Texas Business Organizations Code 21.552 – Standing to Bring Proceeding
(a) Subject to Subsection (b), a shareholder may not institute or maintain a derivative proceeding unless:
(1) the shareholder:
(A) was a shareholder of the corporation at the time of the act or omission complained of; or
(B) became a shareholder by operation of law originating from a person that was a shareholder at the time of the act or omission complained of; and
(2) the shareholder fairly and adequately represents the interests of the corporation in enforcing the right of the corporation.
(b) If the converted entity in a conversion is a corporation, a shareholder of that corporation may not institute or maintain a derivative proceeding based on an act or omission that occurred with respect to the converting entity before the date of the conversion unless:
(1) the shareholder was an equity owner of the converting entity at the time of the act or omission; and
(2) the shareholder fairly and adequately represents the interests of the corporation in enforcing the right of the corporation.
Terms Used In Texas Business Organizations Code 21.552
- Conversion: means :
(A) the continuance of a domestic entity as a non-code organization of any type;
(B) the continuance of a non-code organization as a domestic entity of any type;
(C) the continuance of a domestic entity of one type as a domestic entity of another type;
(D) the continuance of a domestic entity of one type as a foreign entity of the same type that may be treated as a domestication, continuance, or transfer transaction under the laws of the jurisdiction of formation of the foreign entity; or
(E) the continuance of a foreign entity of one type as a domestic entity of the same type that may be treated as a domestication, continuance, or transfer transaction under the laws of the jurisdiction of formation of the foreign entity. See Texas Business Organizations Code 1.002 - Converted entity: means an organization resulting from a conversion. See Texas Business Organizations Code 1.002
- Converting entity: means an organization as the organization existed before the organization's conversion. See Texas Business Organizations Code 1.002
- Corporation: A legal entity owned by the holders of shares of stock that have been issued, and that can own, receive, and transfer property, and carry on business in its own name.
- Corporation: means an entity governed as a corporation under Title 2 or 7. See Texas Business Organizations Code 1.002
- Entity: means a domestic entity or foreign entity. See Texas Business Organizations Code 1.002
- Law: means , unless the context requires otherwise, both statutory and common law. See Texas Business Organizations Code 1.002
- Person: means an individual or a corporation, partnership, limited liability company, business trust, trust, association, or other organization, estate, government or governmental subdivision or agency, or other legal entity, or a protected series or registered series of a domestic limited liability company or foreign entity. See Texas Business Organizations Code 1.002