied for 90 days after:
                           (i)  the date on which the judgment is
  entered; or
                           (ii)  the date on which the stay expires, if
  the judgment is contested by appropriate proceedings and execution
  on the judgment is stayed.
         (c)  Subsection (b)(2) [(b)] does not prohibit a creditor
  from proceeding directly against [one or more partners or] the
  property of one or more [the] partners [without first seeking
  satisfaction from partnership property] if:
               (1)  the partnership is a debtor in bankruptcy;
               (2)  the creditor and the partner or partners whose
  property is the subject of the proceeding brought by the creditor 
  [partnership] agreed that the creditor is not required to comply
  with Subsection (b)(2) [(b)];
               (3)  a court orders otherwise, based on a finding that
  partnership property subject to execution in the state is clearly
  insufficient to satisfy the judgment or that compliance with
  Subsection (b)(2) [(b)] is excessively burdensome; or
               (4)  liability is imposed on the partner by law or
  contract independently of the person's status as a partner.
         SECTION 13.  Section 152.606, Business Organizations Code,
  is amended to read as follows:
         Sec. 152.606.  INDEMNIFICATION OF WITHDRAWN PARTNER [FOR
  CERTAIN LIABILITY]. [(a)]  A partnership shall indemnify a
  withdrawn partner whose interest is redeemed against all [a]
  partnership obligations, whether [liability] incurred before or
  after the date of withdrawal, except for an obligation [a
  liability:
               [(1)  that is unknown to the partnership at the time; or
               [(2)]  incurred by an act of the withdrawn partner
  under Section 152.504.
         [(b)     For purposes of this section, a liability is unknown to
  the partnership if it is not known to a partner other than the
  withdrawn partner.]
         SECTION 14.  Sections 153.551(b) and (c), Business
  Organizations Code, are amended to read as follows:
         (b)  All books and records required to be maintained by a [A]
  limited partnership under this section may be maintained in any
  form and manner permitted under Section 3.151(b) [shall maintain
  its records in written form or in another form capable of being
  converted to written form in a reasonable time].
         (c)  A limited partnership shall keep in its registered
  office in this state and make available to a partner on reasonable
  request the street address of its principal office in the United
  States in which the records required by this section are maintained
  or made available.
         SECTION 15.  This Act takes effect September 1, 2019.
 
 
 
 
 
  ______________________________ ______________________________
     President of the Senate Speaker of the House     
 
         I hereby certify that S.B. No. 1859 passed the Senate on
  May 3, 2019, by the following vote:  Yeas 31, Nays 0.
 
 
  ______________________________
  Secretary of the Senate    
 
         I hereby certify that S.B. No. 1859 passed the House on
  May 22, 2019, by the following vote:  Yeas 138, Nays 6, two
  present not voting.
 
 
  ______________________________
  Chief Clerk of the House   
 
 
 
  Approved:
 
  ______________________________ 
              Date
 
 
  ______________________________ 
            Governor