Texas Business Organizations Code 21.730 – Lack of Formalities; Treatment as Partnership
Terms Used In Texas Business Organizations Code 21.730
- Business: means a trade, occupation, profession, or other commercial activity. See Texas Business Organizations Code 1.002
- Close corporation: means a for-profit corporation that elects to be governed as a close corporation in accordance with Subchapter 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
The failure of a close corporation under this subchapter to observe a usual formality or requirement prescribed for an ordinary corporation by this chapter relating to the exercise of corporate powers or the management of a corporation’s business and affairs and the performance of a shareholders’ agreement that treats the close corporation as if the corporation were a partnership or in a manner that otherwise is appropriate only among partners may not:
(1) be a factor in determining whether to impose personal liability on the shareholders for the close corporation’s obligations by disregarding the separate entity of the close corporation or otherwise;
(2) be grounds for invalidating an otherwise valid shareholders’ agreement; or
(3) affect the status of the close corporation as a corporation under this chapter or other law.