2009 Texas Code
BUSINESS ORGANIZATIONS CODE
TITLE 3. LIMITED LIABILITY COMPANIES
CHAPTER 101. LIMITED LIABILITY COMPANIES  

BUSINESS ORGANIZATIONS CODE

TITLE 3. LIMITED LIABILITY COMPANIES

CHAPTER 101. LIMITED LIABILITY COMPANIES

SUBCHAPTER A. GENERAL PROVISIONS

Sec. 101.001. DEFINITIONS. In this title:

(1) "Company agreement" means any agreement, written or oral, of

the members concerning the affairs or the conduct of the business

of a limited liability company. A company agreement of a limited

liability company having only one member is not unenforceable

because only one person is a party to the company agreement.

(2) "Foreign limited liability company" or "foreign company"

means a limited liability company formed under the laws of a

jurisdiction other than this state.

(3) "Limited liability company" or "company" means a domestic

limited liability company subject to this title.

Acts 2003, 78th Leg., ch. 182, Sec. 1, eff. Jan. 1, 2006.

SUBCHAPTER B. FORMATION AND GOVERNING DOCUMENTS

Sec. 101.051. CERTAIN PROVISIONS CONTAINED IN CERTIFICATE OF

FORMATION. (a) A provision that may be contained in the company

agreement of a limited liability company may alternatively be

included in the certificate of formation of the company as

provided by Section 3.005(b).

(b) A reference in this title to the company agreement of a

limited liability company includes any provision contained in the

company's certificate of formation instead of the company

agreement as provided by Subsection (a).

Acts 2003, 78th Leg., ch. 182, Sec. 1, eff. Jan. 1, 2006.

Sec. 101.0515. EXECUTION OF FILINGS. Unless otherwise provided

by this title, a filing instrument of a limited liability company

must be signed by an authorized officer, manager, or member of

the limited liability company.

Added by Acts 2007, 80th Leg., R.S., Ch.

688, Sec. 96, eff. September 1, 2007.

Sec. 101.052. COMPANY AGREEMENT. (a) Except as provided by

Section 101.054, the company agreement of a limited liability

company governs:

(1) the relations among members, managers, and officers of the

company, assignees of membership interests in the company, and

the company itself; and

(2) other internal affairs of the company.

(b) To the extent that the company agreement of a limited

liability company does not otherwise provide, this title and the

provisions of Title 1 applicable to a limited liability company

govern the internal affairs of the company.

(c) Except as provided by Section 101.054, a provision of this

title or Title 1 that is applicable to a limited liability

company may be waived or modified in the company agreement of a

limited liability company.

(d) The company agreement may contain any provisions for the

regulation and management of the affairs of the limited liability

company not inconsistent with law or the certificate of

formation.

Acts 2003, 78th Leg., ch. 182, Sec. 1, eff. Jan. 1, 2006.

Sec. 101.053. AMENDMENT OF COMPANY AGREEMENT. The company

agreement of a limited liability company may be amended only if

each member of the company consents to the amendment.

Acts 2003, 78th Leg., ch. 182, Sec. 1, eff. Jan. 1, 2006.

Sec. 101.054. WAIVER OR MODIFICATION OF CERTAIN STATUTORY

PROVISIONS PROHIBITED; EXCEPTIONS. (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, or 101.502;

(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, 7, 10, 11, or 12, other than Section 11.056.

(b) A provision listed in Subsection (a) may be waived or

modified in the company agreement if the provision that is waived

or modified authorizes the limited liability company to waive or

modify the provision in the company's governing documents.

(c) A provision listed in Subsection (a) may be modified in the

company agreement if the provision that is modified specifies:

(1) the person or group of persons entitled to approve a

modification; or

(2) the vote or other method by which a modification is required

to be approved.

(d) A provision in this title or in that part of Title 1

applicable to a limited liability company that grants a right to

a person, other than a member, manager, officer, or assignee of a

membership interest in a limited liability company, may be waived

or modified in the company agreement of the company only if the

person consents to the waiver or modification.

Acts 2003, 78th Leg., ch. 182, Sec. 1, eff. Jan. 1, 2006.

Amended by:

Acts 2007, 80th Leg., R.S., Ch.

688, Sec. 97, eff. September 1, 2007.

Acts 2009, 81st Leg., R.S., Ch.

84, Sec. 38, eff. September 1, 2009.

SUBCHAPTER C. MEMBERSHIP

Sec. 101.101. MEMBERS REQUIRED. (a) A limited liability

company may have one or more members. Except as provided by this

section, a limited liability company must have at least one

member.

(b) A limited liability company that has managers is not

required to have any members during a reasonable period between

the date the company is formed and the date the first member is

admitted to the company.

(c) A limited liability company is not required to have any

members during the period between the date the continued

membership of the last remaining member of the company is

terminated and the date the agreement to continue the company

described by Section 11.056 is executed.

Acts 2003, 78th Leg., ch. 182, Sec. 1, eff. Jan. 1, 2006.

Sec. 101.102. QUALIFICATION FOR MEMBERSHIP. (a) A person may

be a member of or acquire a membership interest in a limited

liability company unless the person lacks capacity apart from

this code.

(b) A person is not required, as a condition to becoming a

member of or acquiring a membership interest in a limited

liability company, to:

(1) make a contribution to the company;

(2) otherwise pay cash or transfer property to the company; or

(3) assume an obligation to make a contribution or otherwise pay

cash or transfer property to the company.

(c) If one or more persons own a membership interest in a

limited liability company, the company agreement may provide for

a person to be admitted to the company as a member without

acquiring a membership interest in the company.

Acts 2003, 78th Leg., ch. 182, Sec. 1, eff. Jan. 1, 2006.

Amended by:

Acts 2005, 79th Leg., Ch.

64, Sec. 71, eff. January 1, 2006.

Sec. 101.103. EFFECTIVE DATE OF MEMBERSHIP. (a) In connection

with the formation of a company, a person becomes a member of the

company on the date the company is formed if the person is named

as an initial member in the company's certificate of formation.

(b) In connection with the formation of a company, a person

being admitted as a member of the company but not named as an

initial member in the company's certificate of formation becomes

a member of the company on the latest of:

(1) the date the company is formed;

(2) the date stated in the company's records as the date the

person becomes a member of the company; or

(3) if the company's records do not state a date described by

Subdivision (2), the date the person's admission to the company

is first reflected in the company's records.

(c) A person who, after the formation of a limited liability

company, acquires directly or is assigned a membership interest

in the company or is admitted as a member of the company without

acquiring a membership interest becomes a member of the company

on approval or consent of all of the company's members.

Acts 2003, 78th Leg., ch. 182, Sec. 1, eff. Jan. 1, 2006.

Amended by:

Acts 2005, 79th Leg., Ch.

64, Sec. 72, eff. January 1, 2006.

Sec. 101.104. CLASSES OR GROUPS OF MEMBERS OR MEMBERSHIP

INTERESTS. (a) The company agreement of a limited liability

company may:

(1) establish within the company classes or groups of one or

more members or membership interests each of which has certain

expressed relative rights, powers, and duties, including voting

rights; and

(2) provide for the manner of establishing within the company

additional classes or groups of one or more members or membership

interests each of which has certain expressed relative rights,

powers, and duties, including voting rights.

(b) The rights, powers, and duties of a class or group of

members or membership interests described by Subsection (a)(2)

may be stated in the company agreement or stated at the time the

class or group is established.

(c) If the company agreement of a limited liability company does

not provide for the manner of establishing classes or groups of

members or membership interests under Subsection (a)(2),

additional classes or groups of members or membership interests

may be established only by the adoption of an amendment to the

company agreement.

(d) The rights, powers, or duties of any class or group of

members or membership interests of a limited liability company

may be senior to the rights, powers, or duties of any other class

or group of members or membership interests in the company,

including a previously established class or group.

Acts 2003, 78th Leg., ch. 182, Sec. 1, eff. Jan. 1, 2006.

Sec. 101.105. ISSUANCE OF MEMBERSHIP INTERESTS AFTER FORMATION

OF COMPANY. A limited liability company, after the formation of

the company, may:

(1) issue membership interests in the company to any person with

the approval of all of the members of the company; and

(2) if the issuance of a membership interest requires the

establishment of a new class or group of members or membership

interests, establish a new class or group as provided by Sections

101.104(a)(2), (b), and (c).

Acts 2003, 78th Leg., ch. 182, Sec. 1, eff. Jan. 1, 2006.

Sec. 101.106. NATURE OF MEMBERSHIP INTEREST. (a) A membership

interest in a limited liability company is personal property.

(b) A member of a limited liability company or an assignee of a

membership interest in a limited liability company does not have

an interest in any specific property of the company.

(c) Sections 9.406 and 9.408, Business & Commerce Code, do

not apply to a membership interest in a limited liability

company, including the rights, powers, and interests arising

under the company's certificate of formation or company agreement

or under this code. To the extent of any conflict between this

subsection and Section 9.406 or 9.408, Business & Commerce

Code, this subsection controls. It is the express intent of this

subsection to permit the enforcement, as a contract among the

members of a limited liability company, of any provision of a

company agreement that would otherwise be ineffective under

Section 9.406 or 9.408, Business & Commerce Code.

Acts 2003, 78th Leg., ch. 182, Sec. 1, eff. Jan. 1, 2006.

Amended by:

Acts 2009, 81st Leg., R.S., Ch.

84, Sec. 39, eff. September 1, 2009.

Sec. 101.107. WITHDRAWAL OR EXPULSION OF MEMBER PROHIBITED. A

member of a limited liability company may not withdraw or be

expelled from the company.

Acts 2003, 78th Leg., ch. 182, Sec. 1, eff. Jan. 1, 2006.

Sec. 101.108. ASSIGNMENT OF MEMBERSHIP INTEREST. (a) A

membership interest in a limited liability company may be wholly

or partly assigned.

(b) An assignment of a membership interest in a limited

liability company:

(1) is not an event requiring the winding up of the company; and

(2) does not entitle the assignee to:

(A) participate in the management and affairs of the company;

(B) become a member of the company; or

(C) exercise any rights of a member of the company.

Acts 2003, 78th Leg., ch. 182, Sec. 1, eff. Jan. 1, 2006.

Sec. 101.109. RIGHTS AND DUTIES OF ASSIGNEE OF MEMBERSHIP

INTEREST BEFORE MEMBERSHIP. (a) A person who is assigned a

membership interest in a limited liability company is entitled

to:

(1) receive any allocation of income, gain, loss, deduction,

credit, or a similar item that the assignor is entitled to

receive to the extent the allocation of the item is assigned;

(2) receive any distribution the assignor is entitled to receive

to the extent the distribution is assigned;

(3) require, for any proper purpose, reasonable information or a

reasonable account of the transactions of the company; and

(4) make, for any proper purpose, reasonable inspections of the

books and records of the company.

(b) An assignee of a membership interest in a limited liability

company is entitled to become a member of the company on the

approval of all of the company's members.

(c) An assignee of a membership interest in a limited liability

company is not liable as a member of the company until the

assignee becomes a member of the company.

Acts 2003, 78th Leg., ch. 182, Sec. 1, eff. Jan. 1, 2006.

Sec. 101.110. RIGHTS AND LIABILITIES OF ASSIGNEE OF MEMBERSHIP

INTEREST AFTER BECOMING MEMBER. (a) An assignee of a membership

interest in a limited liability company, after becoming a member

of the company, is:

(1) entitled, to the extent assigned, to the same rights and

powers granted or provided to a member of the company by the

company agreement or this code;

(2) subject to the same restrictions and liabilities placed or

imposed on a member of the company by the company agreement or

this code; and

(3) except as provided by Subsection (b), liable for the

assignor's obligation to make contributions to the company.

(b) An assignee of a membership interest in a limited liability

company, after becoming a member of the company, is not obligated

for a liability of the assignor that:

(1) the assignee did not have knowledge of on the date the

assignee became a member of the company; and

(2) could not be ascertained from the company agreement.

Acts 2003, 78th Leg., ch. 182, Sec. 1, eff. Jan. 1, 2006.

Sec. 101.111. RIGHTS AND DUTIES OF ASSIGNOR OF MEMBERSHIP

INTEREST. (a) An assignor of a membership interest in a limited

liability company continues to be a member of the company and is

entitled to exercise any unassigned rights or powers of a member

of the company until the assignee becomes a member of the

company.

(b) An assignor of a membership interest in a limited liability

company is not released from the assignor's liability to the

company, regardless of whether the assignee of the membership

interest becomes a member of the company.

Acts 2003, 78th Leg., ch. 182, Sec. 1, eff. Jan. 1, 2006.

Sec. 101.112. MEMBER'S MEMBERSHIP INTEREST SUBJECT TO CHARGING

ORDER. (a) On application by a judgment creditor of a member of

a limited liability company or of any other owner of a membership

interest in a limited liability company, a court having

jurisdiction may charge the membership interest of the judgment

debtor to satisfy the judgment.

(b) If a court charges a membership interest with payment of a

judgment as provided by Subsection (a), the judgment creditor has

only the right to receive any distribution to which the judgment

debtor would otherwise be entitled in respect of the membership

interest.

(c) A charging order constitutes a lien on the judgment debtor's

membership interest. The charging order lien may not be

foreclosed on under this code or any other law.

(d) The entry of a charging order is the exclusive remedy by

which a judgment creditor of a member or of any other owner of a

membership interest may satisfy a judgment out of the judgment

debtor's membership interest.

(e) This section may not be construed to deprive a member of a

limited liability company or any other owner of a membership

interest in a limited liability company of the benefit of any

exemption laws applicable to the membership interest of the

member or owner.

(f) A creditor of a member or of any other owner of a membership

interest does not have the right to obtain possession of, or

otherwise exercise legal or equitable remedies with respect to,

the property of the limited liability company.

Acts 2003, 78th Leg., ch. 182, Sec. 1, eff. Jan. 1, 2006.

Amended by:

Acts 2007, 80th Leg., R.S., Ch.

688, Sec. 98, eff. September 1, 2007.

Acts 2009, 81st Leg., R.S., Ch.

84, Sec. 40, eff. September 1, 2009.

Sec. 101.113. PARTIES TO ACTIONS. A member of a limited

liability company may be named as a party in an action by or

against the limited liability company only if the action is

brought to enforce the member's right against or liability to the

company.

Acts 2003, 78th Leg., ch. 182, Sec. 1, eff. Jan. 1, 2006.

Sec. 101.114. LIABILITY FOR OBLIGATIONS. Except as and to the

extent the company agreement specifically provides otherwise, a

member or manager is not liable for a debt, obligation, or

liability of a limited liability company, including a debt,

obligation, or liability under a judgment, decree, or order of a

court.

Acts 2003, 78th Leg., ch. 182, Sec. 1, eff. Jan. 1, 2006.

SUBCHAPTER D. CONTRIBUTIONS

Sec. 101.151. REQUIREMENTS FOR ENFORCEABLE PROMISE. A promise

to make a contribution or otherwise pay cash or transfer property

to a limited liability company is enforceable only if the promise

is:

(1) in writing; and

(2) signed by the person making the promise.

Acts 2003, 78th Leg., ch. 182, Sec. 1, eff. Jan. 1, 2006.

Sec. 101.152. ENFORCEABLE PROMISE NOT AFFECTED BY CHANGE IN

CIRCUMSTANCES. A member of a limited liability company is

obligated to perform an enforceable promise to make a

contribution or otherwise pay cash or transfer property to the

company without regard to the death, disability, or other change

in circumstances of the member.

Acts 2003, 78th Leg., ch. 182, Sec. 1, eff. Jan. 1, 2006.

Sec. 101.153. FAILURE TO PERFORM ENFORCEABLE PROMISE;

CONSEQUENCES. (a) A member of a limited liability company, or

the member's legal representative or successor, who does not

perform an enforceable promise to make a contribution, including

a previously made contribution, or to otherwise pay cash or

transfer property to the company, is obligated, at the request of

the company, to pay in cash the agreed value of the contribution,

as stated in the company agreement or the company's records

required under Sections 3.151 and 101.501, less:

(1) any amount already paid for the contribution; and

(2) the value of any property already transferred.

(b) The company agreement of a limited liability company may

provide that the membership interest of a member who fails to

perform an enforceable promise to make a payment of cash or

transfer property to the company, whether as a contribution or in

connection with a contribution already made, may be:

(1) reduced;

(2) subordinated to other membership interests of nondefaulting

members;

(3) redeemed or sold at a value determined by appraisal or other

formula; or

(4) made the subject of:

(A) a forced sale;

(B) forfeiture;

(C) a loan from other members of the company in an amount

necessary to satisfy the enforceable promise; or

(D) another penalty or consequence.

Acts 2003, 78th Leg., ch. 182, Sec. 1, eff. Jan. 1, 2006.

Sec. 101.154. CONSENT REQUIRED TO RELEASE ENFORCEABLE

OBLIGATION. The obligation of a member of a limited liability

company, or of the member's legal representative or successor, to

make a contribution or otherwise pay cash or transfer property to

the company, or to return cash or property to the company paid or

distributed to the member in violation of this code or the

company agreement, may be released or settled only by consent of

each member of the company.

Acts 2003, 78th Leg., ch. 182, Sec. 1, eff. Jan. 1, 2006.

Sec. 101.155. CREDITOR'S RIGHT TO ENFORCE CERTAIN OBLIGATIONS.

A creditor of a limited liability company who extends credit or

otherwise acts in reasonable reliance on an enforceable

obligation of a member of the company that is released or settled

as provided by Section 101.154 may enforce the original

obligation if the obligation is stated in a document that is:

(1) signed by the member; and

(2) not amended or canceled to evidence the release or

settlement of the obligation.

Acts 2003, 78th Leg., ch. 182, Sec. 1, eff. Jan. 1, 2006.

Sec. 101.156. REQUIREMENTS TO ENFORCE CONDITIONAL OBLIGATION.

(a) An obligation of a member of a limited liability company

that is subject to a condition may be enforced by the company or

a creditor described by Section 101.155 only if the condition is

satisfied or waived by or with respect to the member.

(b) A conditional obligation of a member of a limited liability

company under this section includes a contribution payable on a

discretionary call of the limited liability company before the

time the call occurs.

Acts 2003, 78th Leg., ch. 182, Sec. 1, eff. Jan. 1, 2006.

SUBCHAPTER E. ALLOCATIONS AND DISTRIBUTIONS

Sec. 101.201. ALLOCATION OF PROFITS AND LOSSES. The profits and

losses of a limited liability company shall be allocated to each

member of the company on the basis of the agreed value of the

contributions made by each member, as stated in the company's

records required under Section 101.501.

Acts 2003, 78th Leg., ch. 182, Sec. 1, eff. Jan. 1, 2006.

Amended by:

Acts 2005, 79th Leg., Ch.

64, Sec. 73, eff. January 1, 2006.

Sec. 101.202. DISTRIBUTION IN KIND. A member of a limited

liability company is entitled to receive or demand a distribution

from the company only in the form of cash, regardless of the form

of the member's contribution to the company.

Acts 2003, 78th Leg., ch. 182, Sec. 1, eff. Jan. 1, 2006.

Sec. 101.203. SHARING OF DISTRIBUTIONS. Distributions of cash

and other assets of a limited liability company shall be made to

each member of the company according to the agreed value of the

member's contribution to the company as stated in the company's

records required under Sections 3.151 and 101.501.

Acts 2003, 78th Leg., ch. 182, Sec. 1, eff. Jan. 1, 2006.

Sec. 101.204. INTERIM DISTRIBUTIONS. A member of a limited

liability company, before the winding up of the company, is not

entitled to receive and may not demand a distribution from the

company until the company's governing authority declares a

distribution to:

(1) each member of the company; or

(2) a class or group of members that includes the member.

Acts 2003, 78th Leg., ch. 182, Sec. 1, eff. Jan. 1, 2006.

Sec. 101.205. DISTRIBUTION ON WITHDRAWAL. A member of a limited

liability company who validly exercises the member's right to

withdraw from the company granted under the company agreement is

entitled to receive, within a reasonable time after the date of

withdrawal, the fair value of the member's interest in the

company as determined as of the date of withdrawal.

Acts 2003, 78th Leg., ch. 182, Sec. 1, eff. Jan. 1, 2006.

Sec. 101.206. PROHIBITED DISTRIBUTION; DUTY TO RETURN. (a)

Unless the distribution is made in compliance with Chapter 11, a

limited liability company may not make a distribution to a member

of the company if, immediately after making the distribution, the

company's total liabilities, other than liabilities described by

Subsection (b), exceed the fair value of the company's total

assets.

(b) For purposes of Subsection (a), the liabilities of a limited

liability company do not include:

(1) a liability related to the member's membership interest; or

(2) except as provided by Subsection (c), a liability for which

the recourse of creditors is limited to specified property of the

company.

(c) For purposes of Subsection (a), the assets of a limited

liability company include the fair value of property subject to a

liability for which recourse of creditors is limited to specified

property of the company only if the fair value of that property

exceeds the liability.

(d) A member of a limited liability company who receives a

distribution from the company in violation of this section is not

required to return the distribution to the company unless the

member had knowledge of the violation.

(e) This section may not be construed to affect the obligation

of a member of a limited liability company to return a

distribution to the company under the company agreement or other

state or federal law.

(f) For purposes of this section, "distribution" does not

include an amount constituting reasonable compensation for

present or past services or a reasonable payment made in the

ordinary course of business under a bona fide retirement plan or

other benefits program.

Acts 2003, 78th Leg., ch. 182, Sec. 1, eff. Jan. 1, 2006.

Amended by:

Acts 2009, 81st Leg., R.S., Ch.

84, Sec. 41, eff. September 1, 2009.

Sec. 101.207. CREDITOR STATUS WITH RESPECT TO DISTRIBUTION.

Subject to Sections 11.053 and 101.206, when a member of a

limited liability company is entitled to receive a distribution

from the company, the member, with respect to the distribution,

has the same status as a creditor of the company and is entitled

to any remedy available to a creditor of the company.

Acts 2003, 78th Leg., ch. 182, Sec. 1, eff. Jan. 1, 2006.

Sec. 101.208. RECORD DATE. A company agreement may establish or

provide for the establishment of a record date with respect to

allocations and distributions.

Added by Acts 2009, 81st Leg., R.S., Ch.

84, Sec. 42, eff. September 1, 2009.

SUBCHAPTER F. MANAGEMENT

Sec. 101.251. GOVERNING AUTHORITY. The governing authority of a

limited liability company consists of:

(1) the managers of the company, if the company's certificate of

formation states that the company will have one or more managers;

or

(2) the members of the company, if the company's certificate of

formation states that the company will not have managers.

Acts 2003, 78th Leg., ch. 182, Sec. 1, eff. Jan. 1, 2006.

Amended by:

Acts 2009, 81st Leg., R.S., Ch.

84, Sec. 43, eff. September 1, 2009.

Sec. 101.252. MANAGEMENT BY GOVERNING AUTHORITY. The governing

authority of a limited liability company shall manage the

business and affairs of the company as provided by:

(1) the company agreement; and

(2) this title and the provisions of Title 1 applicable to a

limited liability company to the extent that the company

agreement does not provide for the management of the company.

Acts 2003, 78th Leg., ch. 182, Sec. 1, eff. Jan. 1, 2006.

Sec. 101.253. DESIGNATION OF COMMITTEES; DELEGATION OF

AUTHORITY. (a) The governing authority of a limited liability

company by resolution may designate:

(1) one or more committees of the governing authority consisting

of one or more governing persons of the company; and

(2) subject to any limitation imposed by the governing

authority, a governing person to serve as an alternate member of

a committee designated under Subdivision (1) at a committee

meeting from which a member of the committee is absent or

disqualified.

(b) A committee of the governing authority of a limited

liability company may exercise the authority of the governing

authority as provided by the resolution designating the

committee.

(c) The designation of a committee under this section does not

relieve the governing authority of any responsibility imposed by

law.

Acts 2003, 78th Leg., ch. 182, Sec. 1, eff. Jan. 1, 2006.

Sec. 101.254. DESIGNATION OF AGENTS; BINDING ACTS. (a) Except

as provided by this title and Title 1, each governing person of a

limited liability company and each officer or agent of a limited

liability company vested with actual or apparent authority by the

governing authority of the company is an agent of the company for

purposes of carrying out the company's business.

(b) An act committed by an agent of a limited liability company

described by Subsection (a) for the purpose of apparently

carrying out the ordinary course of business of the company,

including the execution of an instrument, document, mortgage, or

conveyance in the name of the company, binds the company unless:

(1) the agent does not have actual authority to act for the

company; and

(2) the person with whom the agent is dealing has knowledge of

the agent's lack of actual authority.

(c) An act committed by an agent of a limited liability company

described by Subsection (a) that is not apparently for carrying

out the ordinary course of business of the company binds the

company only if the act is authorized in accordance with this

title.

Acts 2003, 78th Leg., ch. 182, Sec. 1, eff. Jan. 1, 2006.

Sec. 101.255. CONTRACTS OR TRANSACTIONS INVOLVING INTERESTED

GOVERNING PERSONS OR OFFICERS. (a) This section applies only to

a contract or transaction between a limited liability company

and:

(1) one or more of the company's governing persons or officers;

or

(2) an entity or other organization in which one or more of the

company's governing persons or officers:

(A) is a managerial official; or

(B) has a financial interest.

(b) An otherwise valid contract or transaction described by

Subsection (a) is valid notwithstanding that the governing person

or officer having the relationship or interest described by

Subsection (a) is present at or participates in the meeting of

the governing authority, or of a committee of the governing

authority, that authorizes the contract or transaction or votes

or signs, in the person's capacity as a governing person or

committee member, a written consent of governing persons or

committee members to authorize the contract or transaction, if:

(1) the material facts as to the relationship or interest

described by Subsection (a) and as to the contract or transaction

are disclosed to or known by:

(A) the company's governing authority or a committee of the

governing authority and the governing authority or committee in

good faith authorizes the contract or transaction by the approval

of the majority of the disinterested governing persons or

committee members, regardless of whether the disinterested

governing persons or committee members constitute a quorum; or

(B) the members of the company, and the members in good faith

approve the contract or transaction by vote of the members; or

(2) the contract or transaction is fair to the company when the

contract or transaction is authorized, approved, or ratified by

the governing authority, a committee of the governing authority,

or the members of the company.

(c) Common or interested governing persons of a limited

liability company may be included in determining the presence of

a quorum at a meeting of the company's governing authority or of

a committee of the governing authority that authorizes the

contract or transaction.

Acts 2003, 78th Leg., ch. 182, Sec. 1, eff. Jan. 1, 2006.

Amended by:

Acts 2009, 81st Leg., R.S., Ch.

84, Sec. 44, eff. September 1, 2009.

SUBCHAPTER G. MANAGERS

Sec. 101.301. APPLICABILITY OF SUBCHAPTER. This subchapter

applies only to a limited liability company that has one or more

managers.

Acts 2003, 78th Leg., ch. 182, Sec. 1, eff. Jan. 1, 2006.

Sec. 101.302. NUMBER AND QUALIFICATIONS. (a) The managers of a

limited liability company may consist of one or more persons.

(b) Except as provided by Subsection (c), the number of managers

of a limited liability company consists of the number of initial

managers listed in the company's certificate of formation.

(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.

(d) A manager of a limited liability company is not required to

be a:

(1) resident of this state; or

(2) member of the company.

Acts 2003, 78th Leg., ch. 182, Sec. 1, eff. Jan. 1, 2006.

Sec. 101.303. TERM. A manager of a limited liability company

serves:

(1) for the term, if any, for which the manager is elected and

until the manager's successor is elected; or

(2) until the earlier resignation, removal, or death of the

manager.

Acts 2003, 78th Leg., ch. 182, Sec. 1, eff. Jan. 1, 2006.

Sec. 101.304. REMOVAL. Subject to Section 101.306(a), a manager

of a limited liability company may be removed, with or without

cause, at a meeting of the company's members called for that

purpose.

Acts 2003, 78th Leg., ch. 182, Sec. 1, eff. Jan. 1, 2006.

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) if the vacancy is a result of an increase in the number of

managers, an election at an annual or special meeting of the

company's members called for that purpose.

(b) A person elected to fill a vacancy in the position of a

manager serves for the unexpired term of the person's

predecessor.

Acts 2003, 78th Leg., ch. 182, Sec. 1, eff. Jan. 1, 2006.

Sec. 101.306. REMOVAL AND REPLACEMENT OF MANAGER ELECTED BY

CLASS OR GROUP. (a) If a class or group of the members of a

limited liability company is entitled by the company agreement of

the company to elect one or more managers of the company, a

manager may be removed from office only by the class or group

that elected the manager.

(b) A vacancy in the position of a manager elected as provided

by Subsection (a) may be filled only by:

(1) a majority vote of the managers serving on the date the

vacancy occurs who were elected by the class or group of members;

or

(2) a majority vote of the members of the class or group.

Acts 2003, 78th Leg., ch. 182, Sec. 1, eff. Jan. 1, 2006.

Sec. 101.307. METHODS OF CLASSIFYING MANAGERS. Other methods of

classifying managers of a limited liability company, including

providing for managers who serve for staggered terms of office or

terms that are not uniform, may be established in the company

agreement.

Acts 2003, 78th Leg., ch. 182, Sec. 1, eff. Jan. 1, 2006.

SUBCHAPTER H. MEETINGS AND VOTING

Sec. 101.351. APPLICABILITY OF SUBCHAPTER. This subchapter

applies only to a meeting of and voting by:

(1) the governing authority of a limited liability company;

(2) the members of a limited liability company if the members do

not constitute the governing authority of the company; and

(3) a committee of the governing authority of a limited

liability company.

Acts 2003, 78th Leg., ch. 182, Sec. 1, eff. Jan. 1, 2006.

Sec. 101.352. GENERAL NOTICE REQUIREMENTS. (a) Except as

provided by Subsection (b), notice of a regular or special

meeting of the governing authority or members of a limited

liability company, or a committee of the company's governing

authority, shall be given in writing to each governing person,

member, or committee member, as appropriate, and as provided by

Section 6.051.

(b) If the members of a limited liability company do not

constitute the governing authority of the company, notice of a

meeting of members required by Subsection (a) shall be given by

or at the direction of the governing authority not later than the

10th day or earlier than the 60th day before the date of the

meeting. Notice of a meeting required under this subsection must

state the business to be transacted at the meeting or the purpose

of the meeting if:

(1) the meeting is a special meeting; or

(2) a purpose of the meeting is to consider a matter described

by Section 101.356.

Acts 2003, 78th Leg., ch. 182, Sec. 1, eff. Jan. 1, 2006.

Amended by:

Acts 2007, 80th Leg., R.S., Ch.

688, Sec. 99, eff. September 1, 2007.

Sec. 101.353. QUORUM. A majority of all of the governing

persons, members, or committee members of a limited liability

company constitutes a quorum for the purpose of transacting

business at a meeting of the governing authority, members, or

committee of the company, as appropriate.

Acts 2003, 78th Leg., ch. 182, Sec. 1, eff. Jan. 1, 2006.

Sec. 101.354. EQUAL VOTING RIGHTS. Each governing person,

member, or committee member of a limited liability company has an

equal vote at a meeting of the governing authority, members, or

committee of the company, as appropriate.

Acts 2003, 78th Leg., ch. 182, Sec. 1, eff. Jan. 1, 2006.

Sec. 101.355. ACT OF GOVERNING AUTHORITY, MEMBERS, OR COMMITTEE.

Except as provided by this title or Title 1, the affirmative

vote of the majority of the governing persons, members, or

committee members of a limited liability company present at a

meeting at which a quorum is present constitutes an act of the

governing authority, members, or committee of the company, as

appropriate.

Acts 2003, 78th Leg., ch. 182, Sec. 1, eff. Jan. 1, 2006.

Sec. 101.356. VOTES REQUIRED TO APPROVE CERTAIN ACTIONS. (a)

Except as provided in this section or any other section in this

title, an action of a limited liability company may be approved

by the company's governing authority as provided by Section

101.355.

(b) Except as provided by Subsection (c), (d), or (e) or any

other section in this title, an action of a limited liability

company not apparently for carrying out the ordinary course of

business of the company must be approved by the affirmative vote

of the majority of all of the company's governing persons.

(c) Except as provided by Subsection (d) or (e) or any other

section in this title, a fundamental business transaction of a

limited liability company, or an action that would make it

impossible for a limited liability company to carry out the

ordinary business of the company, must be approved by the

affirmative vote of the majority of all of the company's members.

(d) Except as provided by Subsection (e) or any other section of

this title, the company's members must approve by an affirmative

vote of all the members:

(1) an amendment to the certificate of formation of a limited

liability company; or

(2) a restated certificate of formation that contains an

amendment to the certificate of formation of a limited liability

company.

(e) A requirement that an action of a limited liability company

must be approved by the company's members does not apply during

the period prescribed by Section 101.101(b).

(f) Approval of a restated certificate of formation by a limited

liability company's members is required only if the restated

certificate contains an amendment.

Acts 2003, 78th Leg., ch. 182, Sec. 1, eff. Jan. 1, 2006.

Amended by:

Acts 2005, 79th Leg., Ch.

64, Sec. 74, eff. January 1, 2006.

Sec. 101.357. MANNER OF VOTING. (a) A member of a limited

liability company may vote:

(1) in person; or

(2) by a proxy executed in writing by the member.

(b) A manager or committee member of a limited liability

company, if authorized by the company agreement, may vote:

(1) in person; or

(2) by a proxy executed in writing by the manager or committee

member, as appropriate.

Acts 2003, 78th Leg., ch. 182, Sec. 1, eff. Jan. 1, 2006.

Sec. 101.358. ACTION BY LESS THAN UNANIMOUS WRITTEN CONSENT.

(a) This section applies only to an action required or

authorized to be taken at an annual or special meeting of the

governing authority, the members, or a committee of the governing

authority of a limited liability company under this title, Title

1, or the governing documents of the company.

(b) Notwithstanding Sections 6.201 and 6.202, an action may be

taken without holding a meeting, providing notice, or taking a

vote if a written consent or consents stating the action to be

taken is signed by the number of governing persons, members, or

committee members of a limited liability company, as appropriate,

necessary to have at least the minimum number of votes that would

be necessary to take the action at a meeting at which each

governing person, member, or committee member, as appropriate,

entitled to vote on the action is present and votes.

Acts 2003, 78th Leg., ch. 182, Sec. 1, eff. Jan. 1, 2006.

Sec. 101.359. EFFECTIVE ACTION BY MEMBERS OR MANAGERS WITH OR

WITHOUT MEETING. Members or managers of a limited liability

company may take action at a meeting of the members or managers

or without a meeting in any manner permitted by this title, Title

1, or the governing documents of the company. Unless otherwise

provided by the governing documents, an action is effective if it

is taken:

(1) by an affirmative vote of those persons having at least the

minimum number of votes that would be necessary to take the

action at a meeting at which each member or manager, as

appropriate, entitled to vote on the action is present and votes;

or

(2) with the consent of each member of the limited liability

company, which may be established by:

(A) the member's failure to object to the action in a timely

manner, if the member has full knowledge of the action;

(B) consent to the action in writing signed by the member; or

(C) any other means reasonably evidencing consent.

Added by Acts 2005, 79th Leg., Ch.

64, Sec. 75, eff. January 1, 2006.

SUBCHAPTER I. MODIFICATION OF DUTIES; INDEMNIFICATION

Sec. 101.401. EXPANSION OR RESTRICTION OF DUTIES AND

LIABILITIES. The company agreement of a limited liability

company may expand or restrict any duties, including fiduciary

duties, and related liabilities that a member, manager, officer,

or other person has to the company or to a member or manager of

the company.

Acts 2003, 78th Leg., ch. 182, Sec. 1, eff. Jan. 1, 2006.

Sec. 101.402. PERMISSIVE INDEMNIFICATION, ADVANCEMENT OF

EXPENSES, AND INSURANCE OR OTHER ARRANGEMENTS. (a) A limited

liability company may:

(1) indemnify a person;

(2) pay in advance or reimburse expenses incurred by a person;

and

(3) purchase or procure or establish and maintain insurance or

another arrangement to indemnify or hold harmless a person.

(b) In this section, "person" includes a member, manager, or

officer of a limited liability company or an assignee of a

membership interest in the company.

Acts 2003, 78th Leg., ch. 182, Sec. 1, eff. Jan. 1, 2006.

SUBCHAPTER J. DERIVATIVE PROCEEDINGS

Sec. 101.451. DEFINITIONS. In this subchapter:

(1) "Derivative proceeding" means a civil suit in the right of a

domestic limited liability company or, to the extent provided by

Section 101.462, in the right of a foreign limited liability

company.

(2) "Member" includes a person who beneficially owns a

membership interest through a voting trust or a nominee on the

person's behalf.

Acts 2003, 78th Leg., ch. 182, Sec. 1, eff. Jan. 1, 2006.

Sec. 101.452. STANDING TO BRING PROCEEDING. A member may not

institute or maintain a derivative proceeding unless:

(1) the member:

(A) was a member of the limited liability company at the time of

the act or omission complained of; or

(B) became a member by operation of law from a person that was a

member at the time of the act or omission complained of; and

(2) the member fairly and adequately represents the interests of

the limited liability company in enforcing the right of the

limited liability company.

Acts 2003, 78th Leg., ch. 182, Sec. 1, eff. Jan. 1, 2006.

Sec. 101.453. DEMAND. (a) A member may not institute a

derivative proceeding until the 91st day after the date a written

demand is filed with the limited liability company stating with

particularity the act, omission, or other matter that is the

subject of the claim or challenge and requesting that the limited

liability company take suitable action.

(b) The waiting period required by Subsection (a) before a

derivative proceeding may be instituted is not required if:

(1) the member has been previously notified that the demand has

been rejected by the limited liability company;

(2) the limited liability company is suffering irreparable

injury; or

(3) irreparable injury to the limited liability company would

result by waiting for the expiration of the 90-day period.

Acts 2003, 78th Leg., ch. 182, Sec. 1, eff. Jan. 1, 2006.

Sec. 101.454. DETERMINATION BY GOVERNING OR INDEPENDENT PERSONS.

(a) The determination of how to proceed on allegations made in

a demand or petition relating to a derivative proceeding must be

made by an affirmative vote of the majority of:

(1) the independent and disinterested governing persons present

at a meeting of the governing authority at which interested

governing persons are not present at the time of the vote if the

independent and disinterested governing persons constitute a

quorum of the governing authority;

(2) a committee consisting of two or more independent and

disinterested governing persons appointed by the majority of one

or more independent and disinterested governing persons present

at a meeting of the governing authority, regardless of whether

the independent and disinterested governing persons constitute a

quorum of the governing authority; or

(3) a panel of one or more independent and disinterested persons

appointed by the court on a motion by the limited liability

company listing the names of the persons to be appointed and

stating that, to the best of the limited liability company's

knowledge, the persons to be appointed are disinterested and

qualified to make the determinations contemplated by Section

101.458.

(b) The court shall appoint a panel under Subsection (a)(3) if

the court finds that the persons recommended by the limited

liability company are independent and disinterested and are

otherwise qualified with respect to expertise, experience,

independent judgment, and other factors considered appropriate by

the court under the circumstances to make the determinations. A

person appointed by the court to a panel under this section may

not be held liable to the limited liability company or the

limited liability company's members for an action taken or

omission made by the person in that capacity, except for acts or

omissions constituting fraud or wilful misconduct.

Acts 2003, 78th Leg., ch. 182, Sec. 1, eff. Jan. 1, 2006.

Sec. 101.455. STAY OF PROCEEDING. (a) If the domestic or

foreign limited liability company that is the subject of a

derivative proceeding commences an inquiry into the allegations

made in a demand or petition and the person or group of persons

described by Section 101.454 is conducting an active review of

the allegations in good faith, the court shall stay a derivative

proceeding until the review is completed and a determination is

made by the person or group regarding what further action, if

any, should be taken.

(b) To obtain a stay, the domestic or foreign limited liability

company shall provide the court with a written statement agreeing

to advise the court and the member making the demand of the

determination promptly on the completion of the review of the

matter. A stay, on motion, may be reviewed every 60 days for the

continued necessity of the stay.

(c) If the review and determination made by the person or group

is not completed before the 61st day after the date on which the

court orders the stay, the stay may be renewed for one or more

additional 60-day periods if the domestic or foreign limited

liability company provides the court and the member with a

written statement of the status of the review and the reasons why

a continued extension of the stay is necessary.

Acts 2003, 78th Leg., ch. 182, Sec. 1, eff. Jan. 1, 2006.

Sec. 101.456. DISCOVERY. (a) If a domestic or foreign limited

liability company proposes to dismiss a derivative proceeding

under Section 101.458, discovery by a member after the filing of

the derivative proceeding in accordance with this subchapter

shall be limited to:

(1) facts relating to whether the person or group of persons

described by Section 101.458 is independent and disinterested;

(2) the good faith of the inquiry and review by the person or

group; and

(3) the reasonableness of the procedures followed by the person

or group in conducting the review.

(b) Discovery described by Subsection (a) may not be expanded to

include a fact or substantive matter regarding the act, omission,

or other matter that is the subject matter of the derivative

proceeding. The scope of discovery may be expanded if the court

determines after notice and hearing that a good faith review of

the allegations for purposes of Section 101.458 has not been made

by an independent and disinterested person or group in accordance

with that section.

Acts 2003, 78th Leg., ch. 182, Sec. 1, eff. Jan. 1, 2006.

Sec. 101.457. TOLLING OF STATUTE OF LIMITATIONS. A written

demand filed with the limited liability company under Section

101.453 tolls the statute of limitations on the claim on which

demand is made until the earlier of:

(1) the 91st day after the date of the demand; or

(2) the 31st day after the date the limited liability company

advises the member that the demand has been rejected or the

review has been completed.

Acts 2003, 78th Leg., ch. 182, Sec. 1, eff. Jan. 1, 2006.

Sec. 101.458. DISMISSAL OF DERIVATIVE PROCEEDING. (a) A court

shall dismiss a derivative proceeding on a motion by the limited

liability company if the person or group of persons described by

Section 101.454 determines in good faith, after conducting a

reasonable inquiry and based on factors the person or group

considers appropriate under the circumstances, that continuation

of the derivative proceeding is not in the best interests of the

limited liability company.

(b) In determining whether the requirements of Subsection (a)

have been met, the burden of proof shall be on:

(1) the plaintiff member if:

(A) the majority of the governing authority consists of

independent and disinterested persons at the time the

determination is made;

(B) the determination is made by a panel of one or more

independent and disinterested persons appointed under Section

101.454(a)(3); or

(C) the limited liability company presents prima facie evidence

that demonstrates that the persons appointed under Section

101.454(a)(2) are independent and disinterested; or

(2) the limited liability company in any other circumstance.

Acts 2003, 78th Leg., ch. 182, Sec. 1, eff. Jan. 1, 2006.

Sec. 101.459. ALLEGATIONS IF DEMAND REJECTED. If a derivative

proceeding is instituted after a demand is rejected, the petition

must allege with particularity facts that establish that the

rejection was not made in accordance with the requirements of

Sections 101.454 and 101.458.

Acts 2003, 78th Leg., ch. 182, Sec. 1, eff. Jan. 1, 2006.

Sec. 101.460. DISCONTINUANCE OR SETTLEMENT. (a) A derivative

proceeding may not be discontinued or settled without court

approval.

(b) The court shall direct that notice be given to the affected

members if the court determines that a proposed discontinuance or

settlement may substantially affect the interests of other

members.

Acts 2003, 78th Leg., ch. 182, Sec. 1, eff. Jan. 1, 2006.

Sec. 101.461. PAYMENT OF EXPENSES. (a) In this section,

"expenses" means reasonable expenses incurred by a party in a

derivative proceeding, including:

(1) attorney's fees;

(2) costs of pursuing an investigation of the matter that was

the subject of the derivative proceeding; or

(3) expenses for which the domestic or foreign limited liability

company may be required to indemnify another person.

(b) On termination of a derivative proceeding, the court may

order:

(1) the domestic or foreign limited liability company to pay the

expenses the plaintiff incurred in the proceeding if the court

finds the proceeding has resulted in a substantial benefit to the

domestic or foreign limited liability company;

(2) the plaintiff to pay the expenses the domestic or foreign

limited liability company or other defendant incurred in

investigating and defending the proceeding if the court finds the

proceeding has been instituted or maintained without reasonable

cause or for an improper purpose; or

(3) a party to pay the expenses incurred by another party

relating to the filing of a pleading, motion, or other paper if

the court finds the pleading, motion, or other paper:

(A) was not well grounded in fact after reasonable inquiry;

(B) was not warranted by existing law or a good faith argument

for the extension, modification, or reversal of existing law; or

(C) was interposed for an improper purpose, such as to harass,

cause unnecessary delay, or cause a needless increase in the cost

of litigation.

Acts 2003, 78th Leg., ch. 182, Sec. 1, eff. Jan. 1, 2006.

Sec. 101.462. APPLICATION TO FOREIGN LIMITED LIABILITY

COMPANIES. (a) In a derivative proceeding brought in the right

of a foreign limited liability company, the matters covered by

this subchapter are governed by the laws of the jurisdiction of

organization of the foreign limited liability company, except for

Sections 101.455, 101.460, and 101.461, which are procedural

provisions and do not relate to the internal affairs of the

foreign limited liability company.

(b) In the case of matters relating to a foreign limited

liability company under Section 101.454, a reference to a person

or group of persons described by that section refers to a person

or group entitled under the laws of the jurisdiction of

organization of the foreign limited liability company to review

and dispose of a derivative proceeding. The standard of review of

a decision made by the person or group to dismiss the derivative

proceeding shall be governed by the laws of the jurisdiction of

organization of the foreign limited liability company.

Acts 2003, 78th Leg., ch. 182, Sec. 1, eff. Jan. 1, 2006.

Sec. 101.463. CLOSELY HELD LIMITED LIABILITY COMPANY. (a) In

this section, "closely held limited liability company" means a

limited liability company that has:

(1) fewer than 35 members; and

(2) no membership interests listed on a national securities

exchange or regularly quoted in an over-the-counter market by one

or more members of a national securities association.

(b) Sections 101.452-101.459 do not apply to a closely held

limited liability company.

(c) If justice requires:

(1) a derivative proceeding brought by a member of a closely

held limited liability company may be treated by a court as a

direct action brought by the member for the member's own benefit;

and

(2) a recovery in a direct or derivative proceeding by a member

may be paid directly to the plaintiff or to the limited liability

company if necessary to protect the interests of creditors or

other members of the limited liability company.

Acts 2003, 78th Leg., ch. 182, Sec. 1, eff. Jan. 1, 2006.

Amended by:

Acts 2007, 80th Leg., R.S., Ch.

688, Sec. 100, eff. September 1, 2007.

SUBCHAPTER K. SUPPLEMENTAL RECORDKEEPING REQUIREMENTS

Sec. 101.501. SUPPLEMENTAL RECORDS REQUIRED FOR LIMITED

LIABILITY COMPANIES. (a) In addition to the books and records

required to be kept under Section 3.151, a limited liability

company shall keep at its principal office in the United States,

or make available to a person at its principal office in the

United States not later than the fifth day after the date the

person submits a written request to examine the books and records

of the company under Section 3.152(a) or 101.502:

(1) a current list that states:

(A) the percentage or other interest in the limited liability

company owned by each member; and

(B) if one or more classes or groups of membership interests are

established in or under the certificate of formation or company

agreement, the names of the members of each specified class or

group;

(2) a copy of the company's federal, state, and local tax

information or income tax returns for each of the six preceding

tax years;

(3) a copy of the company's certificate of formation, including

any amendments to or restatements of the certificate of

formation;

(4) if the company agreement is in writing, a copy of the

company agreement, including any amendments to or restatements of

the company agreement;

(5) an executed copy of any powers of attorney;

(6) a copy of any document that establishes a class or group of

members of the company as provided by the company agreement; and

(7) except as provided by Subsection (b), a written statement

of:

(A) the amount of a cash contribution and a description and

statement of the agreed value of any other contribution made or

agreed to be made by each member;

(B) the dates any additional contributions are to be made by a

member;

(C) any event the occurrence of which requires a member to make

additional contributions;

(D) any event the occurrence of which requires the winding up of

the company; and

(E) the date each member became a member of the company.

(b) A limited liability company is not required to keep or make

available at its principal office in the United States a written

statement of the information required by Subsection (a)(7) if

that information is stated in a written company agreement.

(c) A limited liability company shall keep at its registered

office located in this state and make available to a member of

the company on reasonable request the street address of the

company's principal office in the United States in which the

records required by this section and Section 3.151 are maintained

or made available.

Acts 2003, 78th Leg., ch. 182, Sec. 1, eff. Jan. 1, 2006.

Amended by:

Acts 2007, 80th Leg., R.S., Ch.

688, Sec. 101, eff. September 1, 2007.

Sec. 101.502. RIGHT TO EXAMINE RECORDS AND CERTAIN OTHER

INFORMATION. (a) A member of a limited liability company or an

assignee of a membership interest in a limited liability company,

or a representative of the member or assignee, on written request

and for a proper purpose, may examine and copy at any reasonable

time and at the member's or assignee's expense:

(1) records required under Sections 3.151 and 101.501; and

(2) other information regarding the business, affairs, and

financial condition of the company that is reasonable for the

person to examine and copy.

(b) A limited liability company shall provide to a member of the

company or an assignee of a membership interest in the company,

on written request by the member or assignee sent to the

company's principal office in the United States or, if different,

the person and address designated in the company agreement, a

free copy of:

(1) the company's certificate of formation, including any

amendments to or restatements of the certificate of formation;

(2) if in writing, the company agreement, including any

amendments to or restatements of the company agreement; and

(3) any tax returns described by Section 101.501(a)(2).

Acts 2003, 78th Leg., ch. 182, Sec. 1, eff. Jan. 1, 2006.

SUBCHAPTER L. SUPPLEMENTAL WINDING UP AND TERMINATION PROVISIONS

Sec. 101.551. PERSONS ELIGIBLE TO WIND UP COMPANY. After an

event requiring the winding up of a limited liability company

unless a revocation as provided by Section 11.151 or a

cancellation as provided by Section 11.152 occurs, the winding up

of the company must be carried out by:

(1) the company's governing authority or one or more persons,

including a governing person, designated by the governing

authority, the members, or the governing documents;

(2) if the event requiring the winding up of the company is the

termination of the continued membership of the last remaining

member of the company, the legal representative or successor of

the last remaining member or one or more persons designated by

the legal representative or successor; or

(3) a person appointed by the court to carry out the winding up

of the company under Section 11.054, 11.405, 11.409, or 11.410.

Acts 2003, 78th Leg., ch. 182, Sec. 1, eff. Jan. 1, 2006.

Sec. 101.552. APPROVAL OF VOLUNTARY WINDING UP, REVOCATION,

CANCELLATION, OR REINSTATEMENT. (a) A majority vote of all of

the members of a limited liability company or, if the limited

liability company has no members, a majority vote of all of the

managers of the company is required to approve:

(1) a voluntary winding up of the company under Chapter 11;

(2) a revocation of a voluntary decision to wind up the company

under Section 11.151; or

(3) a reinstatement of a terminated company under Section

11.202.

(b) The consent of all of the members of the limited liability

company is required to approve a cancellation under Section

11.152 of an event requiring winding up specified in Section

11.051(1) or (3).

(c) An event requiring winding up specified in Section 11.056

may be canceled in accordance with Section 11.152(a) if the legal

representative or successor of the last remaining member of the

domestic limited liability company agrees to:

(1) cancel the event requiring winding up and continue the

company; and

(2) become a member of the company effective as of the date of

termination of the membership of the last remaining member of the

company, or designate another person who agrees to become a

member of the company effective as of the date of the

termination.

Acts 2003, 78th Leg., ch. 182, Sec. 1, eff. Jan. 1, 2006.

Amended by:

Acts 2007, 80th Leg., R.S., Ch.

688, Sec. 102, eff. September 1, 2007.

SUBCHAPTER M. SERIES LIMITED LIABILITY COMPANY

Sec. 101.601. SERIES OF MEMBERS, MANAGERS, MEMBERSHIP INTERESTS,

OR ASSETS. (a) A company agreement may establish or provide for

the establishment of one or more designated series of members,

managers, membership interests, or assets that:

(1) has separate rights, powers, or duties with respect to

specified property or obligations of the limited liability

company or profits and losses associated with specified property

or obligations; or

(2) has a separate business purpose or investment objective.

(b) A series established in accordance with Subsection (a) may

carry on any business, purpose, or activity, whether or not for

profit, that is not prohibited by Section 2.003.

Added by Acts 2009, 81st Leg., R.S., Ch.

84, Sec. 45, eff. September 1, 2009.

Sec. 101.602. ENFORCEABILITY OF OBLIGATIONS AND EXPENSES OF

SERIES AGAINST ASSETS. (a) Notwithstanding any other provision

of this chapter or any other law, but subject to Subsection (b)

and any other provision of this subchapter:

(1) 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 that

series only, and shall not be enforceable against the assets of

the limited liability company generally or any other series; and

(2) none of the debts, liabilities, obligations, and expenses

incurred, contracted for, or otherwise existing with respect to

the limited liability company generally or any other series shall

be enforceable against the assets of a particular series.

(b) Subsection (a) applies only if:

(1) the records maintained for that particular series account

for the assets associated with that series separately from the

other assets of the company or any other series;

(2) the company agreement contains a statement to the effect of

the limitations provided in Subsection (a); and

(3) the company's certificate of formation contains a notice of

the limitations provided in Subsection (a).

Added by Acts 2009, 81st Leg., R.S., Ch.

84, Sec. 45, eff. September 1, 2009.

Sec. 101.603. ASSETS OF SERIES. (a) Assets associated with a

series may be held directly or indirectly, including being held

in the name of the series, in the name of the limited liability

company, through a nominee, or otherwise.

(b) If the records of a series are maintained in a manner so

that the assets of the series can be reasonably identified by

specific listing, category, type, quantity, or computational or

allocational formula or procedure, including a percentage or

share of any assets, or by any other method in which the identity

of the assets can be objectively determined, the records are

considered to satisfy the requirements of Section 101.602(b)(1).

Added by Acts 2009, 81st Leg., R.S., Ch.

84, Sec. 45, eff. September 1, 2009.

Sec. 101.604. NOTICE OF LIMITATION ON LIABILITIES OF SERIES.

Notice of the limitation on liabilities of a series required by

Section 101.602 that is contained in a certificate of formation

filed with the secretary of state satisfies the requirements of

Section 101.602(b)(3), regardless of whether:

(1) the limited liability company has established any series

under this subchapter when the notice is contained in the

certificate of formation; and

(2) the notice makes a reference to a specific series of the

limited liability company.

Added by Acts 2009, 81st Leg., R.S., Ch.

84, Sec. 45, eff. September 1, 2009.

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) hold title to assets of the series, including real property,

personal property, and intangible property; and

(4) grant liens and security interests in assets of the series.

Added by Acts 2009, 81st Leg., R.S., Ch.

84, Sec. 45, eff. September 1, 2009.

Sec. 101.606. LIABILITY OF MEMBER OR MANAGER FOR OBLIGATIONS;

DUTIES. (a) Except as and to the extent the company agreement

specifically provides otherwise, a member or manager associated

with a series or a member or manager of the company is not liable

for a debt, obligation, or liability of a series, including a

debt, obligation, or liability under a judgment, decree, or court

order.

(b) The company agreement may expand or restrict any duties,

including fiduciary duties, and related liabilities that a

member, manager, officer, or other person associated with a

series has to:

(1) the series or the company;

(2) a member or manager associated with the series; or

(3) a member or manager of the company.

Added by Acts 2009, 81st Leg., R.S., Ch.

84, Sec. 45, eff. September 1, 2009.

Sec. 101.607. CLASS OR GROUP OF MEMBERS OR MANAGERS. (a) The

company agreement may:

(1) establish classes or groups of one or more members or

managers associated with a series each of which has certain

express relative rights, powers, and duties, including voting

rights; and

(2) provide for the manner of establishing additional classes or

groups of one or more members or managers associated with the

series each of which has certain express rights, powers, and

duties, including providing for voting rights and rights, powers,

and duties senior to existing classes and groups of members or

managers associated with the series.

(b) The company agreement may provide for the taking of an

action, including the amendment of the company agreement, without

the vote or approval of any member or manager or class or group

of members or managers, to create under the provisions of the

company agreement a class or group of the series of membership

interests that was not previously outstanding.

(c) The company agreement may provide that:

(1) all or certain identified members or managers or a specified

class or group of the members or managers associated with a

series have the right to vote on any matter separately or with

all or any class or group of the members or managers associated

with the series;

(2) any member or class or group of members associated with a

series has no voting rights; and

(3) voting by members or managers associated with a series is on

a per capita, number, financial interest, class, group, or any

other basis.

Added by Acts 2009, 81st Leg., R.S., Ch.

84, Sec. 45, eff. September 1, 2009.

Sec. 101.608. GOVERNING AUTHORITY. (a) Notwithstanding any

conflicting provision of the certificate of formation of a

limited liability company, the governing authority of a series

consists of the managers or members associated with the series as

provided in the company agreement.

(b) If the company agreement does not provide for the governing

authority of the series, the governing authority of the series

consists of:

(1) the managers associated with the series, if the company's

certificate of formation states that the company will have one or

more managers; or

(2) the members associated with the series, if the company's

certificate of formation states that the company will not have

managers.

Added by Acts 2009, 81st Leg., R.S., Ch.

84, Sec. 45, eff. September 1, 2009.

Sec. 101.609. APPLICABILITY OF OTHER PROVISIONS OF CHAPTER;

SYNONYMOUS TERMS. (a) To the extent not inconsistent with this

subchapter, this chapter applies to a series and its associated

members and managers.

(b) For purposes of the application of any other provision of

this chapter to a provision of this subchapter, and as the

context requires:

(1) a reference to "limited liability company" or "company"

means the "series";

(2) a reference to "member" means "member associated with the

series"; and

(3) a reference to "manager" means "manager associated with the

series."

Added by Acts 2009, 81st Leg., R.S., Ch.

84, Sec. 45, eff. September 1, 2009.

Sec. 101.610. EFFECT OF CERTAIN EVENT ON MANAGER OR MEMBER. (a)

An event that under this chapter or the company agreement causes

a manager to cease to be a manager with respect to a series does

not, in and of itself, cause the manager to cease to be a manager

of the limited liability company or with respect to any other

series of the company.

(b) An event that under this chapter or the company agreement

causes a member to cease to be associated with a series does not,

in and of itself, cause the member to cease to be associated with

any other series or terminate the continued membership of a

member in the limited liability company or require the winding up

of the series, regardless of whether the member was the last

remaining member associated with the series.

Added by Acts 2009, 81st Leg., R.S., Ch.

84, Sec. 45, eff. September 1, 2009.

Sec. 101.611. MEMBER STATUS WITH RESPECT TO DISTRIBUTION. (a)

Subject to Sections 101.613, 101.617, 101.618, 101.619, and

101.620, when a member associated with a series established under

this subchapter is entitled to receive a distribution with

respect to the series, the member, with respect to the

distribution, has the same status as a creditor of the series and

is entitled to any remedy available to a creditor of the series.

(b) Section 101.207 does not apply to a distribution with

respect to the series.

Added by Acts 2009, 81st Leg., R.S., Ch.

84, Sec. 45, eff. September 1, 2009.

Sec. 101.612. RECORD DATE FOR ALLOCATIONS AND DISTRIBUTIONS. A

company agreement may establish or provide for the establishment

of a record date for allocations and distributions with respect

to a series.

Added by Acts 2009, 81st Leg., R.S., Ch.

84, Sec. 45, eff. September 1, 2009.

Sec. 101.613. DISTRIBUTIONS. (a) A limited liability company

may make a distribution with respect to a series.

(b) A limited liability company may not make a distribution with

respect to a series to a member if, immediately after making the

distribution, the total amount of the liabilities of the series,

other than liabilities described by Subsection (c), exceeds the

fair value of the assets associated with the series.

(c) For purposes of Subsection (b), the liabilities of a series

do not include:

(1) a liability related to the member's membership interest; or

(2) except as provided by Subsection (e), a liability of the

series for which the recourse of creditors is limited to

specified property of the series.

(d) For purposes of Subsection (b), the assets associated with a

series include the fair value of property of the series subject

to a liability for which recourse of creditors is limited to

specified property of the series only if the fair value of that

property exceeds the liability.

(e) A member who receives a distribution from a series in

violation of this section is not required to return the

distribution to the series unless the member had knowledge of the

violation.

(f) This section may not be construed to affect the obligation

of a member to return a distribution to the series under the

company agreement or other state or federal law.

(g) Section 101.206 does not apply to a distribution with

respect to a series.

(h) For purposes of this section, "distribution" does not

include an amount constituting reasonable compensation for

present or past services or a reasonable payment made in the

ordinary course of business under a bona fide retirement plan or

other benefits program.

Added by Acts 2009, 81st Leg., R.S., Ch.

84, Sec. 45, eff. September 1, 2009.

Sec. 101.614. AUTHORITY TO WIND UP AND TERMINATE SERIES. Except

to the extent otherwise provided in the company agreement and

subject to Sections 101.617, 101.618, 101.619, and 101.620, a

series and its business and affairs may be wound up and

terminated without causing the winding up of the limited

liability company.

Added by Acts 2009, 81st Leg., R.S., Ch.

84, Sec. 45, eff. September 1, 2009.

Sec. 101.615. TERMINATION OF SERIES. (a) Except as otherwise

provided by Sections 101.617, 101.618, 101.619, and 101.620, the

series terminates on the completion of the winding up of the

business and affairs of the series in accordance with Sections

101.617, 101.618, 101.619, and 101.620.

(b) The limited liability company shall provide notice of the

termination of a series in the manner provided in the company

agreement for notice of termination, if any.

(c) The termination of the series does not affect the limitation

on liabilities of the series provided by Section 101.602.

Added by Acts 2009, 81st Leg., R.S., Ch.

84, Sec. 45, eff. September 1, 2009.

Sec. 101.616. EVENT REQUIRING WINDING UP. Subject to Sections

101.617, 101.618, 101.619, and 101.620, the business and affairs

of a series are required to be wound up:

(1) if the winding up of the limited liability company is

required under Section 101.552(a) or Chapter 11; or

(2) on the earlier of:

(A) the time specified for winding up the series in the company

agreement;

(B) the occurrence of an event specified with respect to the

series in the company agreement;

(C) the occurrence of a majority vote of all of the members

associated with the series approving the winding up of the series

or, if there is more than one class or group of members

associated with the series, a majority vote of the members of

each class or group of members associated with the series

approving the winding up of the series;

(D) if the series has no members, the occurrence of a majority

vote of all of the managers associated with the series approving

the winding up of the series or, if there is more than one class

or group of managers associated with the series, a majority vote

of the managers of each class or group of managers associated

with the series approving the winding up of the series; or

(E) a determination by a court in accordance with Section

101.621.

Added by Acts 2009, 81st Leg., R.S., Ch.

84, Sec. 45, eff. September 1, 2009.

Sec. 101.617. PROCEDURES FOR WINDING UP AND TERMINATION OF

SERIES. (a) The following provisions apply to a series and the

associated members and managers of the series:

(1) Subchapters A, G, H, and I, Chapter 11; and

(2) Subchapter B, Chapter 11, other than Sections 11.051,

11.056, 11.057, 11.058, and 11.059.

(b) For purposes of the application of Chapter 11 to a series

and as the context requires:

(1) a reference to "domestic entity," "filing entity," or

"entity" means the "series";

(2) a reference to an "owner" means a "member associated with

the series";

(3) a reference to the "governing authority" or a "governing

person" means the "governing authority associated with the

series" or a "governing person associated with the series"; and

(4) a reference to "business," "property," "obligations," or

"liabilities" means the "business associated with the series,"

"property associated with the series," "obligations associated

with the series," or "liabilities associated with the series."

(c) After the occurrence of an event requiring winding up of a

series under Section 101.616, unless a revocation as provided by

Section 101.618 or a cancellation as provided by Section 101.619

occurs, the winding up of the series must be carried out by:

(1) the governing authority of the series or one or more

persons, including a governing person, designated by:

(A) the governing authority of the series;

(B) the members associated with the series; or

(C) the company agreement; or

(2) a person appointed by the court to carry out the winding up

of the series under Section 11.054, 11.405, 11.409, or 11.410.

(d) An action taken in accordance with this section does not

affect the limitation on liability of members and managers

provided by Section 101.606.

Added by Acts 2009, 81st Leg., R.S., Ch.

84, Sec. 45, eff. September 1, 2009.

Sec. 101.618. REVOCATION OF VOLUNTARY WINDING UP. Before the

termination of the series takes effect, a voluntary decision to

wind up the series under Section 101.616(2)(C) or (D) may be

revoked by:

(1) a majority vote of all of the members associated with the

series approving the revocation or, if there is more than one

class or group of members associated with the series, a majority

vote of the members of each class or group of members associated

with the series approving the revocation; or

(2) if the series has no members, a majority vote of all the

managers associated with the series approving the revocation or,

if there is more than one class or group of managers associated

with the series, a majority vote of the managers of each class or

group of managers associated with the series approving the

revocation.

Added by Acts 2009, 81st Leg., R.S., Ch.

84, Sec. 45, eff. September 1, 2009.

Sec. 101.619. CANCELLATION OF EVENT REQUIRING WINDING UP. (a)

Unless the cancellation is prohibited by the company agreement,

an event requiring winding up of the series under Section

101.616(1) or (2) may be canceled by the consent of all of the

members of the series before the termination of the series takes

effect.

(b) In connection with the cancellation, the members must amend

the company agreement to:

(1) eliminate or extend the time specified for the series if the

event requiring winding up of the series occurred under Section

101.616(1); or

(2) eliminate or revise the event specified with respect to the

series if the event requiring winding up of the series occurred

under Section 101.616(2).

Added by Acts 2009, 81st Leg., R.S., Ch.

84, Sec. 45, eff. September 1, 2009.

Sec. 101.620. CONTINUATION OF BUSINESS. The series may continue

its business following the revocation under Section 101.618 or

the cancellation under Section 101.619.

Added by Acts 2009, 81st Leg., R.S., Ch.

84, Sec. 45, eff. September 1, 2009.

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 it is not reasonably

practicable to carry on the business of the series in conformity

with the company agreement.

Added by Acts 2009, 81st Leg., R.S., Ch.

84, Sec. 45, eff. September 1, 2009.

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