Senate Bill 1523 (Laws of 2021), effective June 1, 2022, amends provisions of the Business Organizations Code governing Series LLCs to permit the formation of registered series. A certificate of registered series must be filed with the Secretary of State to form a registered series. A series established in the company agreement without the filing of a certificate of registered series is now referred to as a protected series. The registered series’ name must contain the phrase “registered series” or abbreviation RS or R.S. The certificate of registered series may be amended by filing a certificate of amendment and terminated by filing a certificate of termination. A protected series may convert to a registered series by filing a certificate of conversion and certificate of registered series.
SB 1523 also amends Texas’ UCC law to amend the definition of “person” in Article 1 to include protected series or registered series of a for-profit entity and amends the definition of “registered organization” in Article 9 to include a series of a registered organization if the series is formed or organized under the laws of a single state and the statute of the state governing the series requires that the public organic record of the series be filed with the state.
House Bill 3131, effective January 1, 2022, amends the Business Organizations Code to provide that a certificate of formation of a filing entity filed on or after January 1, 2022 include an initial mailing address.
Senate Bill 938, effective January 1, 2022, (1) requires the Secretary of State to waive certain filing fees for a new veteran-owned business until the earlier of the fifth anniversary of the date on which the entity was formed or the date the entity ceases to qualify as a new veteran-owned business and (2) exempts from the franchise tax a taxable entity that qualifies as a new veteran-owned entity until the earlier of the fifth anniversary of the date on which the taxable entity begins doing business in the state or the date the entity ceases to qualify as a new veteran-owned business. A new veteran-owned business is defined as a new business in which each owner is a natural person who served in and was honorably discharged from a branch of the US armed forces and provides verification to the comptroller of the person’s service and discharge. A new business is an entity chartered or organized or otherwise formed in Texas and first begins doing business in the state on or after January 1, 2022. SB 938 also provides that the provisions granting the exemptions are repealed January 1, 2026.
House Bill 1578, effective September 1, 2021, amends the Civil Practice and Remedies Code to provide that an individual and an organization (as defined by Sec. 1.002 of the Business Organizations Code) may recover attorney's fees in certain civil cases. Sec. 1.002 includes a corporation, limited or general partnership, limited liability company, business trust, real estate investment trust, joint venture, joint stock company, cooperative, association, bank, insurance company, credit union, savings and loan association, or other organization. A quasi-governmental entity authorized to perform a function by state law, a religious organization, a charitable organization, and a charitable trust are not entitled to attorney fees under the amended section. Formerly, the section referred to an individual and a corporation as being able to recover attorney’s fees.
Senate Bill 1203, effective September 1, 2021, amends various sections of the Business Organizations Code on issues including the following: (1) definitions of general partner, limited partner, and member, (2) permitting the governing documents of a domestic entity to include a forum selection clause for internal entity claims, (3) providing that the certificate of formation of an LLC set forth whether it initially has or does not have managers, (4) contents of restatements of a certificate of formation, (5) emergency actions that can be taken during a period of emergency, (6) actions by written consent, (7) indemnification against negligence, (8) activities that do not constitute transacting business, (9) effect of reinstatement of a filing entity’s certificate of formation, (10) determination of a corporation’s solvency or an LLC or LP’s liabilities or value of assets, (11) shareholder meetings by remote communication, and (12) governing authority of an LLC.
House Bill 3794, effective September 1, 2021, amends the law relating to oil and gas liens by repealing Sec. 9.343 of the Texas Business and Commerce Code and enacting a new Chapter 67 of the Texas Property Code (titled “Oil and Gas Liens”). In addition to repealing Sec. 9.343 (a non-uniform UCC provision which provided for the perfection of a security interest in certain oil and gas proceeds without the filing of a financing statement), H.B. 3794 amends Texas’ UCC law to provide that Chapter 9 (Secured Transactions) does not apply to certain liens, assignments, sales, and transfers, including an oil and gas lien arising under new Chapter 67 of the Property Code. New Chapter 67 of the Property Code provides, in part, that to secure the obligations of a first purchaser to pay the sales price, each interest owner has an oil and gas lien to the extent of the interest owner's interest in oil and gas rights and that the oil and gas lien exists as part of and incident to the ownership of oil and gas rights. It also provides that an oil and gas lien of an interest owner is perfected automatically without the need to file a financing statement or any other type of documentation, and that, except for a permitted lien, an oil and gas lien takes priority over any other lien, whether arising by contract, law, equity, or otherwise, or any security interest.
The bill was enacted in response to In re First River Energy, LLC, 986 F.3d 914 (5th Cir. 2021) in which the U.S. Court of Appeals for the Fifth Circuit found that the UCC law of Delaware, the jurisdiction where the debtor was located, governed the priority of liens on the proceeds of oil. Delaware’s UCC law does not recognize the priority of a security interest perfected pursuant to a non-uniform UCC provision. Because Sec. 9.343 - a non-uniform UCC provision – established the Texas producers’ security interests the court found that a bank, which had perfected its interest in the oil proceeds by filing a financing statement with the Delaware Secretary of State, had priority over the Texas producers who did not file a financing statement and claimed priority under Sec. 9.343. In contrast, the court held that Oklahoma producers were entitled to a first-priority statutory lien in the proceeds because they perfected under the Oklahoma Lien Act and the Delaware UCC does not preempt statutory liens created by other states.
House Bill 4474, effective September 1, 2021, amends the law relating to the control of virtual currency and the rights of purchasers who obtain control of virtual currency for purposes of the Uniform Commercial Code. Among other things H.B. 4474 amends various sections of the Business & Commerce Code including the following: Sec. 9.102 (regarding the definition of "virtual currency"), Sec. 9.1071 (a new section regarding a secured party’s control over virtual currency), Secs. 9.310, 9.312, and 9.314 (regarding the perfection of a security interest in virtual currencies), and Sec. 9.331 (regarding the rights of certain holders or purchasers of a virtual currency). H.B. 4474 also adds a new chapter 12 (titled “Virtual Currency”), addressing among other things, the definition of virtual currency and the control of and rights in virtual currency.
Senate Bill 1971, effective September 1, 2019, amends the Texas Business Organizations Code provisions governing corporations regarding, among other things, voting agreements, two-step offer-mergers, ratification of defective acts, notices of redemption, shareholder lists, and nonprofit corporation directors.
Senate Bill 1969, effective September 1, 2019, amends the Texas Business Organizations Code to provide for the ratification of defective corporate acts of a nonprofit corporation.