BUSINESS ORGANIZATIONS CODE TITLE 1. GENERAL …

1 BUSINESS ORGANIZATIONS CODETITLE 1. GENERAL PROVISIONSCHAPTER 1. DEFINITIONS AND OTHER GENERAL PROVISIONSSUBCHAPTER A. DEFINITIONS AND PURPOSESec. PURPOSE. The purpose of this code is to make thelaw encompassed by this code more accessible and understandable by:(1) rearranging the statutes into a more logical order;(2) employing a format and numbering system designed tofacilitate citation of the law and to accommodate future expansion ofthe law;(3) eliminating repealed, duplicative, expired, executed,and other ineffective provisions ; and(4) restating the law in modern American English to thegreatest extent possible. Acts 2003, 78th Leg., ch. 182, Sec. 1, eff. Jan. 1, 2006. Sec. DEFINITIONS. In this code:(1) "Affiliate" means a person who controls, is controlledby, or is under common control with another person.

2 (2) "Associate," when used to indicate a relationship witha person, means:(A) a domestic or foreign entity or organization forwhich the person:(i) is an officer or governing person; or(ii) beneficially owns, directly or indirectly,either individually or through an affiliate, 10 percent or more of aclass of voting ownership interests or similar securities of theentity or organization;(B) a trust or estate in which the person has asubstantial beneficial interest or for which the person serves astrustee or in a similar fiduciary capacity;(C) the person's spouse or a relative of the personrelated by consanguinity or affinity who resides with the person; or(D) a governing person or an affiliate or officer ofthe person.(3) "Association" means an entity governed as anassociation under TITLE 6 or 7. The term includes a cooperativeassociation, nonprofit association, and professional association.

3 (4) "Assumed name" means a name adopted for use by aStatute text rendered on: 1/22/2022- 1 -person. The term includes an assumed name filed under Chapter 71, BUSINESS & Commerce Code.(5) " BUSINESS " means a trade, occupation, profession, orother commercial activity.(6) "Certificate of formation" means:(A) the document required to be filed with the filingofficer under Chapter 3 to form a filing entity; and(B) if appropriate, a restated certificate of formationand all amendments of an original or restated certificate offormation.(7) "Certificated ownership interest" means an ownershipinterest of a domestic entity represented by a certificate issued inbearer or registered form.(8) "Close corporation" means a for-profit corporation thatelects to be governed as a close corporation in accordance withSubchapter O, Chapter 21.

4 (9) "Contribution" means a tangible or intangible benefitthat a person transfers to an entity in consideration for anownership interest in the entity or otherwise in the person'scapacity as an owner or a member. The benefit includes cash,services rendered, a contract for services to be performed, apromissory note or other obligation of a person to pay cash ortransfer property to the entity, or securities or other interests inor obligations of an entity, but does not include cash or propertyreceived by the entity:(A) with respect to a promissory note or otherobligation to the extent that the agreed value of the note orobligation has previously been included as a contribution; or(B) that the person intends to be a loan to the entity.(10) "Conversion" means:(A) the continuance of a domestic entity as a non-codeorganization of any type;(B) the continuance of a non-code organization as adomestic entity of any type;(C) the continuance of a domestic entity of one type asa domestic entity of another type;(D) the continuance of a domestic entity of one type asa foreign entity of the same type that may be treated as adomestication, continuance, or transfer transaction under the laws ofthe jurisdiction of formation of the foreign entity; orBUSINESS ORGANIZATIONS CODES tatute text rendered on: 1/22/2022- 2 -(E) the continuance of a foreign entity of one type asa domestic entity of the same type that may be treated as adomestication, continuance, or transfer transaction under the laws ofthe jurisdiction of formation of the foreign entity.

5 (11) "Converted entity" means an organization resultingfrom a conversion.(12) "Converting entity" means an organization as theorganization existed before the organization's conversion.(13) "Cooperative" or "cooperative association" means anassociation governed as a cooperative association under Chapter 251.(14) "Corporation" means an entity governed as acorporation under TITLE 2 or 7. The term includes a for-profitcorporation, nonprofit corporation, and professional corporation.(15) "Debtor in bankruptcy" means a person who is thesubject of:(A) an order for relief under the United Statesbankruptcy laws ( TITLE 11, United States Code); or(B) a comparable order under a:(i) successor statute of GENERAL applicability; or(ii) federal or state law governing insolvency.(16) "Director" means an individual who serves on the boardof directors of a foreign or domestic corporation.

6 (17) "Domestic" means, with respect to an entity, that theentity is formed under this code or the entity's internal affairs aregoverned by this code.(18) "Domestic entity" means an organization formed underor the internal affairs of which are governed by this code.(19) ""Domestic entity subject to dissenters' rights" meansa domestic entity the owners of which have rights of dissent andappraisal under this code or the governing documents of the entity.(20) "Effective date of this code" means January 1, applicability of this code is governed by TITLE 8.(20-a) "Electronic data system" means an electronic networkor database. The term includes a distributed electronic network ordatabase, including one that employs blockchain or distributed ledgertechnology.(20-b) "Electronic transmission" means a form ofcommunication, including communication by use of or participation inone or more electronic data systems, that:(A) does not directly involve the physical transmissionBUSINESS ORGANIZATIONS CODES tatute text rendered on: 1/22/2022- 3 -of paper;(B) creates a record that may be retained, retrieved,and reviewed by the recipient; and(C) may be directly reproduced in paper form by therecipient through an automated process.

7 (21) "Entity" means a domestic entity or foreign entity.(21-a) "Fictitious name" means an assumed name:(A) that a foreign filing entity adopts for use becausethe name of the entity as stated in the entity's certificate offormation or similar organizational instrument is not available foruse under the laws of this state; and(B) under which the foreign filing entity is registeredto transact BUSINESS in this state, in accordance with Chapter 9.(22) "Filing entity" means a domestic entity that is acorporation, limited partnership, limited liability company,professional association, cooperative, or real estate investmenttrust.(23) "Filing instrument" means an instrument, document,consent, or statement that is required or authorized by this code tobe filed by or for an entity with the filing officer in accordancewith Chapter 4.

8 (24) "Filing officer" means:(A) with respect to an entity other than a domesticreal estate investment trust, the secretary of state; or(B) with respect to a domestic real estate investmenttrust, the county clerk of the county in which the real estateinvestment trust's principal office is located in this state.(25) "For-profit corporation" means a corporation governedas a for-profit corporation under Chapter 21.(26) "For-profit entity" means an entity other than anonprofit entity.(27) "Foreign" means, with respect to an entity, that theentity is formed under, and the entity's internal affairs aregoverned by, the laws of a jurisdiction other than this state.(28) "Foreign entity" means an organization formed under,and the internal affairs of which are governed by, the laws of ajurisdiction other than this state.(29) "Foreign filing entity" means a foreign entity, otherthan a foreign limited liability partnership, that registers or isrequired to register as a foreign entity under Chapter ORGANIZATIONS CODES tatute text rendered on: 1/22/2022- 4 -(30) "Foreign governmental authority" means a governmentalofficial, agency, or instrumentality of a jurisdiction other thanthis state.

9 (31) "Foreign nonfiling entity" means a foreign entity thatis not a foreign filing entity.(32) "Fundamental BUSINESS transaction" means a merger,interest exchange, conversion, or sale of all or substantially all ofan entity's assets.(33) " GENERAL partner" means:(A) each partner in a GENERAL partnership; or(B) a person who has become, and has not ceased to be,a GENERAL partner in a limited partnership in accordance with thegoverning documents of the limited partnership or this code.(34) " GENERAL partnership" means a partnership governed asa GENERAL partnership under Chapter 152. The term includes a generalpartnership registered as a limited liability partnership.(35)(A) "Governing authority" means a person or group ofpersons who are entitled to manage and direct the affairs of anentity under this code and the governing documents of the entity,except that if the governing documents of the entity or this codedivide the authority to manage and direct the affairs of the entityamong different persons or groups of persons according to differentmatters, "governing authority" means the person or group of personsentitled to manage and direct the affairs of the entity with respectto a matter under the governing documents of the entity or this term includes:(i) the board of directors of a corporation orother persons authorized to perform the functions of the board ofdirectors of a corporation;(ii) the GENERAL partners of a GENERAL partnershipor limited partnership.

10 (iii) the managers of a limited liability companythat is managed by managers;(iv) the members of a limited liability companythat is managed by members who are entitled to manage the company;(v) the board of directors of a cooperativeassociation; and(vi) the trust managers of a real estate investmenttrust.(B) The term does not include an officer who is actingBUSINESS ORGANIZATIONS CODES tatute text rendered on: 1/22/2022- 5 -in the capacity of an officer.(36) "Governing documents" means:(A) in the case of a domestic entity:(i) the certificate of formation for a domesticfiling entity or the document or agreement under which a domesticnonfiling entity is formed; and(ii) the other documents or agreements adopted bythe entity under this code to govern the formation or the internalaffairs of the entity; or(B) in the case of a foreign entity, the instruments,documents, or agreements adopted under the law of its jurisdiction offormation to govern the formation or the internal affairs of theentity.