By Byron Egan & Gavin Justiss
Several key bills amending the Texas Business Organizations Code (TBOC) and Texas Business & Commerce Code (TBCC) were passed in the 87th Texas Legislature, Regular Session (the “2021 Legislative Session”), which convened on January 12, 2021, and adjourned on May 31, 2021. This legislation is summarized below and became effective September 1, 2021, unless otherwise noted.
- B. 1203, Business Organization Code Omnibus Amendment Package. This bill constituted substantive and technical amendments to the TBOC relating to domestic entities, corporations, partnerships, and limited liability companies. In particular, it contains enhancements to the operating capabilities of business entities during an emergency or disaster, advances entity management functions, and provides procedural modifications meant to help streamline operations. See Sponsor’s Statement of Intent, SB 1203.
- B. 1523, LLC Registered Series. Effective June 1, 2022. This bill provides for the use of protected and registered series by limited liability companies. As of the 2021 Legislative Session, the TBOC now distinguishes between “registered series” and “protected series,” following the Delaware model. Adding the option of registering a series with the state permits a series to address the additional documentation that may be necessary in various kinds of transactions. At the same time, if a series does not need that kind of official state documentation and the original format works fine, the series may continue as a protected series. See Sponsor’s Statement of Intent, SB 1523.
- B. 1280, Securities Act Corrections. Effective January 1, 2022. This bill includes technical amendments to the recodified Texas Securities Act (TSA), deleting cross-references that confusingly could be construed to link TSA provisions that impose no duties on private actors to TSA private civil remedy provisions.
- B. 873, Business Purchase – Comptroller Tax Disclosure. This bill relates to disclosure by the comptroller to the purchaser of a business for the amount of tax due. In particular, the bill now indicates that the comptroller shall provide such information on an affidavit or in an “other form prescribed by the comptroller.”
- B. 3131, Certificates of Formation – Address. This bill adds an additional requirement for the certificate of formation for a new entity: the initial mailing address of the filing entity must now be known and included.
- B. 6, Pandemic Liability Shield. This bill addresses certain claims arising during a pandemic or disaster related to a pandemic.
- B. 1578, Recovery of Attorney’s Fees in Civil Cases. This bill amended § 38.001 of the Texas Civil Practice and Remedies Code to allow the recovery of attorney’s fees in contract disputes to an expanded definition of business organizations—including limited liability companies, partnerships, and nearly every other business entity. This development is significant because, prior to this change, Texas courts would construe § 38.001 strictly to allow attorney’s fees recovery against only individuals or corporations.
Byron F. Egan regularly handles business combinations of corporations, limited liability companies, and partnerships, including mergers and acquisitions, purchases and sales of stock, and other equity interests, and sales and exchanges of assets. He also handles the related entity governance and structure issues. In 2020, Byron published the third edition of EGAN ON ENTITIES: Corporations, Partnerships and Limited Liability Companies in Texas, a treatise on the Texas Business Organizations Code. Byron is the only attorney to have received the Burton Award for Legal Achievement four times and is consistently recognized among the top corporate and M&A lawyers in Texas by a number of publications. Also, he was honored in 2019 as Chair Emeritus of the State Bar of Texas’ Choice, Governance & Acquisition of Entities Course, which he co-founded in 2002.
Gavin Justiss is a research attorney in the Dallas office of Jackson Walker. He conducts in-depth legal and business development research for all practice groups, attorneys, paralegals and staff. He also analyzes complex federal and state legal issues, performs due diligence research on companies and individuals, and identifies and develops new legal research strategies and resources.
The opinions expressed are those of the authors and do not necessarily reflect the views of the firm, its clients, or any of its or their respective affiliates. This article is for informational purposes only and does not constitute legal advice. For additional assistance, please contact an attorney in Jackson Walker’s Corporate & Securities practice.