Texas Business Organizations Code 21.561 – Payment of Expenses
(a) In this section, “expenses” means reasonable expenses incurred by a party in a derivative proceeding, including:
(1) attorney’s fees;
(2) costs in pursuing an investigation of the matter that was the subject of the derivative proceeding; or
(3) expenses for which the corporation may be required to indemnify another person.
(b) On termination of a derivative proceeding, the court may order:
(1) the corporation to pay expenses the plaintiff incurred in the proceeding if the court finds the proceeding has resulted in a substantial benefit to the corporation;
(2) the plaintiff to pay expenses the corporation or other defendant incurred in investigating and defending the proceeding if the court finds the proceeding has been instituted or maintained without reasonable cause or for an improper purpose; or
(3) a party to pay expenses incurred by another party relating to the filing of a pleading, motion, or other paper if the court finds the pleading, motion, or other paper:
(A) was not well grounded in fact after reasonable inquiry;
(B) was not warranted by existing law or a good faith argument for the application, extension, modification, or reversal of existing law; or
(C) was interposed for an improper purpose, such as to harass, cause unnecessary delay, or cause a needless increase in the cost of litigation.
Terms Used In Texas Business Organizations Code 21.561
- 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
- Defendant: In a civil suit, the person complained against; in a criminal case, the person accused of the crime.
- Law: means , unless the context requires otherwise, both statutory and common law. See Texas Business Organizations Code 1.002
- Litigation: A case, controversy, or lawsuit. Participants (plaintiffs and defendants) in lawsuits are called litigants.
- 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
- Plaintiff: The person who files the complaint in a civil lawsuit.