Texas Business Organizations Code 21.954 – Certain Amendments, Mergers, Exchanges, and Conversions; Voter Approval Required
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(a) Notwithstanding any other provision of this chapter, a domestic for-profit corporation that is not a public benefit corporation may not, without the approval of the owners of two-thirds of the outstanding shares of the corporation entitled to vote on the matter, which must be a vote by class or series of shares if otherwise required by § 21.364, 21.457, or 21.458:
(1) amend the corporation’s certificate of formation to comply with the requirements of § 3.007(e) to elect for the corporation to be governed as a public benefit corporation;
(2) merge or effect an interest exchange with another entity if, as a result of the merger or exchange, the shares in the corporation would become, or be converted into or exchanged for the right to receive, shares or other equity interests in a domestic or foreign public benefit corporation or similar entity; or
(3) convert into a foreign public benefit corporation or similar entity.
(b) Subsection (a) does not apply until the corporation has issued and outstanding shares of the corporation’s capital stock.
Terms Used In Texas Business Organizations Code 21.954
- Appraisal: A determination of property value.
- Association: means an entity governed as an association under Title 6 or 7. See Texas Business Organizations Code 1.002
- Certificate of formation: means :
(A) the document required to be filed with the filing officer under Chapter 3 to form a filing entity; and
(B) if appropriate, a restated certificate of formation and all amendments of an original or restated certificate of formation. 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
- Domestic: means , with respect to an entity, that the entity is formed under this code or the entity's internal affairs are governed by this code. See Texas Business Organizations Code 1.002
- Domestic entity: means an organization formed under or the internal affairs of which are governed by this code. See Texas Business Organizations Code 1.002
- Entity: means a domestic entity or foreign entity. See Texas Business Organizations Code 1.002
- For-profit corporation: means a corporation governed as a for-profit corporation under Chapter 21. See Texas Business Organizations Code 1.002
- Foreign: means , with respect to an entity, that the entity is formed under, and the entity's internal affairs are governed by, the laws of a jurisdiction other than this state. See Texas Business Organizations Code 1.002
- Foreign entity: means an organization formed under, and the internal affairs of which are governed by, the laws of a jurisdiction other than this state. See Texas Business Organizations Code 1.002
- Interest exchange: means the acquisition of an ownership or membership interest in a domestic entity as provided by Subchapter Texas Business Organizations Code 1.002
- Merger: means :
(A) the division of a domestic entity into two or more new domestic entities or other organizations or into a surviving domestic entity and one or more new domestic or foreign entities or non-code organizations; or
(B) the combination of one or more domestic entities with one or more domestic entities or non-code organizations resulting in:
(i) one or more surviving domestic entities or non-code organizations;
(ii) the creation of one or more new domestic entities or non-code organizations; or
(iii) one or more surviving domestic entities or non-code organizations and the creation of one or more new domestic entities or non-code organizations. See Texas Business Organizations Code 1.002 - Nonprofit corporation: means a corporation governed as a nonprofit corporation under Chapter 22. See Texas Business Organizations Code 1.002
- Party to the merger: means a domestic entity or non-code organization that under a plan of merger is divided or combined by a merger. See Texas Business Organizations Code 1.002
(c) A domestic entity that is not a domestic for-profit corporation may not, without the approval of the owners of two-thirds of the outstanding ownership interests of the entity entitled to vote on the matter:
(1) merge or effect an interest exchange with another entity if, as a result of the merger or exchange, the ownership interests in the entity would become, or be converted into or exchanged for the right to receive, shares or other equity interests in a domestic or foreign public benefit corporation or similar entity; or
(2) convert into a domestic or foreign public benefit corporation or similar entity.
(d) Notwithstanding any other provision of this chapter, a public benefit corporation may not, without the approval of two-thirds of the outstanding shares of the corporation entitled to vote on the matter, which must be a vote by class or series of shares if otherwise required by § 21.364, 21.457, or 21.458:
(1) amend the corporation’s certificate of formation to delete or amend a provision required by § 3.007(e) or described by § 21.957(c);
(2) convert into a domestic or foreign entity:
(A) that is not a public benefit corporation or similar entity; and
(B) that does not contain in its certificate of formation or similar governing document provisions identical to the provisions in the certificate of formation of the public benefit corporation containing the public benefit or benefits specified under § 3.007(e) or imposing requirements under § 21.957(c); or
(3) merge or effect an interest exchange with another entity if, as a result of the merger or exchange, the shares in the corporation would become, or be converted into or exchanged for the right to receive, shares or other equity interests in a domestic or foreign entity:
(A) that is not a public benefit corporation or similar entity; and
(B) that does not contain in its certificate of formation or similar governing document provisions identical to the provisions in the certificate of formation of the public benefit corporation containing the public benefit or benefits specified under § 3.007(e) or imposing requirements under § 21.957(c).
(e) Notwithstanding any other provision of this section, a nonprofit corporation or nonprofit association may not:
(1) with respect to a merger governed by this section, be a party to the merger; or
(2) convert into a public benefit corporation.
(f) An owner of a domestic entity affected by an action described by this section has the rights of dissent and appraisal as an owner described by § 10.354 and to the extent provided by Subchapter H, Chapter 10.