SB29 - Relating to the formation, governance, and internal management of domestic entities.

      S.B. No. 29         AN ACT   relating to the formation, governance, and internal management of   domestic entities.          BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:          SECTION 1.  Section 1.002(55-a), Business Organizations   Code, is amended to read as follows:                (55-a)  "National securities exchange" means :                       (A)   an exchange registered as a national   securities exchange under Section 6, Securities Exchange Act of   1934 (15 U.S.C. Section 78f) ; or                       (B)  a stock exchange that:                             (i)     has its principal office in this state;   and                             (ii)     has received approval by the   securities commissioner under Subchapter C, Chapter 4005,   Government Code .          SECTION 2.  Subchapter B, Chapter 1, Business Organizations   Code, is amended by adding Section 1.056 to read as follows:           Sec.   1.056.     LAWS GOVERNING FORMATION, INTERNAL AFFAIRS, AND   GOVERNANCE OF DOMESTIC ENTITY. The managerial officials of a   domestic entity, in exercising their powers with respect to the   domestic entity, may consider the laws and judicial decisions of   other states and the practices observed by entities formed in those   other states. The failure or refusal of a managerial official to   consider, or to conform the exercise of the managerial official's   powers to, the laws, judicial decisions, or practices of another   state does not constitute or imply a breach of this code or of any   duty existing under the laws of this state.          SECTION 3.  Section 2.115(b), Business Organizations Code,   is amended to read as follows:          (b)  The governing documents of a domestic entity [ may   require ], consistent with applicable state and federal   jurisdictional requirements, may require:                 (1)   that any internal entity claims shall be brought   only in a court in this state ; and                 (2)     that one or more courts in this state having   jurisdiction shall serve as the exclusive forum and venue for any   internal entity claims .          SECTION 4.  Subchapter B, Chapter 2, Business Organizations   Code, is amended by adding Section 2.116 to read as follows:           Sec.   2.116.     WAIVER OF TRIAL BY JURY. (a) In this section,   "internal entity claim" has the meaning assigned by Section 2.115.           (b)     The governing documents of a domestic entity may contain   a waiver of the right to a jury trial concerning any internal entity   claim.           (c)     In a lawsuit asserting an internal entity claim, a   waiver of the right to a jury trial contained in the governing   documents of a domestic entity is enforceable, regardless of   whether the applicable governing document is signed by the members,   owners, officers, or governing persons.           (d)     A person asserting an internal entity claim is   considered to have been informed of the waiver of the right to a   jury trial contained in the governing documents and to have   knowingly waived the right in the action if the person:                 (1)     voted for or affirmatively ratified the governing   document containing the waiver; or                 (2)     acquired an equity security of the domestic entity   or any predecessor to the entity at, or continued to hold an equity   security of a domestic entity that has one or more classes of equity   securities listed on a national securities exchange after, a time   at which the waiver was included in the governing documents.           (e)     Nothing in this section prevents an entity from showing   that a person asserting an internal entity claim knowingly and   informedly waived the right to a jury trial by any evidence   satisfactory to the court having jurisdiction, including by the   person's consent or acquiescence to the waiver contained in the   governing documents.          SECTION 5.  Section 21.218, Business Organizations Code, is   amended by amending Subsection (b) and adding Subsections (b-2) and   (b-3) to read as follows:          (b)  On written demand stating a proper purpose, a holder of   shares of a corporation for at least six months immediately   preceding the holder's demand, or a holder of at least five percent   of all of the outstanding shares of a corporation, is entitled to   examine and copy, at a reasonable time at the corporation's   principal place of business or other location approved by the   corporation and the holder, the corporation's books, records of   account, minutes, share transfer records, and other records,   whether in written or other tangible form, if the records are   [ record is ] reasonably related to and appropriate to examine and   copy for that proper purpose. For purposes of this subsection, the   records of the corporation shall not include e-mails, text messages   or similar electronic communications, or information from social   media accounts unless the particular e-mail, communication, or   social media information effectuates an action by the corporation.           (b-2)     This subsection applies only to a corporation that has   a class or series of voting shares listed on a national securities   exchange or that has made an affirmative election to be governed by   Section 21.419. For purposes of Subsection (b), a written demand   shall not be for a proper purpose if the corporation reasonably   determines that the demand is in connection with:                 (1)     an active or pending derivative proceeding in the   right of the corporation under Subchapter L that is or is expected   to be instituted or maintained by the holder or the holder's   affiliate; or                 (2)     an active or pending civil lawsuit to which the   corporation, or its affiliate, and the holder, or the holder's   affiliate, are or are expected to be adversarial named parties.           (b-3)  Subsection (b-2) does not impair any rights of:                 (1)     the holder or the holder's affiliate to obtain   discovery of records from the corporation in:                       (A)     a civil lawsuit described by Subsection   (b-2)(2); or                       (B)     the derivative proceeding subject to Section   21.556; or                 (2)     the holder to obtain a court order to compel   production of records of the corporation for examination by the   holder as provided by Subsection (c).          SECTION 6.  Section 21.364, Business Organizations Code, is   amended by amending Subsections (d) and (e) and adding Subsection   (e-1) to read as follows:          (d)  Unless an amendment to the certificate of formation is   undertaken by the board of directors under Section 21.155, separate   voting by a class or series of shares of a corporation is required   for approval of an amendment to the certificate of formation that   would result in:                (1)  the increase or decrease of the aggregate number   of authorized shares of the class or series , except that the number   of authorized shares of any class or series may be increased or   decreased, but not below the number of shares of the class or series   then outstanding, by the affirmative vote of the holders of a   majority of the stock of the corporation entitled to vote, as   provided by:                       (A)  the certificate of formation; or                       (B)     an amendment of the certificate of formation   that:                             (i)     authorized the shares of the class or   series;                             (ii)     was adopted before the issuance of any   shares of the class or series; or                             (iii)     was authorized by one or more   resolutions adopted by the affirmative vote of the holders of a   majority of the shares of the class or series ;                (2)  the increase or decrease of the par value of the   shares of the class or series, including changing shares with par   value into shares without par value or changing shares without par   value into shares with par value;                (3)  effecting an exchange, reclassification, or   cancellation of all or part of the shares of the class or series;                (4)  effecting an exchange or creating a right of   exchange of all or part of the shares of another class or series   into the shares of the class or series;                (5)  the change of the designations, preferences,   limitations, or relative rights of the shares of the class or   series;                (6)  the change of the shares of the class or series,   with or without par value, into the same or a different number of   shares, with or without par value, of the same class or series or   another class or series;                (7)  the creation of a new class or series of shares   with rights and preferences equal, prior, or superior to the shares   of the class or series;                (8)  increasing the rights and preferences of a class   or series with rights and preferences equal, prior, or superior to   the shares of the class or series;                (9)  increasing the rights and preferences of a class   or series with rights or preferences later or inferior to the shares   of the class or series in such a manner that the rights or   preferences will be equal, prior, or superior to the shares of the   class or series;                (10)  dividing the shares of the class into series and   setting and determining the designation of the series and the   variations in the relative rights and preferences between the   shares of the series;                (11)  the limitation or denial of existing preemptive   rights or cumulative voting rights of the shares of the class or   series;                (12)  canceling or otherwise affecting the dividends on   the shares of the class or series that have accrued but have not   been declared; or                (13)  the inclusion or deletion from the certificate of   formation of provisions required or permitted to be included in the   certificate of formation of a close corporation under Subchapter O.          (e)   Except as provided by Subsection (e-1), the  [ The ] vote   required under Subsect [Text truncated for display. 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