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2009 Texas Code
BUSINESS ORGANIZATIONS CODE
TITLE 1. GENERAL PROVISIONS
CHAPTER 10. MERGERS, INTEREST EXCHANGES, CONVERSIONS, AND SALES OF ASSETS

BUSINESS ORGANIZATIONS CODE

TITLE 1. GENERAL PROVISIONS

CHAPTER 10. MERGERS, INTEREST EXCHANGES, CONVERSIONS, AND SALES

OF ASSETS

SUBCHAPTER A. MERGERS

Sec. 10.001. ADOPTION OF PLAN OF MERGER. (a) A domestic entity

may effect a merger by complying with the applicable provisions

of this code. A merger must be set forth in a plan of merger.

(b) To effect a merger, each domestic entity that is a party to

the merger must act on and approve the plan of merger in the

manner prescribed by this code for the approval of mergers by the

domestic entity.

the notice required by Section 10.355.

(d) If one or more non-code organizations is a party to the

merger or is to be created by the plan of merger:

(1) to effect the merger each non-code organization must take

all action required by this code and its governing documents;

(2) the merger must be permitted by:

(A) the law of the state or country under whose law each

non-code organization is incorporated or organized; or

(B) the governing documents of each non-code organization if the

documents are not inconsistent with the law under which the

non-code organization is incorporated or organized; and

(3) in effecting the merger each non-code organization that is a

party to the merger must comply with:

(A) the applicable laws under which it is incorporated or

organized; and

(B) the governing documents of the non-code organization.

(e) A domestic entity may not merge under this subchapter if an

owner or member of that entity that is a party to the merger

will, as a result of the merger, become personally liable,

without that owner's or member's consent, for a liability or

other obligation of any other person.

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

Sec. 10.002. PLAN OF MERGER: REQUIRED PROVISIONS. (a) A plan

of merger must include:

(1) the name of each organization that is a party to the merger;

(2) the name of each organization that will survive the merger;

(3) the name of each new organization that is to be created by

the plan of merger;

(4) a description of the organizational form of each

organization that is a party to the merger or that is to be

created by the plan of merger and its jurisdiction of formation;

(5) the manner and basis of converting any of the ownership or

membership interests of each organization that is a party to the

merger into:

(A) ownership interests, membership interests, obligations,

rights to purchase securities, or other securities of one or more

of the surviving or new organizations;

(B) cash;

interests, obligations, rights to purchase securities, or other

securities of any other person or entity; or

(D) any combination of the items described by Paragraphs

(A)-(C);

(6) the certificate of formation of each new domestic filing

entity to be created by the plan of merger;

(7) the governing documents of each new domestic nonfiling

entity to be created by the plan of merger; and

(8) the governing documents of each non-code organization that:

(A) is to survive the merger or to be created by the plan of

merger; and

(B) is an entity that is not:

(i) organized under the laws of any state or the United States;

(ii) required to file its certificate of formation or similar

document under which the entity is organized with the appropriate

governmental authority.

(b) An item required by Subsections (a)(6)-(8) may be included

in the plan of merger by an attachment or exhibit to the plan.

converting an ownership or membership interest that may be

converted in a manner or basis different than any other ownership

or membership interest of the same class or series of the

ownership or membership interest, the manner and basis of

conversion must be included in the plan of merger in the same

manner as provided by Subsection (a)(5).

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

Sec. 10.003. CONTENTS OF PLAN OF MERGER: MORE THAN ONE

SUCCESSOR. If more than one organization is to survive or to be

created by the plan of merger, the plan of merger must include:

(1) the manner and basis of allocating and vesting the property

of each organization that is a party to the merger among one or

more of the surviving or new organizations;

(2) the name of each surviving or new organization that is

primarily obligated for the payment of the fair value of an

ownership or membership interest of an owner or member of a

domestic entity subject to dissenters' rights that is a party to

the merger and who complies with the requirements for dissent and

appraisal under this code applicable to the domestic entity; and

(3) the manner and basis of allocating each liability and

obligation of each organization that is a party to the merger, or

adequate provisions for the payment and discharge of each

liability and obligation, among one or more of the surviving or

new organizations.

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

Sec. 10.004. PLAN OF MERGER: PERMISSIVE PROVISIONS. A plan of

merger may include:

(1) amendments to the governing documents of any surviving

organization;

(2) provisions relating to an interest exchange, including a

plan of exchange; and

(3) any other provisions relating to the merger that are not

required by this chapter.

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

Sec. 10.005. CREATION OF HOLDING COMPANY BY MERGER. (a) In

this section:

(1) "Direct or indirect wholly owned subsidiary" means, with

respect to a domestic entity, another domestic entity, all of the

outstanding voting ownership or membership interests of which are

owned by the domestic entity or by one or more other domestic

entities or non-code organizations, all of the outstanding voting

ownership or membership interests of which are owned by the

domestic entity or one or more other wholly owned domestic

entities or non-code organizations.

(2) "Holding company" means a domestic entity that, from its

organization until a merger takes effect, was at all times a

direct or indirect wholly owned subsidiary of the merging

domestic entity and the ownership or membership interests of

which are issued to the members or owners of the merging domestic

entity in the merger.

(3) "Merging domestic entity" means the original domestic entity

that is a party to a merger that is intended to create a holding

company structure under a plan of merger that satisfies the

requirements of this section and whose members or owners are not

required to approve the plan of merger under Subsection (b).

(4) "Surviving entity subsidiary" means the surviving entity in

a merger of a merging domestic entity and a direct or indirect

wholly owned subsidiary of the merging domestic entity, which

immediately following the merger is a direct or indirect wholly

owned subsidiary of the holding company.

(b) A domestic entity may, without owner or member approval and

pursuant to a plan of merger, restructure the ownership or

membership structure of that entity to create a holding company

structure under this chapter and the provisions of this code

under which the entity was formed. The approval of the owners or

members of a merging domestic entity that is a party to a merger

under a plan of merger that creates a holding company is not

required if:

(1) the holding company is a domestic entity of the same

organizational form as the merging domestic entity;

(2) approval is not otherwise required by the governing

documents of the merging domestic entity;

(3) the merging domestic entity merges with a direct or indirect

wholly owned subsidiary;

(4) after the merger the merging domestic entity or its

successor is a direct or indirect wholly owned subsidiary of a

holding company;

(5) the merging domestic entity and the direct or indirect

wholly owned subsidiary are the only parties to the merger;

(6) each ownership or membership interest of the merging

domestic entity that is outstanding preceding the merger is

converted in the merger into an ownership or membership interest

of the holding company having the same designations, preferences,

limitations, and relative rights and corresponding obligations in

respect of the ownership or membership interest as the ownership

or membership interest held by the owner or member in the merging

domestic entity;

(7) except as provided by Subsection (c), the governing

documents of the holding company immediately following the merger

contain provisions substantively identical to the governing

documents of the merging domestic entity immediately preceding

the merger;

(8) except as provided by Subsections (c) and (d), the governing

documents of the surviving entity subsidiary immediately

following the merger contain provisions substantively identical

to the governing documents of the merging domestic entity

immediately preceding the merger;

(9) the governing persons of the merging domestic entity become

or remain the governing persons of the holding company when the

merger takes effect;

(10) the owners or members of the merging domestic entity will

not recognize gain or loss for United States federal income tax

purposes, the United States federal tax classification of the

holding company will be the same as that of the merging domestic

entity, and the merger will not result in the loss of any tax

benefit or attribute of the merging domestic entity, each as

determined by the governing authority of the merging domestic

entity; and

(11) the governing authority of the merging domestic entity

adopts a resolution approving the plan of merger.

provisions regarding the organizer or organizers, the entity

name, the registered office and agent, the initial governing

persons, and the initial subscribers of ownership or membership

interests and provisions contained in any amendment to the

governing documents as were necessary to effect a change,

exchange, reclassification, or cancellation of ownership or

membership interests, if the change, exchange, reclassification,

or cancellation was in effect preceding the merger.

(d) Notwithstanding Subsection (b)(8):

(1) the governing documents of the surviving entity subsidiary

must require that an act or transaction by or involving the

surviving entity subsidiary, other than the election or removal

of the governing persons of the surviving entity subsidiary, that

requires for its approval under this code or the governing

documents of the surviving entity subsidiary the approval of the

owners or members of the surviving entity subsidiary must, by

specific reference to this section, require the approval of the

owners or members of the holding company, or any successor by

merger, by the same vote as is required by this code and the

governing documents of the surviving entity subsidiary;

(2) if the surviving entity subsidiary is not of the same

organizational form as the merging domestic entity, the governing

documents of the surviving entity subsidiary may differ from the

governing documents of the merging domestic entity to the minimum

extent necessary to make a change that takes into account the

differences between the types of entities, including a change in

reference to the types of owners, members, ownership interests,

membership interests, governing persons, or governing authority,

each as determined by the governing authority of the merging

domestic entity;

(3) if the surviving entity subsidiary is not of the same

organizational form as the merging domestic entity, the governing

documents of the surviving entity subsidiary must require that:

(A) the surviving entity subsidiary obtain the approval of the

owners or members of the holding company for any act or

transaction by or involving the surviving entity subsidiary,

other than the election or removal of the governing persons of

the surviving entity subsidiary, that would require the approval

of the owners or members of the surviving entity subsidiary if

the surviving entity subsidiary were of the same organizational

form as the merging domestic entity;

(B) any amendment to the governing documents of the surviving

entity subsidiary that would, if adopted by an entity of the same

organizational form as the merging domestic entity, be required

to be included in the certificate of formation of the entity also

require, by specific reference to this section, the approval of

the owners or members of the holding company, or any successor by

merger, by the same vote as is required by this code or by the

governing documents of the surviving entity subsidiary; and

managed by or under the direction of governing persons who are:

(i) subject to the same fiduciary duties applicable to the

governing persons of an entity of the same organizational form as

the merging domestic entity subject to this code; and

(ii) liable for the breach of any duties to the same extent as

governing persons of that form of entity;

(4) the governing documents of the surviving entity subsidiary

may change the classes and series of ownership or membership

interests and the number of ownership or membership interests

that the surviving entity subsidiary is authorized to issue; and

(5) this subsection or a provision of a surviving entity

subsidiary's governing documents required by this subsection may

not be construed as requiring the approval of the owners or

members of the holding company to elect or remove governing

persons of the surviving entity subsidiary.

(e) To the extent the provisions contained in Section 21.606

apply to a merging domestic entity and its owners or members when

a merger takes effect under this section, those provisions

continue to apply to the holding company and its owners or

members immediately after the merger takes effect as though the

holding company were the merging domestic entity. All ownership

or membership interests of the holding company acquired in the

merger, for purposes of Section 21.606, are considered to have

been acquired at the time the ownership or membership interest of

the merging domestic entity converted in the merger was acquired.

Any owner or member who, preceding the merger, was not an

affiliated owner or member as described by Section 21.606 does

not solely by reason of the merger become an affiliated owner or

member of the holding company.

(f) If the name of a holding company immediately following the

effectiveness of a merger under this section is the same as the

name of the merging domestic entity preceding the merger, the

ownership or membership interests of the holding company into

which the ownership or membership interests of the merging

domestic entity are converted pursuant to the merger will be

represented by the certificates, if any, that previously

represented the ownership or membership interests in the merging

domestic entity.

(g) This section shall not apply to a merger of a partnership

with or into a domestic entity without the approval of the owners

or members of the partnership and domestic entity as provided by

this code.

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

Amended by:

Acts 2005, 79th Leg., Ch.

64, Sec. 33, eff. January 1, 2006.

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

688, Sec. 49, eff. September 1, 2007.

Sec. 10.006. SHORT FORM MERGER. (a) A parent organization that

owns at least 90 percent of the outstanding ownership or

membership interests of each class and series of each of one or

more subsidiary organizations may merge with one or more of the

subsidiary organizations as provided by this section if:

(1) at least one of the parties to the merger is a domestic

entity and each other party is a domestic entity or another

non-code organization organized under the laws of a jurisdiction

that permits a merger of the type authorized by this chapter; and

(2) the resulting organization or organizations are the parent

organization, one or more existing subsidiary organizations, or

one or more new organizations.

(b) No action by any subsidiary organization that is a domestic

entity is required to approve the merger.

plan of merger must be adopted by action of the parent

organization in the same manner as a plan of merger not governed

by this section or Section 10.005.

(d) If the parent organization will survive the merger, the

merger is required to be approved only by a resolution adopted by

the governing authority of the parent organization.

(e) Sections 10.001(c)-(e), 10.002(c), 10.003, and 10.007-10.010

apply to a merger approved under Subsection (d), except that the

resolution approving the merger should be considered the plan of

merger for purposes of those sections.

(f) The resolution approving the merger under Subsection (d)

must describe:

(1) the basic terms of the merger;

(2) the organizations that are party to the merger; and

(3) the organizations that survive the merger.

(g) If the parent organization does not own all of the

outstanding ownership or membership interests of each class or

series of ownership or membership interests of each subsidiary

organization that is a party to the merger, the resolution of the

parent organization required by Subsection (d) must describe the

terms of the merger, including the cash or other property,

including ownership or membership interests, obligations, rights

to purchase securities, or other securities of any person or

organization or any combination of the ownership or membership

interests, obligations, rights, or other securities, to be used,

paid, or delivered by the parent organization on surrender of

each ownership or membership interest of the subsidiary

organizations not owned by the parent organization.

(h) An entity is not disqualified from effecting a merger under

any other provision of this chapter because it qualifies for a

merger under this section.

(i) This section shall not apply if a subsidiary organization

that is a party to the merger is:

(1) a partnership; or

(2) a domestic entity that has in its governing documents the

provision required by Section 10.005(d)(1) and of which there are

outstanding ownership or membership interests that would be

entitled to vote on the merger absent this section.

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

Amended by:

Acts 2005, 79th Leg., Ch.

64, Sec. 34, eff. January 1, 2006.

Sec. 10.007. EFFECTIVENESS OF MERGER. Except as otherwise

provided by Subchapter B, Chapter 4, a merger takes effect at the

time provided by the plan of merger, except that a merger that

requires a filing under Subchapter D takes effect on the

acceptance of the filing of the certificate of merger by the

secretary of state or county clerk, as appropriate.

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

Sec. 10.008. EFFECT OF MERGER. (a) When a merger takes effect:

(1) the separate existence of each domestic entity that is a

party to the merger, other than a surviving or new domestic

entity, ceases;

(2) all rights, title, and interests to all real estate and

other property owned by each organization that is a party to the

merger is allocated to and vested, subject to any existing liens

or other encumbrances on the property, in one or more of the

surviving or new organizations as provided in the plan of merger

without:

(A) reversion or impairment;

(B) any further act or deed; or

(3) all liabilities and obligations of each organization that is

a party to the merger are allocated to one or more of the

surviving or new organizations in the manner provided by the plan

of merger;

(4) each surviving or new domestic organization to which a

liability or obligation is allocated under the plan of merger is

the primary obligor for the liability or obligation, and, except

as otherwise provided by the plan of merger or by law or

contract, no other party to the merger, other than a surviving

domestic entity or non-code organization liable or otherwise

obligated at the time of the merger, and no other new domestic

entity or non-code organization created under the plan of merger

is liable for the debt or other obligation;

(5) any proceeding pending by or against any domestic entity or

by or against any non-code organization that is a party to the

merger may be continued as if the merger did not occur, or the

surviving or new domestic entity or entities or the surviving or

new non-code organization or non-code organizations to which the

liability, obligation, asset, or right associated with that

proceeding is allocated to and vested in under the plan of merger

may be substituted in the proceeding;

(6) the governing documents of each surviving domestic entity

are amended to the extent provided by the plan of merger;

(7) each new filing entity whose certificate of formation is

included in the plan of merger under this chapter, on meeting any

additional requirements, if any, of this code for its formation,

is formed as a domestic entity under this code as provided by the

plan of merger;

(8) the ownership or membership interests of each organization

that is a party to the merger and that are to be converted or

exchanged, in whole or part, into ownership or membership

interests, obligations, rights to purchase securities, or other

securities of one or more of the surviving or new organizations,

into cash or other property, including ownership or membership

interests, obligations, rights to purchase securities, or other

securities of any organization, or into any combination of these

are converted and exchanged and the former owners or members who

held ownership or membership interests of each domestic entity

that is a party to the merger are entitled only to the rights

provided by the plan of merger or, if applicable, any rights to

receive the fair value for the ownership interests provided under

Subchapter H; and

(9) notwithstanding Subdivision (4), the surviving or new

organization named in the plan of merger as primarily obligated

to pay the fair value of an ownership or membership interest

under Section 10.003(2) is the primary obligor for that payment

and all other surviving or new organizations are secondarily

liable for that payment.

(b) If the plan of merger does not provide for the allocation

and vesting of the right, title, and interest in any particular

real estate or other property or for the allocation of any

liability or obligation of any party to the merger, the

unallocated property is owned in undivided interest by, or the

liability or obligation is the joint and several liability and

obligation of, each of the surviving and new organizations, pro

rata to the total number of surviving and new organizations

resulting from the merger.

entity, the surviving organization is considered to have:

(1) appointed the secretary of state in this state as the

organization's agent for service of process in a proceeding to

enforce any obligation of a domestic entity that is a party to

the merger; and

(2) agreed to promptly pay to the dissenting owners or members

of each domestic entity that is a party to the merger who have

the right of dissent and appraisal under this code the amount, if

any, to which they are entitled under this code.

(d) If the surviving organization in a merger is not a domestic

entity, the organization shall register to transact business in

this state if the entity is required to register for that purpose

by another provision of this code.

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

Amended by:

Acts 2005, 79th Leg., Ch.

64, Sec. 35, eff. January 1, 2006.

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

688, Sec. 50, eff. September 1, 2007.

Sec. 10.009. SPECIAL PROVISIONS APPLYING TO PARTNERSHIP MERGERS.

(a) A partner of a domestic partnership that is a party to a

merger does not become liable as a result of the merger for the

liability or obligation of another person that is a party to the

merger unless the partner consents to becoming personally liable

by action taken in connection with the specific plan of merger

approved by the partner.

(b) A partner of a domestic partnership that is a party to a

merger who remains in or enters a partnership is treated as an

incoming partner in the partnership when the merger takes effect

for purposes of determining the partner's liability for a debt or

obligation of the partnership or partnerships that are parties to

the merger or to be created in the merger and in which the

partner was not a partner.

the merger, no longer exists, a former partner who becomes an

owner or member of the surviving organization may, until the

first anniversary of the effective date of the merger, bind the

surviving organization to a transaction for which the owner or

member no longer has authority to bind the organization if the

transaction is one in which the actions by the owner or member as

a partner would have bound the partnership before the effective

date of the merger, and the other party to the transaction:

(1) does not have actual or constructive notice of the merger;

(2) had done business with the terminated partnership within one

year preceding the effective date of the merger; and

(3) reasonably believes that the partner who was previously an

owner or member of the partnership that was merged into the

surviving organization and is now an owner or member of the

surviving organization has the authority to bind the surviving

organization to the transaction at the time of the transaction.

(d) If a partnership is formed under a plan of merger, the

existence of the partnership as a partnership begins when the

merger takes effect, and the persons to be partners become

partners at that time.

(e) A partner in a domestic partnership that is a party to the

merger but does not survive shall be treated as a partner who

withdrew from the nonsurviving domestic partnership as of the

effective date of the merger.

(f) The partnership agreement of each domestic partnership that

is a party to the merger must contain provisions that authorize

the merger provided for in the plan of merger adopted by the

partnership.

(g) Each domestic partnership that is a party to the merger must

approve the plan of merger in the manner prescribed in its

partnership agreement.

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

Sec. 10.010. SPECIAL PROVISIONS APPLYING TO NONPROFIT

CORPORATION MERGERS. (a) A domestic nonprofit corporation may

not merge into another entity if the domestic nonprofit

corporation would, because of the merger, lose or impair its

charitable status.

(b) One or more domestic or foreign for-profit entities or

non-code organizations may merge into one or more domestic

nonprofit corporations that continue as the surviving entity or

entities.

foreign for-profit entity if the domestic nonprofit corporation

does not continue as the surviving entity.

(d) One or more domestic nonprofit corporations and non-code

organizations may merge into one or more foreign nonprofit

entities that continue as the surviving entity or entities.

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

SUBCHAPTER B. EXCHANGES OF INTERESTS

Sec. 10.051. INTEREST EXCHANGES. (a) For the purpose of

acquiring all of the outstanding ownership or membership

interests of one or more classes or series of one or more

domestic entities, one or more domestic entities or non-code

organizations may adopt a plan of exchange.

(b) To make an interest exchange under this section:

(1) the governing authority of each domestic entity the

ownership or membership interests of which are to be acquired in

the interest exchange must act on a plan of exchange and, if

otherwise required by this code, the owners or members of the

domestic entity must approve the plan of exchange in the manner

provided by this code; and

(2) each acquiring domestic entity must take all action that may

otherwise be required by this code and its governing documents to

effect the exchange.

the notice required by Section 10.355.

(d) If a non-code organization is to acquire ownership or

membership interests in the exchange, each non-code organization

must take all action that is required under the laws of the

organization's jurisdiction of formation and the organization's

governing documents to effect the exchange.

(e) If one or more non-code organizations as part of the plan of

exchange are to issue ownership or membership interests, the

issuance of the ownership or membership interests must be

permitted by the laws under which the non-code organizations are

incorporated or organized or not inconsistent with those laws.

(f) A plan of exchange may not be effected if any owner or

member of a domestic entity that is a party to the interest

exchange will, as a result of the interest exchange, become

personally liable, without the consent of the owner or member,

for the liabilities or obligations of any other person or

organization.

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

Sec. 10.052. PLAN OF EXCHANGE: REQUIRED PROVISIONS. (a) A plan

of exchange must include:

(1) the name of each domestic entity the ownership or membership

interests of which are to be acquired;

(2) the name of each acquiring organization;

(3) if there is more than one acquiring organization, the

ownership or membership interests to be acquired by each

organization;

(4) the terms and conditions of the exchange; and

(5) the manner and basis of exchanging the ownership or

membership interests to be acquired for:

(A) ownership or membership interests, obligations, rights to

purchase securities, or other securities of one or more of the

acquiring organizations that is a party to the plan of exchange;

(B) cash;

obligations, rights to purchase securities, or other securities

of any other person or entity; or

(D) any combination of those items.

(b) The manner and basis of exchanging an ownership or

membership interest of an owner or member that is exchanged in a

manner or basis different from any other owner or member having

ownership or membership interests of the same class or series

must be included in the plan of exchange in the same manner as

provided by Subsection (a)(5).

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

Sec. 10.053. PLAN OF EXCHANGE: PERMISSIVE PROVISIONS. A plan of

exchange may include any other provisions not required by Section

10.052 relating to the interest exchange.

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

Sec. 10.054. EFFECTIVENESS OF EXCHANGE. Except as otherwise

provided by Subchapter B, Chapter 4, an interest exchange takes

effect at the time provided in the plan of exchange or otherwise

agreed to by the parties, except that an interest exchange that

requires a filing under Subchapter D takes effect on the

acceptance of the filing of the certificate of exchange by the

secretary of state or county clerk, as appropriate.

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

Sec. 10.055. GENERAL EFFECT OF INTEREST EXCHANGE. When an

interest exchange takes effect:

(1) the ownership or membership interest of each acquired

organization is exchanged as provided in the plan of exchange,

and the former owners or members whose interests are exchanged

under the plan of exchange are entitled only to the rights

provided in the plan of exchange or, if applicable, a right to

receive the fair value for the ownership interests provided under

Subchapter H; and

(2) the acquiring organization has all rights, title, and

interests with respect to the ownership or membership interest to

be acquired by it subject to the provisions of the plan of

exchange.

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

Amended by:

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

688, Sec. 51, eff. September 1, 2007.

Sec. 10.056. SPECIAL PROVISIONS APPLYING TO PARTNERSHIPS. To

effect an interest exchange:

(1) the partnership agreement of each domestic partnership whose

partnership interests are to be acquired pursuant to the plan of

exchange must authorize the partnership interest exchange adopted

by the partnership;

(2) each domestic partnership whose partnership interests are to

be acquired under the plan of exchange must approve the plan of

exchange in the manner prescribed by its partnership agreement;

and

(3) each acquiring domestic partnership must take all actions

that may be required by its partnership agreement in order to

effect the exchange.

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

SUBCHAPTER C. CONVERSIONS

Sec. 10.101. CONVERSION OF DOMESTIC ENTITIES. (a) A domestic

entity may convert into a different type of domestic entity or a

non-code organization by adopting a plan of conversion.

(b) To effect a conversion, the converting entity must act on

and the owners or members of the domestic entity must approve a

plan of conversion in the manner prescribed by this code for the

approval of conversions by the domestic entity or, if not

prescribed by this code, in the same manner as prescribed by this

code for the adoption and approval of a plan of merger by the

domestic entity when the domestic entity does not survive the

merger.

the notice required by Section 10.355.

(d) A conversion may not take effect if the conversion is

prohibited by or inconsistent with the laws of the converted

entity's jurisdiction of formation, and the formation,

incorporation, or organization of the converted entity under the

plan of conversion must be effected in compliance with those laws

pursuant to the plan of conversion.

(e) At the time a conversion takes effect, each owner or member

of the converting entity, other than those who receive payment of

their ownership or membership interest under any applicable

provisions of this code relating to dissent and appraisal, has,

unless otherwise agreed to by that owner or member, an ownership

or membership interest in, and is the owner or member of, the

converted entity.

(f) A domestic entity may not convert under this section if an

owner or member of the domestic entity, as a result of the

conversion, becomes personally liable, without the consent of the

owner or member, for a liability or other obligation of the

converted entity.

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

Amended by:

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

688, Sec. 52, eff. September 1, 2007.

Sec. 10.102. CONVERSION OF NON-CODE ORGANIZATIONS. (a) A

non-code organization may convert into a domestic entity by

adopting a plan of conversion as provided by this section.

(b) To effect a conversion, the non-code organization must take

any action that may be required for a conversion under the laws

of the organization's jurisdiction of formation and the

organization's governing documents.

non-code organization is incorporated or organized or by its

governing documents, which may not be inconsistent with the laws

of the jurisdiction in which the non-code organization is

incorporated or organized.

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

Sec. 10.1025. CONVERSION AND CONTINUANCE. (a) A converting

entity may elect to continue its existence in its current

organizational form and jurisdiction of formation in connection

with the entity's:

(1) conversion under Section 10.101 as a domestic entity of one

organizational form into a non-United States entity of the same

organizational form; or

(2) conversion under Section 10.102 as a non-United States

entity of one organizational form into a domestic entity of the

same organizational form.

(b) The election permitted by Subsection (a) for the converting

entity to continue its existence in its current organizational

form and jurisdiction of formation must be:

(1) adopted and approved as part of the plan of conversion for

the converting entity as required by Section 10.101(b) or

10.102(b), as applicable; and

(2) permitted by, or not prohibited by and inconsistent with,

the laws of the applicable non-United States jurisdiction.

filing of the certificate of conversion if the converting entity

is a domestic filing entity that elects to continue its existence

in accordance with this section.

(d) Chapter 9 does not apply to a non-United States entity that

also exists as a domestic filing entity because of a conversion

and election to continue its existence in accordance with this

section.

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

84, Sec. 15, eff. September 1, 2009.

Sec. 10.103. PLAN OF CONVERSION: REQUIRED PROVISIONS. (a) A

plan of conversion must include:

(1) the name of the converting entity;

(2) the name of the converted entity;

(3) a statement that the converting entity is continuing its

existence in the organizational form of the converted entity;

(4) a statement of the type of entity that the converted entity

is to be and the converted entity's jurisdiction of formation;

(5) if Sections 10.1025 and 10.109 do not apply, the manner and

basis of converting the ownership or membership interests of the

converting entity into ownership or membership interests of the

converted entity;

(6) any certificate of formation required to be filed under this

code if the converted entity is a filing entity;

(7) the certificate of formation or similar organizational

document of the converted entity if the converted entity is not a

filing entity; and

(8) if Sections 10.1025 and 10.109 apply, a statement that the

converting entity is electing to continue its existence in its

current organizational form and jurisdiction of formation after

the conversion takes effect.

(b) An item required by Subsection (a)(6) or (7) may be included

in the plan of conversion by an attachment or exhibit to the

plan.

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

Amended by:

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

84, Sec. 16, eff. September 1, 2009.

Sec. 10.104. PLAN OF CONVERSION: PERMISSIVE PROVISIONS. A plan

of conversion may include other provisions relating to the

conversion that are not inconsistent with law.

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

Sec. 10.105. EFFECTIVENESS OF CONVERSION. Except as otherwise

provided by Subchapter B, Chapter 4, a conversion takes effect at

the time provided by the plan of conversion, except that a

conversion that requires a filing under Subchapter D takes effect

on the acceptance of the filing of the certificate of conversion

by the filing officer.

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

Sec. 10.106. GENERAL EFFECT OF CONVERSION. When a conversion

takes effect:

(1) the converting entity continues to exist without

interruption in the organizational form of the converted entity

rather than in the organizational form of the converting entity;

(2) all rights, title, and interests to all property owned by

the converting entity continues to be owned, subject to any

existing liens or other encumbrances on the property, by the

converted entity in the new organizational form without:

(A) reversion or impairment;

(B) further act or deed; or

(3) all liabilities and obligations of the converting entity

continue to be liabilities and obligations of the converted

entity in the new organizational form without impairment or

diminution because of the conversion;

(4) the rights of creditors or other parties with respect to or

against the previous owners or members of the converting entity

in their capacities as owners or members in existence when the

conversion takes effect continue to exist as to those liabilities

and obligations and may be enforced by the creditors and obligees

as if a conversion had not occurred;

(5) a proceeding pending by or against the converting entity or

by or against any of the converting entity's owners or members in

their capacities as owners or members may be continued by or

against the converted entity in the new organizational form and

by or against the previous owners or members without a need for

substituting a party;

(6) the ownership or membership interests of the converting

entity that are to be converted into ownership or membership

interests of the converted entity as provided in the plan of

conversion are converted as provided by the plan, and if the

converting entity is a domestic entity, the former owners or

members of the domestic entity are entitled only to the rights

provided in the plan of conversion or a right of dissent and

appraisal under this code;

(7) if, after the conversion takes effect, an owner or member of

the converted entity as an owner or member is liable for the

liabilities or obligations of the converted entity, the owner or

member is liable for the liabilities and obligations of the

converting entity that existed before the conversion took effect

only to the extent that the owner or member:

(A) agrees in writing to be liable for the liabilities or

obligations;

(B) was liable, before the conversion took effect, for the

liabilities or obligations; or

becomes liable under other applicable law for the existing

liabilities and obligations of the converted entity; and

(8) if the converted entity is a non-code organization, the

converted entity is considered to have:

(A) appointed the secretary of state in this state as its agent

for service of process in a proceeding to enforce any obligation

or the rights of dissenting owners or members of the converting

domestic entity; and

(B) agreed that the converted entity will promptly pay the

dissenting owners or members of the converting domestic entity

the amount, if any, to which they are entitled under this code.

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

Sec. 10.107. SPECIAL PROVISIONS APPLYING TO PARTNERSHIP

CONVERSIONS. (a) If a partnership is formed under a plan of

conversion under this code, the existence of the partnership as a

partnership begins when the conversion takes effect, and the

owners or members designated to become the partners under the

plan of conversion become the partners at that time.

(b) The partnership agreement of a domestic partnership that is

converting must contain provisions that authorize the conversion

provided for in the plan of conversion adopted by the

partnership.

plan of conversion in the manner provided in its partnership

agreement.

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

Amended by:

Acts 2005, 79th Leg., Ch.

64, Sec. 36, eff. January 1, 2006.

Sec. 10.108. SPECIAL PROVISIONS APPLYING TO NONPROFIT

CORPORATION CONVERSIONS. A domestic nonprofit corporation may

not convert into a for-profit entity.

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

Sec. 10.109. SPECIAL PROVISIONS APPLYING TO CONVERSION AND

CONTINUANCE. (a) This section applies only to a converting

entity that elects to continue its existence in accordance with

Section 10.1025.

(b) When the conversion of a converting entity to which this

section applies takes effect:

(1) notwithstanding Section 10.106(1), the converting entity

continues to exist both in its current organizational form and

jurisdiction of formation and, as the converted entity, in the

same organizational form in the new jurisdiction of formation;

(2) the converting entity and the converted entity, for purposes

of the laws of this state, constitute a single entity formed,

incorporated, created, or otherwise having come into being, as

applicable, and existing under the laws of this state and the

laws of the applicable non-United States jurisdiction, so long as

the entity continues to exist as a domestic entity under the laws

of this state following the conversion;

(3) if the converting entity is a domestic entity, this code and

the other laws of this state apply to the converted entity to the

same extent as the laws applied to the entity before the

conversion;

(4) if the converting entity is a non-United States entity, the

laws of the applicable non-United States jurisdiction apply to

the converted entity to the same extent as the laws applied to

the entity before the conversion;

(5) notwithstanding Section 10.106(2), all rights, title, and

interests in all property owned by the converting entity continue

to be owned by the converted entity, subject to any existing

liens or other encumbrances on the property, in both the

organizational form of the converting entity and the

organizational form of the converted entity without:

(A) reversion or impairment;

(B) further act or deed; or

(6) notwithstanding Section 10.106(3), all liabilities and

obligations of the converting entity remain the liabilities and

obligations of the converted entity in both the organizational

form of the converting entity and the organizational form of the

converted entity without impairment or diminution because of the

conversion.

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

84, Sec. 17, eff. September 1, 2009.

SUBCHAPTER D. CERTIFICATE OF MERGER, EXCHANGE, OR CONVERSION

Sec. 10.151. CERTIFICATE OF MERGER AND EXCHANGE. (a) After

approval of a plan of merger or a plan of exchange as provided by

this code, a certificate of merger, which may also include an

exchange, or a certificate of exchange, as applicable, must be

filed for a merger or interest exchange to become effective if:

(1) for a merger:

(A) any domestic entity that is a party to the merger is a

filing entity; or

(B) any domestic entity to be created under the plan of merger

is a filing entity; or

(2) for an exchange, an ownership or membership interest in any

filing entity is to be acquired in the interest exchange.

(b) If a certificate of merger or exchange is required to be

filed in connection with an interest exchange or a merger, other

than a merger under Section 10.006, the certificate must be

signed on behalf of each domestic entity and non-code

organization that is a party to the merger or exchange by an

officer or other authorized representative and must include:

(1) the plan of merger or exchange or a statement certifying:

(A) the name and organizational form of each domestic entity or

non-code organization that is a party to the merger or exchange;

(B) for a merger, the name and organizational form of each

domestic entity or non-code organization that is to be created by

the plan of merger;

or non-code organization named under Paragraph (A) or (B) is

incorporated or organized;

(D) for a merger, the amendments or changes to the certificate

of formation of each filing entity that is a party to the merger,

or if no amendments are desired to be effected by the merger, a

statement to that effect;

(E) for a merger, that the certificate of formation of each new

filing entity to be created under the plan of merger is being

filed with the certificate of merger;

(F) that a signed plan of merger or exchange is on file at the

principal place of business of each surviving, acquiring, or new

domestic entity or non-code organization, and the address of each

principal place of business; and

(G) that a copy of the plan of merger or exchange will be on

written request furnished without cost by each surviving,

acquiring, or new domestic entity or non-code organization to any

owner or member of any domestic entity that is a party to or

created by the plan of merger or exchange and, for a merger with

multiple surviving domestic entities or non-code organizations,

to any creditor or obligee of the parties to the merger at the

time of the merger if a liability or obligation is then

outstanding;

(2) if approval of the owners or members of any domestic entity

that was a party to the plan of merger or exchange is not

required by this code, a statement to that effect; and

(3) a statement that the plan of merger or exchange has been

approved as required by the laws of the jurisdiction of formation

of each organization that is a party to the merger or exchange

and by the governing documents of those organizations.

exchange if it contains the information required for a

certificate of exchange.

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

Amended by:

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

688, Sec. 53, eff. September 1, 2007.

Sec. 10.152. CERTIFICATE OF MERGER: SHORT FORM MERGER. (a) The

certificate of merger for a merger under Section 10.006 is

required to be signed only by an officer or other authorized

representative of the parent organization described by that

section.

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

merger must include:

(1) the name of the parent organization, the name of each

subsidiary organization that is a party to the merger, and the

jurisdiction of formation of each named organization;

(2) the number of outstanding ownership interests of each class

or series of each subsidiary organization and the number and

percentage of ownership interests of each class or series owned

by the parent organization;

(3) a copy of the resolution of merger adopted by the governing

authority of the parent organization authorizing the merger and

the date of the adoption of the resolution;

(4) a statement that the resolution has been approved as

required by the laws of the jurisdiction of formation of the

parent organization and by its governing documents; and

(5) if any surviving organization is not a domestic entity, the

address, including street number, if any, of its registered or

principal office in the organization's jurisdiction of formation.

the parent organization under Section 10.006(c), the certificate

of merger must include the information required by Section

10.151(b).

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

Sec. 10.153. FILING OF CERTIFICATE OF MERGER OR EXCHANGE. (a)

If a certificate of merger or exchange is required to be filed,

the certificate of merger or exchange must be filed in accordance

with Chapter 4. The certificate of formation of each filing

entity that is to be formed under a plan of merger must also be

filed with the certificate of merger in accordance with Chapter

4. Except as provided by this section, the certificate must be

filed with the secretary of state.

(b) If a domestic real estate investment trust is a party to the

merger or if an ownership interest in a domestic real estate

investment trust is to be acquired in the interest exchange, the

certificate of merger or exchange must be filed in accordance

with Chapter 4 with the county clerk of the county in which the

domestic real estate investment trust's principal place of

business in this state is located.

under the plan of merger, the certificate of formation of the

domestic real estate investment trust must also be filed with the

certificate of merger in accordance with Chapter 4 with the

county clerk of the county in which the domestic real estate

investment trust's principal place of business in this state is

located.

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

Sec. 10.154. CERTIFICATE OF CONVERSION. (a) After approval of

a plan of conversion as provided by this code, a certificate of

conversion must be filed for the conversion to become effective

if:

(1) any domestic entity that is a party to the conversion is a

filing entity; or

(2) any domestic entity to be created under the plan of

conversion is a filing entity.

(b) If a certificate of conversion is required to be filed in

connection with a conversion, the certificate must be signed on

behalf of the converting entity and must include:

(1) the plan of conversion or a statement certifying the

following:

(A) the name, organizational form, and jurisdiction of formation

of the converting entity;

(B) the name, organizational form, and jurisdiction of formation

of the converted entity;

place of business of the converting entity, and the address of

the principal place of business;

(D) that a signed plan of conversion will be on file after the

conversion at the principal place of business of the converted

entity, and the address of the principal place of business; and

(E) that a copy of the plan of conversion will be on written

request furnished without cost by the converting entity before

the conversion or by the converted entity after the conversion to

any owner or member of the converting entity or the converted

entity; and

(2) a statement that the plan of conversion has been approved as

required by the laws of the jurisdiction of formation and the

governing documents of the converting entity.

Subsections (a) and (b), if Sections 10.1025 and 10.109 apply to

the conversion, the certificate of conversion required by this

section must:

(1) be titled "Certificate of Conversion and Continuance"; and

(2) include a statement certifying that the converting entity is

electing to continue its existence in its current organizational

form and jurisdiction of formation.

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

Amended by:

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

688, Sec. 54, eff. September 1, 2007.

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

84, Sec. 18, eff. September 1, 2009.

Sec. 10.155. FILING OF CERTIFICATE OF CONVERSION. (a) If a

certificate of conversion is required to be filed, the

certificate of conversion must be filed in accordance with

Chapter 4. If the converted entity is a filing entity, the

certificate of formation of the filing entity must also be filed

with the certificate of conversion in accordance with Chapter 4.

Except as provided by this section, the certificate must be filed

with the secretary of state.

(b) If the converting entity is a domestic real estate

investment trust, the certificate of conversion must be filed in

accordance with Chapter 4 with the county clerk of the county in

which the converting entity's principal place of business in this

state is located.

trust, the certificate of formation of the converted entity must

also be filed with the certificate of conversion in accordance

with Chapter 4 with the county clerk of the county in which the

converted entity's principal place of business in this state is

located.

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

Sec. 10.156. ACCEPTANCE OF CERTIFICATE FOR FILING. The filing

officer may not accept a certificate of merger, exchange, or

conversion for filing if:

(1) the filing officer finds that the certificate of merger,

exchange, or conversion does not conform to law; or

(2) the required franchise taxes have not been paid or the

certificate of merger, exchange, or conversion does not provide

that one or more of the surviving, new, or acquiring

organizations or the converted entity is liable for the payment

of the required franchise taxes.

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

SUBCHAPTER E. ABANDONMENT OF MERGER, EXCHANGE, OR CONVERSION

Sec. 10.201. ABANDONMENT OF PLAN OF MERGER, EXCHANGE, OR

CONVERSION. After a merger, interest exchange, or conversion is

approved as provided by this code, and at any time before the

merger, interest exchange, or conversion takes effect, the plan

of merger, interest exchange, or conversion may be abandoned,

subject to any contractual rights, by any of the domestic

entities that are a party to the merger, interest exchange, or

conversion, without action by the owners or members, under the

procedures provided by the plan of merger, exchange, or

conversion or, if no abandonment procedures are provided, in the

manner determined by the governing authority.

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

Sec. 10.202. ABANDONMENT AFTER FILING. If a certificate of

merger, exchange, or conversion has been filed, the merger,

interest exchange, or conversion may be abandoned before its

effectiveness in accordance with Sections 4.057 and 10.201.

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

Amended by:

Acts 2005, 79th Leg., Ch.

64, Sec. 37, eff. January 1, 2006.

Sec. 10.203. ABANDONMENT IF NO FILING REQUIRED. (a) If no

filing is required by this chapter for the abandonment of a

merger, interest exchange, or conversion, the merger, interest

exchange, or conversion is abandoned:

(1) as provided by the procedures in the plan of merger,

exchange, or conversion; or

(2) if no abandonment procedures are provided by the plan, in

the manner determined by the governing authority of the

abandoning entity.

(b) A filing of a certificate of abandonment under Section 4.057

is not required for the abandonment of a merger, interest

exchange, or conversion if no filing is required under Subchapter

D to make the merger, interest exchange, or conversion effective.

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

64, Sec. 38, eff. January 1, 2006.

SUBCHAPTER F. PROPERTY TRANSFERS AND DISPOSITIONS

Sec. 10.251. GENERAL POWER OF DOMESTIC ENTITY TO SELL, LEASE, OR

CONVEY PROPERTY. (a) Subject to any approval required by this

code or the governing documents of the domestic entity, a

domestic entity may transfer and convey by sale, lease,

assignment, or another method an interest in property of the

entity, including real property. The transfer and conveyance may:

(1) be made with or without the goodwill of the entity;

(2) be made on any terms and conditions and for any

consideration, which may consist wholly or partly of money or

other property, including an ownership interest in a domestic

entity or non-code organization; and

(3) be evidenced by a deed, assignment, or other instrument of

transfer or conveyance, with or without the seal of the entity.

(b) Subject to any approval required by this code or the

governing documents of the domestic entity, a domestic entity may

grant a pledge, mortgage, deed of trust, or trust indenture with

respect to an interest in property of the entity, including real

property, with or without the seal of the entity.

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

Sec. 10.252. NO APPROVAL REQUIRED FOR CERTAIN DISPOSITIONS OF

PROPERTY. Except as otherwise provided by this code, the

governing documents of the domestic entity, or specific

limitations established by the governing authority, a sale,

lease, assignment, conveyance, pledge, mortgage, deed of trust,

trust indenture, or other transfer of an interest in real

property or other property made by a domestic entity does not

require the approval of the members or owners of the entity.

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

Sec. 10.253. RECORDING INSTRUMENT CONVEYING REAL PROPERTY OF

DOMESTIC ENTITY. (a) A deed or other instrument executed by a

domestic entity that conveys an interest in real property may be

recorded in the same manner and with the same effect as other

similar instruments if the instrument is signed and acknowledged

by:

(1) an officer, authorized attorney-in-fact, or other authorized

person of the entity; or

(2) in the case of a partnership or limited liability company, a

governing person of the entity.

(b) A deed or other instrument executed by a domestic entity

that conveys an interest in real property and that is recorded

and signed by an officer, authorized attorney-in-fact, or other

authorized person of the entity constitutes prima facie evidence

that the sale or conveyance that is the subject of the instrument

was authorized under this code and the governing documents of the

entity.

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

Sec. 10.254. DISPOSITION OF PROPERTY NOT A MERGER OR CONVERSION;

LIABILITY. (a) A disposition of all or part of the property of

a domestic entity, regardless of whether the disposition requires

the approval of the entity's owners or members, is not a merger

or conversion for any purpose.

(b) Except as otherwise expressly provided by another statute, a

person acquiring property described by this section may not be

held responsible or liable for a liability or obligation of the

transferring domestic entity that is not expressly assumed by the

person.

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

Amended by:

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

688, Sec. 55, eff. September 1, 2007.

SUBCHAPTER G. BANKRUPTCY REORGANIZATION

Sec. 10.301. REORGANIZATION UNDER BANKRUPTCY AND SIMILAR LAWS.

(a) A trustee appointed for a domestic entity that is being

reorganized under a federal statute, the designated officers of a

domestic entity being reorganized under a federal statute, or any

other individual designated by a court having jurisdiction of a

domestic entity being reorganized under a federal statute to act

on behalf of the domestic entity may, without action by or notice

to the domestic entity's governing authority, owners, or members,

in order to carry out a plan of reorganization ordered by a court

under the federal statute:

(1) amend or restate the domestic entity's certificate of

formation if the certificate of formation after amendment or

restatement contains only provisions required or permitted to be

contained in the certificate of formation;

(2) merge or exchange an interest with one or more domestic

entities or non-code organizations under a plan of merger or

exchange having any provision required or permitted by Sections

10.002, 10.003, 10.004, 10.005, 10.052, and 10.053;

(3) change the location of the domestic entity's registered

office, change its registered agent, and remove or appoint any

agent to receive service of process;

(4) alter, amend, or repeal the domestic entity's governing

documents other than filing instruments;

(5) constitute or reconstitute and classify or reclassify the

domestic entity's governing authority and name, constitute, or

appoint managerial officials in place of or in addition to all or

some of the managerial officials;

(6) sell, lease, exchange, or otherwise dispose of all, or

substantially all, of the domestic entity's property and assets;

(7) authorize and fix the terms, manner, and conditions of the

issuance of bonds, debentures, or other obligations, regardless

of whether the obligation is convertible into ownership interests

of any class or bearing warrants or other evidences of optional

rights to purchase or subscribe for any ownership interests of

any class;

(8) wind up and terminate the entity's existence; or

(9) effect a conversion.

(b) An action taken under Subsection (a)(4) or (5) takes effect

on entry of the order approving the plan of reorganization or on

another effective date as may be specified, without further

action of the domestic entity, as and to the extent provided by

the plan of reorganization or the order approving the plan of

reorganization.

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

Sec. 10.302. SIGNING OF DOCUMENTS. A trustee appointed for a

domestic entity being reorganized under a federal statute, the

designated officers of a domestic entity being reorganized under

a federal statute, or any other individual designated by a court

having jurisdiction of a domestic entity being reorganized under

a federal statute may sign on behalf of a domestic entity that is

being reorganized:

(1) a certificate of amendment or restated certificate of

formation containing:

(A) the name of the domestic entity;

(B) each amendment or the restatement approved by the court;

amendment or the restatement;

(D) the name of the court having jurisdiction, file name, and

case number of the reorganization case in which the order was

entered; and

(E) a statement that the court had jurisdiction of the case

under a federal statute;

(2) a certificate of merger or exchange containing:

(A) the name of the domestic entity;

(B) the part of the plan of reorganization that contains the

plan of merger or exchange approved by the court, which must

include the information required by Section 10.151(b) or 10.152,

as applicable, but which is not required to include the

resolution of the governing authority referred to in Section

10.152;

or consolidation;

(D) the name of the court having jurisdiction, file name, and

case number of the reorganization case in which the order or

decree was entered; and

(E) a statement that the court had jurisdiction of the case

under a federal statute;

(3) a certificate of termination containing:

(A) the name of the domestic entity;

(B) the information required by Sections 11.101(c)(1)-(4);

termination;

(D) a statement that the obligations of the domestic entity,

including debts and liabilities, have been paid or discharged as

provided by the plan of reorganization and the remaining property

and assets of the domestic entity have been distributed as

provided by the plan of reorganization;

(E) the name of the court having jurisdiction, file name, and

case number of the reorganization case in which the order or

decree was entered; and

(F) a statement that the court had jurisdiction of the case

under a federal statute;

(4) a statement of change of registered office or registered

agent, or both, containing:

(A) the name of the domestic entity;

(B) the information required by Section 5.202(b), as applicable,

but not the information included in the statement referred to in

Section 5.202(b)(6);

change of registered office or registered agent, or both;

(D) the name of the court having jurisdiction, file name, and

case number of the reorganization case in which the order or

decree was entered; and

(E) a statement that the court had jurisdiction of the case

under a federal statute; or

(5) a certificate of conversion containing:

(A) the name of the domestic entity;

(B) the part of the plan of reorganization that contains the

plan of conversion approved by the court, which must include the

information required by Section 10.103;

of conversion;

(D) the name of the court having jurisdiction, file name, and

case number of the reorganization case in which the order was

entered; and

(E) a statement that the court had jurisdiction of the case

under a federal statute.

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

Sec. 10.303. REORGANIZATION WITH OTHER ENTITIES. If a domestic

entity or non-code organization that is not being reorganized

under a federal statute merges or exchanges an interest with a

domestic entity that is being reorganized under a plan of

reorganization under a federal statute:

(1) Subchapters A, B, D, E, and H apply to the domestic entity

or non-code organization that is not being reorganized to the

same extent those subchapters would apply if the domestic entity

or non-code organization were merging or engaging in an interest

exchange with a domestic entity that is not being reorganized,

except as otherwise provided by the plan of reorganization

ordered by a court under the federal statute;

(2) Subchapter H applies to a subsidiary organization that is

not being reorganized to the same extent that subchapter would

apply if the subsidiary organization were merging with a parent

organization that is not being reorganized;

(3) on the receipt of all required authorization for all action

required by this code for each domestic entity that is a party to

the plan of merger or exchange that is not being reorganized and

all action by each domestic entity or non-code organization that

is a party to the plan of merger or exchange required by the laws

of the entity's or organization's jurisdiction of formation and

governing documents, a certificate of merger or exchange shall be

signed by each domestic entity or non-code organization that is a

party to the merger or exchange other than the domestic entity

that is being reorganized as provided by Section 10.151 and on

behalf of the domestic entity that is being reorganized by the

persons specified in Section 10.302;

(4) the certificate of merger or exchange must contain the

information required by Section 10.302(2);

(5) the certificate of merger or exchange must be filed in the

manner provided by Section 10.153; and

(6) on the acceptance for filing of the certificate of merger or

exchange in accordance with Subchapter D, the merger or interest

exchange, when effective, has the same effect as if it had been

adopted by unanimous action of the governing authority and owners

or members of the domestic entity being reorganized, and the

effectiveness of the merger or interest exchange is determined as

provided by Section 10.007 or 10.054.

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

Sec. 10.304. RIGHT OF DISSENT AND APPRAISAL EXCLUDED. An owner

or member of a domestic entity subject to dissenters' rights

being reorganized under a federal statute does not have a right

to dissent and appraisal under this code except as provided by

the plan of reorganization.

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

Sec. 10.305. AFTER FINAL DECREE. This subchapter does not apply

after the entry of a final decree in a reorganization case under

a federal statute even though the court that renders the decree

may retain jurisdiction of the case for limited purposes

unrelated to consummation of the plan of reorganization.

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

Sec. 10.306. CHAPTER CUMULATIVE OF OTHER CHANGES. This chapter

does not preclude other changes in a domestic entity or its

ownership or membership interests or securities by a plan of

reorganization ordered by a court under a federal statute.

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

SUBCHAPTER H. RIGHTS OF DISSENTING OWNERS

Sec. 10.351. APPLICABILITY OF SUBCHAPTER. (a) This subchapter

does not apply to a fundamental business transaction of a

domestic entity if, immediately before the effective date of the

fundamental business transaction, all of the ownership interests

of the entity otherwise entitled to rights to dissent and

appraisal under this code are held by one owner or only by the

owners who approved the fundamental business transaction.

(b) This subchapter applies only to a "domestic entity subject

to dissenters' rights," as defined in Section 1.002. That term

includes a domestic for-profit corporation, professional

corporation, professional association, and real estate investment

trust. Except as provided in Subsection (c), that term does not

include a partnership or limited liability company.

liability company may provide that its owners are entitled to the

rights of dissent and appraisal provided by this subchapter,

subject to any modification to those rights as provided by the

entity's governing documents.

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

Amended by:

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

688, Sec. 56, eff. September 1, 2007.

Sec. 10.352. DEFINITIONS. In this subchapter:

(1) "Dissenting owner" means an owner of an ownership interest

in a domestic entity subject to dissenters' rights who:

(A) provides notice under Section 10.356; and

(B) complies with the requirements for perfecting that owner's

right to dissent under this subchapter.

(2) "Responsible organization" means:

(A) the organization responsible for:

(i) the provision of notices under this subchapter; and

(ii) the primary obligation of paying the fair value for an

ownership interest held by a dissenting owner;

(B) with respect to a merger or conversion:

(i) for matters occurring before the merger or conversion, the

organization that is merging or converting; and

(ii) for matters occurring after the merger or conversion, the

surviving or new organization that is primarily obligated for the

payment of the fair value of the dissenting owner's ownership

interest in the merger or conversion;

ownership interests of which are being acquired in the interest

exchange; and

(D) with respect to the sale of all or substantially all of the

assets of an organization, the organization the assets of which

are to be transferred by sale or in another manner.

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

Sec. 10.353. FORM AND VALIDITY OF NOTICE. (a) Notice required

under this subchapter:

(1) must be in writing; and

(2) may be mailed, hand-delivered, or delivered by courier or

electronic transmission.

(b) Failure to provide notice as required by this subchapter

does not invalidate any action taken.

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

Sec. 10.354. RIGHTS OF DISSENT AND APPRAISAL. (a) Subject to

Subsection (b), an owner of an ownership interest in a domestic

entity subject to dissenters' rights is entitled to:

(1) dissent from:

(A) a plan of merger to which the domestic entity is a party if

owner approval is required by this code and the owner owns in the

domestic entity an ownership interest that was entitled to vote

on the plan of merger;

(B) a sale of all or substantially all of the assets of the

domestic entity if owner approval is required by this code and

the owner owns in the domestic entity an ownership interest that

was entitled to vote on the sale;

owner is to be acquired;

(D) a plan of conversion in which the domestic entity is the

converting entity if owner approval is required by this code and

the owner owns in the domestic entity an ownership interest that

was entitled to vote on the plan of conversion; or

(E) a merger effected under Section 10.006 in which:

(i) the owner is entitled to vote on the merger; or

(ii) the ownership interest of the owner is converted or

exchanged; and

(2) subject to compliance with the procedures set forth in this

subchapter, obtain the fair value of that ownership interest

through an appraisal.

(b) Notwithstanding Subsection (a), subject to Subsection (c),

an owner may not dissent from a plan of merger or conversion in

which there is a single surviving or new domestic entity or

non-code organization, or from a plan of exchange, if:

(1) the ownership interest, or a depository receipt in respect

of the ownership interest, held by the owner is part of a class

or series of ownership interests, or depository receipts in

respect of ownership interests, that are, on the record date set

for purposes of determining which owners are entitled to vote on

the plan of merger, conversion, or exchange, as appropriate:

(A) listed on a national securities exchange or a similar

system;

(B) listed on the Nasdaq Stock Market or a successor quotation

system;

quotation system by the National Association of Securities

Dealers, Inc., or a successor system; or

(D) held of record by at least 2,000 owners;

(2) the owner is not required by the terms of the plan of

merger, conversion, or exchange, as appropriate, to accept for

the owner's ownership interest any consideration that is

different from the consideration to be provided to any other

holder of an ownership interest of the same class or series as

the ownership interest held by the owner, other than cash instead

of fractional shares or interests the owner would otherwise be

entitled to receive; and

(3) the owner is not required by the terms of the plan of

merger, conversion, or exchange, as appropriate, to accept for

the owner's ownership interest any consideration other than:

(A) ownership interests, or depository receipts in respect of

ownership interests, of a domestic entity or non-code

organization of the same general organizational type that,

immediately after the effective date of the merger, conversion,

or exchange, as appropriate, will be part of a class or series of

ownership interests, or depository receipts in respect of

ownership interests, that are:

(i) listed on a national securities exchange or authorized for

listing on the exchange on official notice of issuance;

(ii) approved for quotation as a national market security on an

interdealer quotation system by the National Association of

Securities Dealers, Inc., or a successor entity; or

(iii) held of record by at least 2,000 owners;

(B) cash instead of fractional ownership interests the owner

would otherwise be entitled to receive; or

described by Paragraphs (A) and (B).

a subsidiary with respect to a merger under Section 10.006.

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

Amended by:

Acts 2005, 79th Leg., Ch.

64, Sec. 39, eff. January 1, 2006.

Sec. 10.355. NOTICE OF RIGHT OF DISSENT AND APPRAISAL. (a) A

domestic entity subject to dissenters' rights that takes or

proposes to take an action regarding which an owner has a right

to dissent and obtain an appraisal under Section 10.354 shall

notify each affected owner of the owner's rights under that

section if:

(1) the action or proposed action is submitted to a vote of the

owners at a meeting; or

(2) approval of the action or proposed action is obtained by

written consent of the owners instead of being submitted to a

vote of the owners.

(b) If a parent organization effects a merger under Section

10.006 and a subsidiary organization that is a party to the

merger is a domestic entity subject to dissenters' rights, the

responsible organization shall notify the owners of that

subsidiary organization who have a right to dissent to the merger

under Section 10.354 of their rights under this subchapter not

later than the 10th day after the effective date of the merger.

The notice must also include a copy of the certificate of merger

and a statement that the merger has become effective.

must:

(1) be accompanied by a copy of this subchapter; and

(2) advise the owner of the location of the responsible

organization's principal executive offices to which a notice

required under Section 10.356(b)(2) may be provided.

(d) In addition to the requirements prescribed by Subsection

(c), a notice required to be provided under Subsection (a)(1)

must accompany the notice of the meeting to consider the action,

and a notice required under Subsection (a)(2) must be provided

to:

(1) each owner who consents in writing to the action before the

owner delivers the written consent; and

(2) each owner who is entitled to vote on the action and does

not consent in writing to the action before the 11th day after

the date the action takes effect.

(e) Not later than the 10th day after the date an action

described by Subsection (a)(1) takes effect, the responsible

organization shall give notice that the action has been effected

to each owner who voted against the action and sent notice under

Section 10.356(b)(2).

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

Sec. 10.356. PROCEDURE FOR DISSENT BY OWNERS AS TO ACTIONS;

PERFECTION OF RIGHT OF DISSENT AND APPRAISAL. (a) An owner of

an ownership interest of a domestic entity subject to dissenters'

rights who has the right to dissent and appraisal from any of the

actions referred to in Section 10.354 may exercise that right to

dissent and appraisal only by complying with the procedures

specified in this subchapter. An owner's right of dissent and

appraisal under Section 10.354 may be exercised by an owner only

with respect to an ownership interest that is not voted in favor

of the action.

(b) To perfect the owner's rights of dissent and appraisal under

Section 10.354, an owner:

(1) with respect to the ownership interest for which the rights

of dissent and appraisal are sought:

(A) must vote against the action if the owner is entitled to

vote on the action and the action is approved at a meeting of the

owners; and

(B) may not consent to the action if the action is approved by

written consent; and

(2) must give to the responsible organization a notice

dissenting to the action that:

(A) is addressed to the president and secretary of the

responsible organization;

(B) demands payment of the fair value of the ownership interests

for which the rights of dissent and appraisal are sought;

a notice relating to the dissent and appraisal procedures under

this subchapter may be sent;

(D) states the number and class of the ownership interests of

the domestic entity owned by the owner and the fair value of the

ownership interests as estimated by the owner; and

(E) is delivered to the responsible organization at its

principal executive offices at the following time:

(i) before the action is considered for approval, if the action

is to be submitted to a vote of the owners at a meeting;

(ii) not later than the 20th day after the date the responsible

organization sends to the owner a notice that the action was

approved by the requisite vote of the owners, if the action is to

be undertaken on the written consent of the owners; or

(iii) not later than the 20th day after the date the responsible

organization sends to the owner a notice that the merger was

effected, if the action is a merger effected under Section

10.006.

required by Subsection (b)(2)(E) is bound by the action and is

not entitled to exercise the rights of dissent and appraisal

under Section 10.354.

(d) Not later than the 20th day after the date an owner makes a

demand under this section, the owner must submit to the

responsible organization any certificates representing the

ownership interest to which the demand relates for purposes of

making a notation on the certificates that a demand for the

payment of the fair value of an ownership interest has been made

under this section. An owner's failure to submit the certificates

within the required period has the effect of terminating, at the

option of the responsible organization, the owner's rights to

dissent and appraisal under Section 10.354 unless a court, for

good cause shown, directs otherwise.

(e) If a domestic entity and responsible organization satisfy

the requirements of this subchapter relating to the rights of

owners of ownership interests in the entity to dissent to an

action and seek appraisal of those ownership interests, an owner

of an ownership interest who fails to perfect that owner's right

of dissent in accordance with this subchapter may not bring suit

to recover the value of the ownership interest or money damages

relating to the action.

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

Sec. 10.357. WITHDRAWAL OF DEMAND FOR FAIR VALUE OF OWNERSHIP

INTEREST. (a) An owner may withdraw a demand for the payment of

the fair value of an ownership interest made under Section 10.356

before:

(1) payment for the ownership interest has been made under

Sections 10.358 and 10.361; or

(2) a petition has been filed under Section 10.361.

(b) Unless the responsible organization consents to the

withdrawal of the demand, an owner may not withdraw a demand for

payment under Subsection (a) after either of the events specified

in Subsections (a)(1) and (2).

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

Sec. 10.358. RESPONSE BY ORGANIZATION TO NOTICE OF DISSENT AND

DEMAND FOR FAIR VALUE BY DISSENTING OWNER. (a) Not later than

the 20th day after the date a responsible organization receives a

demand for payment made by a dissenting owner in accordance with

Section 10.356, the responsible organization shall respond to the

dissenting owner in writing by:

(1) accepting the amount claimed in the demand as the fair value

of the ownership interests specified in the notice; or

(2) rejecting the demand and including in the response the

requirements prescribed by Subsection (c).

(b) If the responsible organization accepts the amount claimed

in the demand, the responsible organization shall pay the amount

not later than the 90th day after the date the action that is the

subject of the demand was effected if the owner delivers to the

responsible organization:

(1) endorsed certificates representing the ownership interests

if the ownership interests are certificated; or

(2) signed assignments of the ownership interests if the

ownership interests are uncertificated.

in the demand, the responsible organization shall provide to the

owner:

(1) an estimate by the responsible organization of the fair

value of the ownership interests; and

(2) an offer to pay the amount of the estimate provided under

Subdivision (1).

(d) An offer made under Subsection (c)(2) must remain open for a

period of at least 60 days from the date the offer is first

delivered to the dissenting owner.

(e) If a dissenting owner accepts an offer made by a responsible

organization under Subsection (c)(2) or if a dissenting owner and

a responsible organization reach an agreement on the fair value

of the ownership interests, the responsible organization shall

pay the agreed amount not later than the 60th day after the date

the offer is accepted or the agreement is reached, as

appropriate, if the dissenting owner delivers to the responsible

organization:

(1) endorsed certificates representing the ownership interests

if the ownership interests are certificated; or

(2) signed assignments of the ownership interests if the

ownership interests are uncertificated.

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

Sec. 10.359. RECORD OF DEMAND FOR FAIR VALUE OF OWNERSHIP

INTEREST. (a) A responsible organization shall note in the

organization's ownership interest records maintained under

Section 3.151 the receipt of a demand for payment from any

dissenting owner made under Section 10.356.

(b) If an ownership interest that is the subject of a demand for

payment made under Section 10.356 is transferred, a new

certificate representing that ownership interest must contain:

(1) a reference to the demand; and

(2) the name of the original dissenting owner of the ownership

interest.

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

Sec. 10.360. RIGHTS OF TRANSFEREE OF CERTAIN OWNERSHIP INTEREST.

A transferee of an ownership interest that is the subject of a

demand for payment made under Section 10.356 does not acquire

additional rights with respect to the responsible organization

following the transfer. The transferee has only the rights the

original dissenting owner had with respect to the responsible

organization after making the demand.

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

Sec. 10.361. PROCEEDING TO DETERMINE FAIR VALUE OF OWNERSHIP

INTEREST AND OWNERS ENTITLED TO PAYMENT; APPOINTMENT OF

APPRAISERS. (a) If a responsible organization rejects the

amount demanded by a dissenting owner under Section 10.358 and

the dissenting owner and responsible organization are unable to

reach an agreement relating to the fair value of the ownership

interests within the period prescribed by Section 10.358(d), the

dissenting owner or responsible organization may file a petition

requesting a finding and determination of the fair value of the

owner's ownership interests in a court in:

(1) the county in which the organization's principal office is

located in this state; or

(2) the county in which the organization's registered office is

located in this state, if the organization does not have a

business office in this state.

(b) A petition described by Subsection (a) must be filed not

later than the 60th day after the expiration of the period

required by Section 10.358(d).

(a), service of a copy of the petition shall be made to the

responsible organization. Not later than the 10th day after the

date a responsible organization receives service under this

subsection, the responsible organization shall file with the

clerk of the court in which the petition was filed a list

containing the names and addresses of each owner of the

organization who has demanded payment for ownership interests

under Section 10.356 and with whom agreement as to the value of

the ownership interests has not been reached with the responsible

organization. If the responsible organization files a petition

under Subsection (a), the petition must be accompanied by this

list.

(d) The clerk of the court in which a petition is filed under

this section shall provide by registered mail notice of the time

and place set for the hearing to:

(1) the responsible organization; and

(2) each owner named on the list described by Subsection (c) at

the address shown for the owner on the list.

(e) The court shall:

(1) determine which owners have:

(A) perfected their rights by complying with this subchapter;

and

(B) become subsequently entitled to receive payment for the fair

value of their ownership interests; and

(2) appoint one or more qualified appraisers to determine the

fair value of the ownership interests of the owners described by

Subdivision (1).

(f) The court shall approve the form of a notice required to be

provided under this section. The judgment of the court is final

and binding on the responsible organization, any other

organization obligated to make payment under this subchapter for

an ownership interest, and each owner who is notified as required

by this section.

(g) The beneficial owner of an ownership interest subject to

dissenters' rights held in a voting trust or by a nominee on the

beneficial owner's behalf may file a petition described by

Subsection (a) if no agreement between the dissenting owner of

the ownership interest and the responsible organization has been

reached within the period prescribed by Section 10.358(d). When

the beneficial owner files a petition described by Subsection

(a):

(1) the beneficial owner shall at that time be considered, for

purposes of this subchapter, the owner, the dissenting owner, and

the holder of the ownership interest subject to the petition; and

(2) the dissenting owner who demanded payment under Section

10.356 has no further rights regarding the ownership interest

subject to the petition.

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

Amended by:

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

84, Sec. 19, eff. September 1, 2009.

Sec. 10.362. COMPUTATION AND DETERMINATION OF FAIR VALUE OF

OWNERSHIP INTEREST. (a) For purposes of this subchapter, the

fair value of an ownership interest of a domestic entity subject

to dissenters' rights is the value of the ownership interest on

the date preceding the date of the action that is the subject of

the appraisal. Any appreciation or depreciation in the value of

the ownership interest occurring in anticipation of the proposed

action or as a result of the action must be specifically excluded

from the computation of the fair value of the ownership interest.

(b) In computing the fair value of an ownership interest under

this subchapter, consideration must be given to the value of the

domestic entity as a going concern without including in the

computation of value any control premium, any minority ownership

discount, or any discount for lack of marketability. If the

domestic entity has different classes or series of ownership

interests, the relative rights and preferences of and limitations

placed on the class or series of ownership interests, other than

relative voting rights, held by the dissenting owner must be

taken into account in the computation of value.

made for purposes of this subchapter may not be used for purposes

of making a determination of the fair value of that ownership

interest for another purpose or of the fair value of another

ownership interest, including for purposes of determining any

minority or liquidity discount that might apply to a sale of an

ownership interest.

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

Amended by:

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

688, Sec. 57, eff. September 1, 2007.

Sec. 10.363. POWERS AND DUTIES OF APPRAISER; APPRAISAL

PROCEDURES. (a) An appraiser appointed under Section 10.361

has the power and authority that:

(1) is granted by the court in the order appointing the

appraiser; and

(2) may be conferred by a court to a master in chancery as

provided by Rule 171, Texas Rules of Civil Procedure.

(b) The appraiser shall:

(1) determine the fair value of an ownership interest of an

owner adjudged by the court to be entitled to payment for the

ownership interest; and

(2) file with the court a report of that determination.

of a responsible organization and may conduct investigations as

the appraiser considers appropriate. A dissenting owner or

responsible organization may submit to an appraiser evidence or

other information relevant to the determination of the fair value

of the ownership interest required by Subsection (b)(1).

(d) The clerk of the court appointing the appraiser shall

provide notice of the filing of the report under Subsection (b)

to each dissenting owner named in the list filed under Section

10.361 and the responsible organization.

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

Sec. 10.364. OBJECTION TO APPRAISAL; HEARING. (a) A dissenting

owner or responsible organization may object, based on the law or

the facts, to all or part of an appraisal report containing the

fair value of an ownership interest determined under Section

10.363(b).

(b) If an objection to a report is raised under Subsection (a),

the court shall hold a hearing to determine the fair value of the

ownership interest that is the subject of the report. After the

hearing, the court shall require the responsible organization to

pay to the holders of the ownership interest the amount of the

determined value with interest, accruing from the 91st day after

the date the applicable action for which the owner elected to

dissent was effected until the date of the judgment.

provided for the accrual of prejudgment interest in civil cases.

(d) The responsible organization shall:

(1) immediately pay the amount of the judgment to a holder of an

uncertificated ownership interest; and

(2) pay the amount of the judgment to a holder of a certificated

ownership interest immediately after the certificate holder

surrenders to the responsible organization an endorsed

certificate representing the ownership interest.

(e) On payment of the judgment, the dissenting owner does not

have an interest in the:

(1) ownership interest for which the payment is made; or

(2) responsible organization with respect to that ownership

interest.

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

Sec. 10.365. COURT COSTS; COMPENSATION FOR APPRAISER. (a) An

appraiser appointed under Section 10.361 is entitled to a

reasonable fee payable from court costs.

(b) All court costs shall be allocated between the responsible

organization and the dissenting owners in the manner that the

court determines to be fair and equitable.

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

Sec. 10.366. STATUS OF OWNERSHIP INTEREST HELD OR FORMERLY HELD

BY DISSENTING OWNER. (a) An ownership interest of an

organization acquired by a responsible organization under this

subchapter:

(1) in the case of a merger, conversion, or interest exchange,

shall be held or disposed of as provided in the plan of merger,

conversion, or interest exchange; and

(2) in any other case, may be held or disposed of by the

responsible organization in the same manner as other ownership

interests acquired by the organization or held in its treasury.

(b) An owner who has demanded payment for the owner's ownership

interest under Section 10.356 is not entitled to vote or exercise

any other rights of an owner with respect to the ownership

interest except the right to:

(1) receive payment for the ownership interest under this

subchapter; and

(2) bring an appropriate action to obtain relief on the ground

that the action to which the demand relates would be or was

fraudulent.

under Section 10.356 may not be considered outstanding for

purposes of any subsequent vote or action.

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

Amended by:

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

84, Sec. 20, eff. September 1, 2009.

Sec. 10.367. RIGHTS OF OWNERS FOLLOWING TERMINATION OF RIGHT OF

DISSENT. (a) The rights of a dissenting owner terminate if:

(1) the owner withdraws the demand under Section 10.356;

(2) the owner's right of dissent is terminated under Section

10.356;

(3) a petition is not filed within the period required by

Section 10.361; or

(4) after a hearing held under Section 10.361, the court

adjudges that the owner is not entitled to elect to dissent from

an action under this subchapter.

(b) On termination of the right of dissent under this section:

(1) the dissenting owner and all persons claiming a right under

the owner are conclusively presumed to have approved and ratified

the action to which the owner dissented and are bound by that

action;

(2) the owner's right to be paid the fair value of the owner's

ownership interests ceases;

(3) the owner's status as an owner of those ownership interests

is restored, as if the owner's demand for payment of the fair

value of the ownership interests had not been made under Section

10.356, if the owner's ownership interests were not canceled,

converted, or exchanged as a result of the action or a subsequent

action;

(4) the dissenting owner is entitled to receive the same cash,

property, rights, and other consideration received by owners of

the same class and series of ownership interests held by the

owner, as if the owner's demand for payment of the fair value of

the ownership interests had not been made under Section 10.356,

if the owner's ownership interests were canceled, converted, or

exchanged as a result of the action or a subsequent action;

(5) any action of the domestic entity taken after the date of

the demand for payment by the owner under Section 10.356 will not

be considered ineffective or invalid because of the restoration

of the owner's ownership interests or the other rights or

entitlements of the owner under this subsection; and

(6) the dissenting owner is entitled to receive dividends or

other distributions made after the date of the owner's payment

demand under Section 10.356, to owners of the same class and

series of ownership interests held by the owner as if the demand

had not been made, subject to any change in or adjustment to the

ownership interests because of an action taken by the domestic

entity after the date of the demand.

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

Amended by:

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

688, Sec. 58, eff. September 1, 2007.

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

84, Sec. 21, eff. September 1, 2009.

Sec. 10.368. EXCLUSIVITY OF REMEDY OF DISSENT AND APPRAISAL. In

the absence of fraud in the transaction, any right of an owner of

an ownership interest to dissent from an action and obtain the

fair value of the ownership interest under this subchapter is the

exclusive remedy for recovery of:

(1) the value of the ownership interest; or

(2) money damages to the owner with respect to the action.

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

Amended by:

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

688, Sec. 59, eff. September 1, 2007.

SUBCHAPTER Z. MISCELLANEOUS PROVISIONS

Sec. 10.901. CREDITORS; ANTITRUST. This code does not affect,

nullify, or repeal the antitrust laws or abridge any right or

rights of any creditor under existing laws.

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

Sec. 10.902. NONEXCLUSIVITY. This chapter does not limit the

power of a domestic entity or non-code organization to acquire

all or part of the ownership or membership interests of one or

more classes or series of a domestic entity through a voluntary

exchange or otherwise.

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

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2009 Texas Code BUSINESS ORGANIZATIONS CODE TITLE 1. GENERAL PROVISIONS CHAPTER 10. MERGERS, INTEREST EXCHANGES, CONVERSIONS, AND SALES OF ASSETS

2009 Texas Code
BUSINESS ORGANIZATIONS CODE
TITLE 1. GENERAL PROVISIONS
CHAPTER 10. MERGERS, INTEREST EXCHANGES, CONVERSIONS, AND SALES OF ASSETS