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CHAPTER 22. NONPROFIT CORPORATIONS

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BUSINESS ORGANIZATIONS CODETITLE 2. CORPORATIONSCHAPTER 22. NONPROFIT CORPORATIONSSUBCHAPTER A. GENERAL PROVISIONSSec. 22.001.DEFINITIONS.In this chapter:(1)"Board of directors" means the group of persons vested withthe management of the affairs of the corporation, regardless ofthe name used to designate the group.(2)"Bylaws" means the rules adopted to regulate or manage thecorporation, regardless of the name used to designate the rules.(3)"Corporation" or "domestic corporation" means a domesticnonprofit corporation subject to this chapter.(4)"Foreign corporation" means a foreign nonprofit corporation.(5)"Nonprofit corporation" means a corporation no part of theincome of which is distributable to a member, director, orofficer of the corporation.(6)"Ordinary care" means the care that an ordinarily prudentperson in a similar position would exercise under similarcircumstances.Acts 2003, 78th Leg., ch. 182, Sec. 1, eff. Jan. 1, 2006.Sec. 22.002.MEETINGS BY REMOTE COMMUNICATIONS TECHNOLOGY.Subject to the provisions of this code and the certificate offormation and bylaws of a corporation, a meeting of the membersof a corporation, the board of directors of a corporation, or anycommittee designated by the board of directors of a corporationmay be held by means of a remote electronic communicationssystem, including videoconferencing technology or the Internet,only if:(1)each person entitled to participate in the meeting consentsto the meeting being held by means of that system; and(2)the system provides access to the meeting in a manner orusing a method by which each person participating in the meetingcan communicate concurrently with each other participant.Acts 2003, 78th Leg., ch. 182, Sec. 1, eff. Jan. 1, 2006.SUBCHAPTER B. PURPOSES AND POWERSSec. 22.051.GENERAL PURPOSES.A nonprofit corporation may beformed for any lawful purpose or purposes not expresslyprohibited under this chapter or Chapter 2, including any purposedescribed by Section 2.002.Acts 2003, 78th Leg., ch. 182, Sec. 1, eff. Jan. 1, 2006.Sec. 22.052.DENTAL HEALTH SERVICE CORPORATION.(a)Acharitable corporation may be formed to operate a dental healthservice corporation that manages and coordinates the relationshipbetween a dentist who contracts to perform dental services and apatient who will receive the services as a member of a group thatcontracted with the dental health service corporation to providedental care to group members.(b)The certificate of formation for a charitable corporationformed under this section must have attached as an exhibit:(1)an affidavit of the organizer or organizers stating:(A)that not less than 30 percent of the dentists legallyengaged in the practice of dentistry in this state have signed acontract to perform the required dental services for a period ofat least one year after incorporation; and(B)the names and addresses of those dentists; and(2)a certification by the State Board of Dental Examiners that:(A)the applicants are reputable residents of this state of goodmoral character; and(B)the corporation will be in the best interest of the publichealth.(c)A corporation formed under this section must have at least12 directors, including 9 directors who are licensed to practicedentistry in this state and are actively engaged in the practiceof dentistry in this state.(d)A corporation formed under this section shall maintain asparticipating or contracting dentists at least 30 percent of thenumber of dentists actually engaged in the practice of dentistryin this state. The corporation shall file annually in Septemberwith the State Board of Dental Examiners the name and address ofeach participating or contracting dentist.(e)A corporation formed under this section may not:(1)prevent a patient from selecting the licensed dentist of thepatient's choice to provide dental services to the patient;(2)deny a licensed dentist the right to participate as acontracting dentist to perform the dental services contracted forby the patient;(3)discriminate among patients or licensed dentists regardingpayment or reimbursement for the cost of performing dentalservices; or(4)authorize any person to regulate, interfere with, orintervene in any manner in the diagnosis or treatment provided bya licensed dentist to a patient.(f)A corporation formed under this section may require theattending dentist to provide a narrative oral or writtendescription of the dental services provided to determine benefitsor provide proof of treatment. The corporation may request butmay not require diagnostic aids used in the course of treatment.Acts 2003, 78th Leg., ch. 182, Sec. 1, eff. Jan. 1, 2006.Sec. 22.053.DIVIDENDS PROHIBITED.A dividend may not be paidto, and no part of the income of a corporation may be distributedto, the corporation's members, directors, or officers.Acts 2003, 78th Leg., ch. 182, Sec. 1, eff. Jan. 1, 2006.Sec. 22.054.AUTHORIZED BENEFITS AND DISTRIBUTIONS.Acorporation may:(1)pay compensation in a reasonable amount to the members,directors, or officers of the corporation for services provided;(2)confer benefits on the corporation's members in conformitywith the corporation's purposes; and(3)make distributions to the corporation's members on windingup and termination to the extent authorized by this chapter.Acts 2003, 78th Leg., ch. 182, Sec. 1, eff. Jan. 1, 2006.Sec. 22.055.POWER TO ASSIST EMPLOYEE OR OFFICER.(a)Acorporation may lend money to or otherwise assist an employee orofficer of the corporation, but not a director, if the loan orassistance may reasonably be expected to directly or indirectlybenefit the corporation.(b)A loan made to an officer must be:(1)made for the purpose of financing the officer's principalresidence; or(2)set in an original principal amount that does not exceed:(A)100 percent of the officer's annual salary, if the loan ismade before the first anniversary of the officer's employment; or(B)50 percent of the officer's annual salary, if the loan ismade in any subsequent year.Acts 2003, 78th Leg., ch. 182, Sec. 1, eff. Jan. 1, 2006.Sec. 22.056.HEALTH ORGANIZATION CORPORATION.(a)Doctors ofmedicine and osteopathy licensed by the Texas State Board ofMedical Examiners and podiatrists licensed by the Texas StateBoard of Podiatric Medical Examiners may form a corporation thatis jointly owned, managed, and controlled by those practitionersto perform a professional service that falls within the scope ofpractice of those practitioners and consists of:(1)carrying out research in the public interest in medicalscience, medical economics, public health, sociology, or arelated field;(2)supporting medical education in medical schools throughgrants or scholarships;(3)developing the capabilities of individuals or institutionsstudying, teaching, or practicing medicine, including podiatricmedicine;(4)delivering health care to the public; or(5)instructing the public regarding medical science, publichealth, hygiene, or a related matter.(b)When doctors of medicine, osteopathy, and podiatry form acorporation that is jointly owned by those practitioners, theauthority of each of the practitioners is limited by the scope ofpractice of the respective practitioners and none can exercisecontrol over the other's clinical authority granted by theirrespective licenses, either through agreements, the certificateof formation or bylaws of the corporation, directives, financialincentives, or other arrangements that would assert control overtreatment decisions made by the practitioner. The Texas StateBoard of Medical Examiners and the Texas State Board of PodiatricMedical Examiners continue to exercise regulatory authority overtheir respective licenses.Acts 2003, 78th Leg., ch. 182, Sec. 1, eff. Jan. 1, 2006.SUBCHAPTER C. FORMATION AND GOVERNING DOCUMENTSSec. 22.101.INCORPORATION OF CERTAIN ORGANIZATIONS.Areligious society, a charitable, benevolent, literary, or socialassociation, or a church may incorporate as a corporationgoverned by this chapter with the consent of a majority of itsmembers. Those members shall authorize the organizers to executethe certificate of formation.Acts 2003, 78th Leg., ch. 182, Sec. 1, eff. Jan. 1, 2006.Sec. 22.102.BYLAWS.(a)The initial bylaws of a corporationshall be adopted by the corporation's board of directors or, ifthe management of the corporation is vested in the corporation'smembers, by the members.(b)The bylaws may contain provisions for the regulation andmanagement of the affairs of the corporation that are consistentwith law and the certificate of formation.(c)The board of directors may amend or repeal the bylaws, oradopt new bylaws, unless:(1)this chapter or the corporation's certificate of formationwholly or partly reserves the power exclusively to thecorporation's members;(2)the management of the corporation is vested in thecorporation's members; or(3)in amending, repealing, or adopting a bylaw, the membersexpressly provide that the board of directors may not amend orrepeal the bylaw.Acts 2003, 78th Leg., ch. 182, Sec. 1, eff. Jan. 1, 2006.Sec. 22.103.INCONSISTENCY BETWEEN CERTIFICATE OF FORMATION ANDBYLAW.(a)A provision of a certificate of formation of acorporation that is inconsistent with a bylaw controls over thebylaw, except as provided by Subsection (b).(b)A change in the number of directors by amendment to thebylaws controls over the number stated in the certificate offormation, unless the certificate of formation provides that achange in the number of directors may be made only by amendmentto the certificate.Acts 2003, 78th Leg., ch. 182, Sec. 1, eff. Jan. 1, 2006.Sec. 22.104.ORGANIZATION MEETING.(a)After the certificateof formation is filed, the board of directors named in thecertificate of formation of a corporation shall hold anorganization meeting of the board, either in or out of thisstate, at the call of the organizers or a majority of thedirectors to adopt bylaws and elect officers and for otherpurposes determined by the board at the meeting.The organizersor directors calling the meeting shall send notice of the timeand place of the meeting to each director named in thecertificate of formation not later than the third day before thedate of the meeting.(b)A first meeting of the members may be held at the call ofthe majority of the directors on notice provided not later thanthe third day before the date of the meeting. The notice muststate the purposes of the meeting.(c)If the management of a corporation is vested in thecorporation's members, the members shall hold the organizationmeeting on the call of an organizer.An organizer who calls themeeting shall:(1)send notice of the time and place of the meeting to eachmember not later than the third day before thedate of themeeting;(2)if the corporation is a church, make an oral announcement ofthe time and place of the meeting at a regularly scheduledworship service before the meeting; or(3)send notice of the meeting in the manner provided by thecertificate of formation.Acts 2003, 78th Leg., ch. 182, Sec. 1, eff. Jan. 1, 2006.Amended by:Acts 2005, 79th Leg., Ch.64, Sec. 66, eff. January 1, 2006.Sec. 22.105.PROCEDURES TO ADOPT AMENDMENT TO CERTIFICATE OFFORMATION BY MEMBERS HAVING VOTING RIGHTS.(a)Except asprovided by Section 22.107(b), to amend the certificate offormation of a corporation with members having voting rights, theboard of directors of the corporation must adopt a resolutionspecifying the proposed amendment and directing that theamendment be submitted to a vote at an annual or special meetingof the members having voting rights.(b)Written notice containing the proposed amendment or asummary of the changes to be effected by the amendment shall begiven to each member entitled to vote at the meeting within thetime and in the manner provided by this chapter for giving noticeof a meeting of members.(c)The proposed amendment shall be adopted on receiving thevote required by Section 22.164.Acts 2003, 78th Leg., ch. 182, Sec. 1, eff. Jan. 1, 2006.Sec. 22.106.PROCEDURES TO ADOPT AMENDMENT TO CERTIFICATE OFFORMATION BY MANAGING MEMBERS.(a)To be approved, a proposedamendment to the certificate of formation of a corporation themanagement of the affairs of which is vested in the corporation'smembers under Section 22.202 must be submitted to a vote at anannual, regular, or special meeting of the members.(b)Except as otherwise provided by the certificate of formationor bylaws, notice containing the proposed amendment or a summaryof the changes to be effected by the amendment shall be given tothe members within the time and in the manner provided by thischapter for giving notice of a meeting of members.(c)The proposed amendment shall be adopted on receiving thevote required by Section 22.164.Acts 2003, 78th Leg., ch. 182, Sec. 1, eff. Jan. 1, 2006.Sec. 22.107.PROCEDURES TO ADOPT AMENDMENT TO CERTIFICATE OFFORMATION BY BOARD OF DIRECTORS.(a)If a corporation has nomembers or has no members with voting rights, or in the case ofan amendment under Subsection (b), an amendment to thecorporation's certificate of formation shall be adopted at ameeting of the board of directors on receiving the vote ofdirectors required by Section 22.164.(b)Except as otherwise provided by the certificate offormation, the board of directors of a corporation with membershaving voting rights may, without member approval, adoptamendments to the certificate of formation to:(1)extend the duration of the corporation if the corporationwas incorporated when limited duration was required by law;(2)delete the names and addresses of the initial directors;(3)delete the name and address of the initial registered agentor registered office, if a statement of change is on file withthe secretary of state; or(4)change the corporate name by:(A)substituting the word "corporation," "incorporated,""company," or "limited," or the abbreviation "corp.," "inc.,""co.," or "ltd.," for a similar word or abbreviation in the name;or(B)adding, deleting, or changing a geographical attribution tothe name.Acts 2003, 78th Leg., ch. 182, Sec. 1, eff. Jan. 1, 2006.Sec. 22.108.NUMBER OF AMENDMENTS SUBJECT TO VOTE AT MEETING.Any number of amendments to the corporation's certificate offormation may be submitted to and voted on by a corporation'smembers at any one meeting of the members.Acts 2003, 78th Leg., ch. 182, Sec. 1, eff. Jan. 1, 2006.Sec. 22.109.RESTATED CERTIFICATE OF FORMATION.(a)The boardof directors of a corporation may adopt a restated certificate offormation as provided by Subchapter B, Chapter 3, by followingthe same procedure to amend the corporation's certificate offormation provided by Sections 22.104-22.107, except that memberapproval is required only if the restated certificate offormation contains an amendment.(b)A person shall file a restated certificate of formation asprovided by Chapter 4, and the restated certificate of formationtakes effect as provided by Subchapter B, Chapter 3.Added by Acts 2005, 79th Leg., Ch.64, Sec. 67, eff. January 1, 2006.SUBCHAPTER D. MEMBERSSec. 22.151.MEMBERS.(a)A corporation may have one or moreclasses of members or may have no members.(b)If the corporation has one or more classes of members, thecorporation's certificate of formation or bylaws must include:(1)a designation of each class;(2)the manner of the election or appointment of the members ofeach class; and(3)the qualifications and rights of the members of each class.(c)A corporation may issue a certificate, card, or otherinstrument evidencing membership rights, voting rights, orownership rights as authorized by the certificate of formation orbylaws.Acts 2003, 78th Leg., ch. 182, Sec. 1, eff. Jan. 1, 2006.Sec. 22.152.IMMUNITY FROM LIABILITY.The members of acorporation are not personally liable for a debt, liability, orobligation of the corporation.Acts 2003, 78th Leg., ch. 182, Sec. 1, eff. Jan. 1, 2006.Sec. 22.153.ANNUAL MEETING.(a)Except as provided bySubsection (b), a corporation shall hold an annual meeting of themembers at a time that is stated in or determined in accordancewith the corporation's bylaws.(b)If the bylaws provide for more than one regular meeting ofmembers each year, an annual meeting is not required. If anannual meeting is not required, directors may be elected at ameeting as provided by the bylaws.Acts 2003, 78th Leg., ch. 182, Sec. 1, eff. Jan. 1, 2006.Sec. 22.154.FAILURE TO CALL ANNUAL MEETING.(a) If the boardof directors of a corporation fails to call the annual meeting ofmembers when required, a member of the corporation may demandthat the meeting be held within a reasonable time.The demandmust be made in writing and sent to an officer of the corporationby registered mail.(b)If a required annual meeting is not called before the 61stday after the date of demand, a member of the corporation maycompel the holding of the meeting by legal action directedagainst the board of directors, and each of the extraordinarywrits of common law and of courts of equity are available to themember to compel the holding of the meeting.Each member has ajusticiable interest sufficient to enable the member to instituteand prosecute the legal proceedings.(c)Failure to hold a required annual meeting at the designatedtime does not result in the winding up and termination of thecorporation.Acts 2003, 78th Leg., ch. 182, Sec. 1, eff. Jan. 1, 2006.Amended by:Acts 2007, 80th Leg., R.S., Ch.688, Sec. 87, eff. September 1, 2007.Sec. 22.155.SPECIAL MEETINGS OF MEMBERS.A special meeting ofthe members of a corporation may be called by:(1)the president;(2)the board of directors;(3)members having not less than one-tenth of the votes entitledto be cast at the meeting; or(4)other officers or persons as provided by the certificate offormation or bylaws of the corporation.Acts 2003, 78th Leg., ch. 182, Sec. 1, eff. Jan. 1, 2006.Sec. 22.156.NOTICE OF MEETING.(a)A corporation other than achurch shall provide written notice of the place, date, and timeof a meeting of the members of the corporation and, if themeeting is a special meeting, the purpose or purposes for whichthe meeting is called. The notice shall be delivered to eachmember entitled to vote at the meeting not later than the 10thday and not earlier than the 60th day before the date of themeeting. Notice may be delivered personally or in accordance withSection 6.051(b).(b)Notice of a meeting of the members of a corporation that isa church is sufficient if given by oral announcement at aregularly scheduled worship service before the meeting or asotherwise provided by the certificate of formation or bylaws ofthe corporation.Acts 2003, 78th Leg., ch. 182, Sec. 1, eff. Jan. 1, 2006.Sec. 22.157.SPECIAL BYLAWS AFFECTING NOTICE.(a)Acorporation may provide in the corporation's bylaws that noticeof an annual or regular meeting is not required.(b)A corporation having more than 1,000 members at the time ameeting is scheduled or called may provide notice of a meeting bypublication in a newspaper of general circulation in thecommunity in which the principal office of the corporation islocated, if the corporation provides for that notice in itsbylaws.Acts 2003, 78th Leg., ch. 182, Sec. 1, eff. Jan. 1, 2006.Sec. 22.158.PREPARATION AND INSPECTION OF LIST OF VOTINGMEMBERS.(a) After setting a record date for the notice of ameeting, a corporation shall prepare an alphabetical list of thenames of all its voting members. The list must identify:(1)the members who are entitled to notice and the members whoare not entitled to notice of the meeting;(2)the address of each voting member; and(3)the number of votes each voting member is entitled to castat the meeting.(b)Not later than the second business day after the date noticeis given of a meeting for which a list was prepared in accordancewith Subsection (a), and continuing through the meeting, the listof voting members must be available at the corporation'sprincipal office or at a reasonable place in the municipality inwhich the meeting will be held, as identified in the notice ofthe meeting, for inspection by members entitled to vote at themeeting for the purpose of communication with other membersconcerning the meeting.(c)A voting member or voting member's agent or attorney isentitled on written demand to inspect and, at the member'sexpense and subject to Section 22.351, copy the list at areasonable time during the period the list is available forinspection.(d)The corporation shall make the list of voting membersavailable at the meeting. A voting member or voting member'sagent or attorney is entitled to inspect the list at any timeduring the meeting or an adjournment of the meeting.Acts 2003, 78th Leg., ch. 182, Sec. 1, eff. Jan. 1, 2006.Sec. 22.159.QUORUM OF MEMBERS.(a)Unless otherwise providedby the certificate of formation or bylaws of a corporation,members of the corporation holding one-tenth of the votesentitled to be cast, in person or by proxy, constitute a quorum.(b)The vote of the majority of the votes entitled to be cast bythe members present or represented by proxy at a meeting at whicha quorum is present is the act of the members meeting, unless thevote of a greater number is required by law or the certificate offormation or bylaws.(c)Unless otherwise provided by the certificate of formation orbylaws, a church incorporated before May 12, 1959, is consideredto have provided in the certificate of formation or bylaws thatmembers present at a meeting for which notice has been givenconstitute a quorum.Acts 2003, 78th Leg., ch. 182, Sec. 1, eff. Jan. 1, 2006.Sec. 22.160.VOTING OF MEMBERS.(a)Each member of acorporation, regardless of class, is entitled to one vote on eachmatter submitted to a vote of the corporation's members, exceptto the extent that the voting rights of members of a class arelimited, enlarged, or denied by the certificate of formation orbylaws of the corporation.(b)A member may vote in person or, unless otherwise provided bythe certificate of formation or bylaws, by proxy executed inwriting by the member or the member's attorney-in-fact.(c)Unless otherwise provided by the proxy, a proxy is revocableand expires 11 months after the date of its execution. A proxymay not be irrevocable for longer than 11 months.(d)If authorized by the certificate of formation or bylaws ofthe corporation, a member vote on any matter may be conducted bymail, by facsimile transmission, by electronic message, or by anycombination of those methods.Acts 2003, 78th Leg., ch. 182, Sec. 1, eff. Jan. 1, 2006.Sec. 22.161.ELECTION OF DIRECTORS.(a)A member entitled tovote at an election of directors is entitled to vote, in personor by proxy, for as many persons as there are directors to beelected and for whose election the member has a right to vote.(b)If expressly authorized by the corporation's certificate offormation, the member may cumulate the member's vote by:(1)giving one candidate a number of votes equal to the numberof the directors to be elected multiplied by the member's vote;or(2)distributing the votes on the same principle among anynumber of the candidates.(c)A member who intends to cumulate votes under Subsection (b)shall give written notice of the member's intention to thesecretary of the corporation not later than the day preceding thedate of the election.Acts 2003, 78th Leg., ch. 182, Sec. 1, eff. Jan. 1, 2006.Sec. 22.162.GREATER VOTING REQUIREMENTS UNDER CERTIFICATE OFFORMATION.If the corporation's certificate of formationrequires the vote or concurrence of a greater proportion of themembers of a corporation than is required by this chapter withrespect to an action to be taken by the members, the certificateof formation controls.Acts 2003, 78th Leg., ch. 182, Sec. 1, eff. Jan. 1, 2006.Sec. 22.163.RECORD DATE FOR DETERMINATION OF MEMBERS.(a)Therecord date for determining members of a corporation may be setas provided by Section 6.101.(b)If a record date is not set under Section 6.101:(1)members on the date of the meeting who are otherwiseeligible to vote are entitled to vote at the meeting;(2)members at the close of business on the business daypreceding the date notice is given, or if notice is waived, atthe close of business on the business day preceding the date ofthe meeting, are entitled to notice of a meeting of members; and(3)members at the close of business on the later of the day theboard of directors adopts the resolution relating to the actionor the 60th day before the date of the action are entitled toexercise any rights regarding any other lawful action.(c)The record date for the determination of members entitled tonotice of or to vote at a meeting is effective for an adjournmentof the meeting unless the board of directors of a corporationsets a new date for determining the right to notice of or to voteat the adjournment.Acts 2003, 78th Leg., ch. 182, Sec. 1, eff. Jan. 1, 2006.Amended by:Acts 2007, 80th Leg., R.S., Ch.688, Sec. 88, eff. September 1, 2007.Sec. 22.164.VOTE REQUIRED TO APPROVE FUNDAMENTAL ACTION.(a)In this section, "fundamental action" means:(1)an amendment of a certificate of formation, including anamendment required for the cancellation of an event requiringwinding up in accordance with Section 11.152(b);(2)a voluntary winding up under Chapter 11;(3)a revocation of a voluntary decision to wind up underSection 11.151;(4)a cancellation of an event requiring winding up underSection 11.152(a);(5)a reinstatement under Section 11.202;(6)a distribution plan under Section 22.305;(7)a plan of merger under Subchapter F;(8)a sale of all or substantially all of the assets of acorporation under Subchapter F;(9)a plan of conversion under Subchapter F; or(10)a plan of exchange under Subchapter F.(b)Except as otherwise provided by Subsection (c) or thecertificate of formation in accordance with Section 22.162, thevote required for approval of a fundamental action is:(1)at least two-thirds of the votes that members present inperson or by proxy are entitled to cast at the meeting at whichthe action is submitted for a vote, if the corporation hasmembers with voting rights;(2)at least two-thirds of the votes of members present at themeeting at which the action is submitted for a vote, if themanagement of the affairs of the corporation is vested in thecorporation's members under Section 22.202; or(3)the affirmative vote of the majority of the directors inoffice, if the corporation has no members or has no members withvoting rights.(c)If any class of members is entitled to vote on thefundamental action as a class by the terms of the certificate offormation or the bylaws, the vote required for the approval ofthe fundamental action is the vote required by Subsection (b)(1)and at least two-thirds of the votes that the members of eachclass in person or by proxy are entitled to cast at the meetingat which the action is submitted for a vote.Acts 2003, 78th Leg., ch. 182, Sec. 1, eff. Jan. 1, 2006.Amended by:Acts 2007, 80th Leg., R.S., Ch.688, Sec. 89, eff. September 1, 2007.SUBCHAPTER E. MANAGEMENTSec. 22.201.MANAGEMENT BY BOARD OF DIRECTORS.Except asprovided by Section 22.202, the affairs of a corporation aremanaged by a board of directors. The board of directors may bedesignated by any name appropriate to the customs, usages, ortenets of the corporation.Acts 2003, 78th Leg., ch. 182, Sec. 1, eff. Jan. 1, 2006.Sec. 22.202.MANAGEMENT BY MEMBERS.(a)The certificate offormation of a corporation may vest the management of the affairsof the corporation in the members of the corporation. If thecorporation has a board of directors, the corporation may limitthe authority of the board to the extent provided by thecertificate of formation or bylaws.(b)A corporation is considered to have vested the management ofthe corporation's affairs in the board of directors of thecorporation in the absence of a provision to the contrary in thecertificate of formation, unless the corporation is a churchorganized and operating under a congregational system that:(1)was incorporated before January 1, 1994; and(2)has the management of its affairs vested in thecorporation's members.Acts 2003, 78th Leg., ch. 182, Sec. 1, eff. Jan. 1, 2006.Sec. 22.203.BOARD MEMBER ELIGIBILITY REQUIREMENTS.A directorof a corporation is not required to be a resident of this stateor a member of the corporation unless the certificate offormation or a bylaw of the corporation imposes that requirement.The certificate of formation or bylaws may prescribe otherqualifications for directors.Acts 2003, 78th Leg., ch. 182, Sec. 1, eff. Jan. 1, 2006.Sec. 22.204.NUMBER OF DIRECTORS.(a)If the corporation has aboard of directors, a corporation may not have fewer than threedirectors. The number of directors shall be set by, or in themanner provided by, the certificate of formation or bylaws of thecorporation, except that the number of directors on the initialboard of directors must be set by the certificate of formation.(b)The number of directors may be increased or decreased byamendment to, or in the manner provided by, the certificate offormation or bylaws. A decrease in the number of directors maynot shorten the term of an incumbent director.(c)In the absence of a provision of the certificate offormation or a bylaw setting the number of directors or providingfor the manner in which the number of directors shall bedetermined, the number of directors is the same as the numberconstituting the initial board of directors.Acts 2003, 78th Leg., ch. 182, Sec. 1, eff. Jan. 1, 2006.Sec. 22.205.DESIGNATION OF INITIAL BOARD OF DIRECTORS.If thecorporation is to be managed by a board of directors, thecertificate of formation of a corporation must state the names ofthe members of the initial board of directors of the corporation.Acts 2003, 78th Leg., ch. 182, Sec. 1, eff. Jan. 1, 2006.Sec. 22.206.ELECTION OR APPOINTMENT OF BOARD OF DIRECTORS.Directors other than the initial directors are elected,appointed, or designated in the manner provided by thecertificate of formation or bylaws. If the method of election,designation, or appointment is not provided by the certificate offormation or bylaws, directors other than the initial directorsare elected by the board of directors.Acts 2003, 78th Leg., ch. 182, Sec. 1, eff. Jan. 1, 2006.Sec. 22.207.ELECTION AND CONTROL BY CERTAIN ENTITIES.(a)Theboard of directors of a religious, charitable, educational, oreleemosynary corporation may be affiliated with, elected, andcontrolled by an incorporated or unincorporated convention,conference, or association organized under the laws of this oranother state, the membership of which is composed ofrepresentatives, delegates, or messengers from a church or otherreligious association.(b)The board of directors of a corporation may be wholly orpartly elected by one or more associations or corporationsorganized under the laws of this or another state if:(1)the certificate of formation or bylaws of the corporationprovide for that election; and(2)the corporation has no members with voting rights.Acts 2003, 78th Leg., ch. 182, Sec. 1, eff. Jan. 1, 2006.Sec. 22.208.TERM OF OFFICE.(a)Unless the director resignsor is removed, a director on the initial board of directors of acorporation holds office until the first annual election ofdirectors or for the period specified in the certificate offormation or bylaws of the corporation.Directors other than theinitial directors are elected, appointed, or designated for theterms provided by the certificate of formation or bylaws.(b)In the absence of a provision in the certificate offormation or bylaws setting the term of office for directors, adirector holds office until the next annual election of directorsand until a successor is elected, appointed, or designated andqualified.(c)A director may be removed from office as provided in Section22.211.Acts 2003, 78th Leg., ch. 182, Sec. 1, eff. Jan. 1, 2006.Amended by:Acts 2005, 79th Leg., Ch.64, Sec. 68, eff. January 1, 2006.Sec. 22.209.CLASSIFICATION OF DIRECTORS.Directors may bedivided into classes. The terms of office of the several classesare not required to be uniform.Acts 2003, 78th Leg., ch. 182, Sec. 1, eff. Jan. 1, 2006.Sec. 22.210.EX OFFICIO MEMBER OF BOARD.(a)The certificateof formation or bylaws of a corporation may provide that a personmay be an ex officio member of the board of directors of thecorporation.(b)A person designated as an ex officio member of the board isentitled to receive notice of and to attend board meetings.(c)An ex officio member is not entitled to vote unless thecertificate of formation or bylaws authorize the member to vote.An ex officio member of the board who is not entitled to votedoes not have the duties or liabilities of a director provided bythis chapter.Acts 2003, 78th Leg., ch. 182, Sec. 1, eff. Jan. 1, 2006.Sec. 22.211.REMOVAL OF DIRECTOR.(a)A director of acorporation may be removed from office under any procedureprovided by the certificate of formation or bylaws of thecorporation.(b)In the absence of a provision for removal in the certificateof formation or bylaws, a director may be removed from office,with or without cause, by the persons entitled to elect,designate, or appoint the director. If the director was electedto office, removal requires an affirmative vote equal to the votenecessary to elect the director.Acts 2003, 78th Leg., ch. 182, Sec. 1, eff. Jan. 1, 2006.Sec. 22.2111.RESIGNATION OF DIRECTOR.Except as provided bythe certificate of formation or bylaws, a director of acorporation may resign at any time by providing written notice tothe corporation.Added by Acts 2005, 79th Leg., Ch.64, Sec. 69, eff. January 1, 2006.Sec. 22.212.VACANCY.(a)Unless otherwise provided by thecertificate of formation or bylaws of the corporation, a vacancyin the board of directors of a corporation shall be filled by theaffirmative vote of the majority of the remaining directors,regardless of whether that majority is less than a quorum. Adirector elected to fill a vacancy is elected for the unexpiredterm of the member's predecessor in office.(b)A vacancy in the board occurring because of an increase inthe number of directors shall be filled by election at an annualmeeting or at a special meeting of members called for thatpurpose. If a corporation has no members or has no members withthe right to vote on the vacancy, the vacancy shall be filled asprovided by the certificate of formation or bylaws.Acts 2003, 78th Leg., ch. 182, Sec. 1, eff. Jan. 1, 2006.Sec. 22.213.QUORUM.(a)A quorum for the transaction ofbusiness by the board of directors of a corporation is the lesserof:(1)the majority of the number of directors set by thecorporation's bylaws or, in the absence of a bylaw setting thenumber of directors, a majority of the number of directors statedin the corporation's certificate of formation; or(2)any number, not less than three, set as a quorum by thecertificate of formation or bylaws.(b)A director present by proxy at a meeting may not be countedtoward a quorum.Acts 2003, 78th Leg., ch. 182, Sec. 1, eff. Jan. 1, 2006.Sec. 22.214.ACTION BY DIRECTORS.The act of a majority of thedirectors present in person or by proxy at a meeting at which aquorum is present is the act of the board of directors of acorporation, unless the act of a greater number is required bythe certificate of formation or bylaws of the corporation.Acts 2003, 78th Leg., ch. 182, Sec. 1, eff. Jan. 1, 2006.Sec. 22.215.VOTING IN PERSON OR BY PROXY.A director of acorporation may vote in person or, if authorized by thecertificate of formation or bylaws of the corporation, by proxyexecuted in writing by the director.Acts 2003, 78th Leg., ch. 182, Sec. 1, eff. Jan. 1, 2006.Sec. 22.216.TERM AND REVOCABILITY OF PROXY.(a)A proxyexpires three months after the date the proxy is executed.(b)A proxy is revocable unless otherwise provided by the proxyor made irrevocable by law.Acts 2003, 78th Leg., ch. 182, Sec. 1, eff. Jan. 1, 2006.Sec. 22.217.NOTICE OF MEETING; WAIVER OF NOTICE.(a)Regularmeetings of the board of directors of a corporation may be heldwith or without notice as prescribed by the corporation's bylaws.(b)Special meetings of the board of directors shall be heldwith notice as prescribed by the bylaws. Attendance of a directorat a meeting constitutes a waiver of notice, unless the directorattends a meeting for the express purpose of objecting to thetransaction of any business on the ground that the meeting is notlawfully called or convened.(c)Unless required by the bylaws, the business to be transactedat, or the purpose of, a regular or special meeting of the boardof directors is not required to be specified in the notice orwaiver of notice of the meeting.(d)Notice may be delivered personally or in accordance withSection 6.051(b).Acts 2003, 78th Leg., ch. 182, Sec. 1, eff. Jan. 1, 2006.Sec. 22.218.MANAGEMENT COMMITTEE.(a)If authorized by thecertificate of formation or bylaws of the corporation, the boardof directors of a corporation, by resolution adopted by themajority of the directors in office, may designate one or morecommittees to have and exercise the authority of the board in themanagement of the corporation to the extent provided by:(1)the resolution;(2)the certificate of formation; or(3)the bylaws.(b)A committee designated under this section must consist of atleast two persons.Except as provided by Subsection (b-1), themajority of the persons on the committee must be directors.Ifprovided by the certificate of formation or bylaws, the remainingpersons on the committee are not required to be directors.(b-1)If a corporation is a religious institution and ifprovided by the corporation's certificate of formation or bylaws,a committee designated under this section may be composedentirely of persons who are not directors of the corporation.(c)The designation of a committee and the delegation ofauthority to the committee does not operate to relieve the boardof directors, or an individual director, of any responsibilityimposed on the board or director by law. A committee member whois not a director has the same responsibility with respect to thecommittee as a committee member who is a director.Acts 2003, 78th Leg., ch. 182, Sec. 1, eff. Jan. 1, 2006.Amended by:Acts 2009, 81st Leg., R.S., Ch.1007, Sec. 1, eff. September 1, 2009.Sec. 22.219.OTHER COMMITTEES.(a)The board of directors of acorporation, by resolution adopted by the majority of thedirectors at a meeting at which a quorum is present, or thepresident, if authorized by a similar resolution of the board ofdirectors or by the certificate of formation or bylaws of thecorporation, may designate and appoint one or more committeesthat do not have the authority of the board of directors in themanagement of the corporation.(b)The membership on a committee designated under this sectionmay be limited to directors.Acts 2003, 78th Leg., ch. 182, Sec. 1, eff. Jan. 1, 2006.Sec. 22.220.ACTION WITHOUT MEETING OF DIRECTORS OR COMMITTEE.(a) The certificate of formation or bylaws of a corporation mayprovide that an action required by this chapter to be taken at ameeting of the corporation's directors or an action that may betaken at a meeting of the directors or a committee may be takenwithout a meeting if a written consent, stating the action to betaken, is signed by the number of directors or committee membersnecessary to take that action at a meeting at which all of thedirectors or committee members are present and voting.Theconsent must state the date of each director's or committeemember's signature.(b) Prompt notice of the taking of an action by directors or acommittee without a meeting by less than unanimous writtenconsent shall be given to each director or committee member whodid not consent in writing to the action.Acts 2003, 78th Leg., ch. 182, Sec. 1, eff. Jan. 1, 2006.Amended by:Acts 2007, 80th Leg., R.S., Ch.688, Sec. 90, eff. September 1, 2007.Sec. 22.221.GENERAL STANDARDS FOR DIRECTORS.(a)A directorshall discharge the director's duties, including duties as acommittee member, in good faith, with ordinary care, and in amanner the director reasonably believes to be in the bestinterest of the corporation.(b)A director is not liable to the corporation, a member, oranother person for an action taken or not taken as a director ifthe director acted in compliance with this section. A personseeking to establish liability of a director must prove that thedirector did not act:(1)in good faith;(2)with ordinary care; and(3)in a manner the director reasonably believed to be in thebest interest of the corporation.Acts 2003, 78th Leg., ch. 182, Sec. 1, eff. Jan. 1, 2006.Sec. 22.222.RELIGIOUS CORPORATION DIRECTOR'S GOOD FAITHRELIANCE ON CERTAIN INFORMATION.A director of a religiouscorporation, in the discharge of a duty imposed or powerconferred on the director, including a duty imposed or powerconferred as a committee member, may rely in good faith oninformation or on an opinion, report, or statement, including afinancial statement or other financial data, concerning thecorporation or another person that was prepared or presented by:(1)a religious authority; or(2)a minister, priest, rabbi, or other person whose position orduties in the religious organization the director believesjustify reliance and confidence and whom the director believes tobe reliable and competent in the matters presented.Acts 2003, 78th Leg., ch. 182, Sec. 1, eff. Jan. 1, 2006.Amended by:Acts 2007, 80th Leg., R.S., Ch.688, Sec. 91, eff. September 1, 2007.Sec. 22.223.NOT A TRUSTEE.A director of a corporation is notconsidered to have the duties of a trustee of a trust withrespect to the corporation or with respect to property held oradministered by the corporation, including property subject torestrictions imposed by the donor or transferor of the property.Acts 2003, 78th Leg., ch. 182, Sec. 1, eff. Jan. 1, 2006.Sec. 22.224.DELEGATION OF INVESTMENT AUTHORITY.(a)The boardof directors of a corporation may:(1)contract with an advisor who is an investment counsel or atrust company, bank, investment advisor, or investment manager;and(2)confer on that advisor the authority to:(A)purchase or otherwise acquire a stock, bond, security, orother investment on behalf of the corporation; and(B)sell, transfer, or otherwise dispose of an asset or propertyof the corporation at a time and for a consideration the advisorconsiders appropriate.(b)The board of directors may:(1)confer on an advisor described by Subsection (a) otherpowers regarding the corporation's investments as the boardconsiders appropriate; and(2)authorize the advisor to hold title to an asset or propertyof the corporation, in the advisor's own name or in the name of anominee, for the benefit of the corporation.(c)The board of directors is not liable for an action taken ornot taken by an advisor under this section if the board acted ingood faith and with ordinary care in selecting the advisor. Theboard of directors may remove or replace the advisor, with orwithout cause, if the board considers that action appropriate ornecessary.Acts 2003, 78th Leg., ch. 182, Sec. 1, eff. Jan. 1, 2006.Sec. 22.225.LOAN TO DIRECTOR PROHIBITED.(a)A corporationmay not make a loan to a director.(b)The directors of a corporation who vote for or assent to themaking of a loan to a director, and any officer who participatesin making the loan, are jointly and severally liable to thecorporation for the amount of the loan until the loan is repaid.Acts 2003, 78th Leg., ch. 182, Sec. 1, eff. Jan. 1, 2006.Sec. 22.226.DIRECTOR LIABILITY FOR CERTAIN DISTRIBUTIONS OFASSETS.(a)In addition to any other liability imposed by lawon the directors of a corporation, the directors who vote for orassent to a distribution of assets other than in payment of thecorporation's debts, when the corporation is insolvent or whendistribution would render the corporation insolvent, or duringthe liquidation of the corporation, without the payment anddischarge of or making adequate provisions for any known debt,obligation, or liability of the corporation, are jointly andseverally liable to the corporation for the value of the assetsdistributed, to the extent that the debt, obligation, orliability is not paid and discharged.(b)A director is not liable under this section if, in votingfor or assenting to a distribution, the director:(1)relied in good faith and with ordinary care on informationor an opinion, report, or statement in accordance with Section3.102;(2)acting in good faith and with ordinary care, considered theassets of the corporation to be at least equal to their bookvalue; or(3)in determining whether the corporation made adequateprovision for the discharge of all of its liabilities andobligations as provided in Section 11.053, relied in good faithand with ordinary care on financial statements of, or otherinformation concerning, a person who was or became contractuallyobligated to discharge some or all of those liabilities orobligations.Acts 2003, 78th Leg., ch. 182, Sec. 1, eff. Jan. 1, 2006.Sec. 22.227.DISSENT TO ACTION.(a)A director of acorporation who is present at a meeting of the board of directorsat which action is taken on a corporate matter described bySection 22.226(a) is presumed to have assented to the actionunless:(1)the director's dissent has been entered in the minutes ofthe meeting;(2)the director has filed a written dissent to the action withthe person acting as the secretary of the meeting before themeeting is adjourned; or(3)the director has sent a written dissent by registered mailto the secretary of the corporation immediately after the meetinghas been adjourned.(b)The right to dissent under this section does not apply to adirector who voted in favor of the action.Acts 2003, 78th Leg., ch. 182, Sec. 1, eff. Jan. 1, 2006.Sec. 22.228.RELIANCE ON WRITTEN OPINION OF ATTORNEY.Adirector is not liable under Section 22.226 or 22.227 if, in theexercise of ordinary care, the director acted in good faith andin reliance on the written opinion of an attorney for thecorporation.Acts 2003, 78th Leg., ch. 182, Sec. 1, eff. Jan. 1, 2006.Sec. 22.229.RIGHT TO CONTRIBUTION.A director against whom aclaim is asserted under Section 22.226 or 22.227 and who is heldliable on the claim is entitled to contribution from persons whoaccepted or received the distribution knowing the distribution tohave been made in violation of that section, in proportion to theamounts received by those persons.Acts 2003, 78th Leg., ch. 182, Sec. 1, eff. Jan. 1, 2006.Sec. 22.230.CONTRACTS OR TRANSACTIONS INVOLVING INTERESTEDDIRECTORS, OFFICERS, AND MEMBERS.(a)This section applies onlyto a contract or transaction between a corporation and:(1)one or more of the corporation's directors, officers, ormembers; or(2)an entity or other organization in which one or more of thecorporation's directors, officers, or members:(A)is a managerial official or a member; or(B)has a financial interest.(b)An otherwise valid contract or transaction is validnotwithstanding that a director, officer, or member of thecorporation is present at or participates in the meeting of theboard of directors, of a committee of the board, or of themembers that authorizes the contract or transaction, or votes toauthorize the contract or transaction, if:(1)the material facts as to the relationship or interest and asto the contract or transaction are disclosed to or known by:(A)the corporation's board of directors, a committee of theboard of directors, or the members, and the board, the committee,or the members in good faith and with ordinary care authorize thecontract or transaction by the affirmative vote of the majorityof the disinterested directors, committee members or members,regardless of whether the disinterested directors, committeemembers or members constitute a quorum; or(B)the members entitled to vote on the authorization of thecontract or transaction, and the contract or transaction isspecifically approved in good faith and with ordinary care by avote of the members; or(2)the contract or transaction is fair to the corporation whenthe contract or transaction is authorized, approved, or ratifiedby the board of directors, a committee of the board of directors,or the members.(c)Common or interested directors or members of a corporationmay be included in determining the presence of a quorum at ameeting of the board, a committee of the board, or members thatauthorizes the contract or transaction.Acts 2003, 78th Leg., ch. 182, Sec. 1, eff. Jan. 1, 2006.Sec. 22.231.OFFICERS.(a)The officers of a corporation shallinclude a president and a secretary and may include one or morevice presidents, a treasurer, and other officers and assistantofficers as considered necessary. Any two or more offices, otherthan the offices of president and secretary, may be held by thesame person.(b)A properly designated committee may perform the functions ofan officer. A single committee may perform the functions of anytwo or more officers, including the functions of president andsecretary.(c)The officers of a corporation may be designated by other oradditional titles as provided by the certificate of formation orbylaws of the corporation.Acts 2003, 78th Leg., ch. 182, Sec. 1, eff. Jan. 1, 2006.Sec. 22.232.ELECTION OR APPOINTMENT OF OFFICERS.(a)Anofficer of a corporation shall be elected or appointed at thetime, in the manner, and for the terms prescribed by thecertificate of formation or bylaws of the corporation. The termof an officer may not exceed three years.(b)If the certificate of formation or bylaws do not includeprovisions for the election or appointment of officers, theofficers shall be elected or appointed annually by the board ofdirectors or, if the management of the corporation is vested inthe corporation's members, by the members.Acts 2003, 78th Leg., ch. 182, Sec. 1, eff. Jan. 1, 2006.Sec. 22.233.APPLICATION TO CHURCH.A corporation that is achurch is not required to have officers as provided by thissubchapter. The duties and responsibilities of the officers maybe vested in the corporation's board of directors or otherdesignated body in any manner provided for by the certificate offormation or bylaws of the corporation.Acts 2003, 78th Leg., ch. 182, Sec. 1, eff. Jan. 1, 2006.Sec. 22.234.RELIGIOUS CORPORATION OFFICER'S GOOD FAITH RELIANCEON CERTAIN INFORMATION.An officer of a religious corporation,in the discharge of a duty imposed or power conferred on theofficer, may rely in good faith and with ordinary care oninformation or on an opinion, report, or statement, including afinancial statement or other financial data, concerning thecorporation or another person that was prepared or presented by:(1)a religious authority; or(2)a minister, priest, rabbi, or other person whose position orduties in the religious organization the officer believes justifyreliance and confidence and whom the officer believes to bereliable and competent in the matters presented.Acts 2003, 78th Leg., ch. 182, Sec. 1, eff. Jan. 1, 2006.Amended by:Acts 2007, 80th Leg., R.S., Ch.688, Sec. 92, eff. September 1, 2007.Sec. 22.235.OFFICER LIABILITY.(a)An officer is not liableto the corporation or any other person for an action taken oromission made by the officer in the person's capacity as anofficer unless the officer's conduct was not exercised:(1)in good faith;(2)with ordinary care; and(3)in a manner the officer reasonably believes to be in thebest interest of the corporation.(b)This section shall not affect the liability of thecorporation for an act or omission of the officer.Acts 2003, 78th Leg., ch. 182, Sec. 1, eff. Jan. 1, 2006.SUBCHAPTER F. FUNDAMENTAL BUSINESS TRANSACTIONSSec. 22.251.APPROVAL OF MERGER.(a)A domestic corporationthat is a party to a merger under Chapter 10 must approve themerger by complying with this section.(b)If the corporation that is a party to the merger has nomembers or has no members with voting rights, the plan of mergermust be approved by the vote of directors required by Section22.164.(c)If the management of the affairs of the corporation that isa party to the merger is vested in its members under Section22.202, the plan of merger:(1)must be submitted to a vote at an annual, regular, orspecial meeting of the members; and(2)must be approved by the members by the vote required bySection 22.164.(d)If the corporation that is a party to the merger has memberswith voting rights:(1)the board of directors must adopt a resolution that:(A)approves the plan of merger; and(B)directs that the plan be submitted to a vote at an annual orspecial meeting of the members having voting rights; and(2)the members must approve the plan of merger by the voterequired by Section 22.164.Acts 2003, 78th Leg., ch. 182, Sec. 1, eff. Jan. 1, 2006.Sec. 22.252.APPROVAL OF SALE OF ALL OR SUBSTANTIALLY ALL OFASSETS.(a)A corporation must approve the sale of all orsubstantially all of its assets by complying with this section.(b)If the corporation has no members or has no members withvoting rights, the sale of all or substantially all of the assetsof the corporation must be authorized by the vote of directorsrequired by Section 22.164.(c)If the management of the affairs of the corporation isvested in its members under Section 22.202, a resolutionauthorizing a sale of all or substantially all of the assets ofthe corporation:(1)must be submitted to a vote at an annual, regular, orspecial meeting of the members; and(2)must be approved by the members by the vote required bySection 22.164.(d)If the corporation has members with voting rights:(1)the board of directors of the corporation must adopt aresolution that:(A)recommends the sale; and(B)directs that the resolution be submitted to a vote at anannual or special meeting of the members having voting rights;and(2)the members must approve the resolution by the vote requiredby Section 22.164.(e)At the meeting required by Subsection (c) or (d), inaddition to approving the resolution authorizing the sale, themembers may set, or authorize the board of directors to set, theterms and conditions of the sale and the consideration to bereceived by the corporation for the sale by the same vote ofmembers.(f)After the members authorize a sale under Subsection (d), theboard of directors may abandon the sale, subject to the rights ofthird parties under any contracts relating to the sale, withoutfurther action or approval by members.(g)Notwithstanding Subsection (d), if a corporation isinsolvent, a sale of all or substantially all of the assets ofthe corporation may be authorized on receiving the affirmativevote of the majority of the directors in office.(h)The phrase "sale of all or substantially all of the assets"means the sale, lease, exchange, or other disposition, other thana pledge, mortgage, deed of trust, or trust indenture unlessotherwise provided by the certificate of formation, of all orsubstantially all of the property and assets of a domesticcorporation that is not made in the usual and regular course ofthe corporation's activities without regard to whether thedisposition is made with the goodwill of the corporation'sactivities. The term does not include a transaction that resultsin the corporation directly or indirectly:(1)continuing to engage in one or more activities; or(2)applying a portion of the consideration received inconnection with the transaction to the conduct of an activitythat the corporation engages in after the transaction.Acts 2003, 78th Leg., ch. 182, Sec. 1, eff. Jan. 1, 2006.Sec. 22.253.MEETING OF MEMBERS; NOTICE.(a)The corporationmust give to each member entitled to vote at a meeting describedby Section 22.251(c) or (d) or Section 22.252(c) or (d) a writtennotice stating that the purpose or one of the purposes of themeeting is to consider the plan of merger or the sale of all orsubstantially all of the assets of the corporation. The noticemust be given in the time and manner provided by Chapter 6 andthis chapter for giving notice of a meeting to members.(b)A vote of members entitled to vote at the meeting shall betaken on the plan of merger or the resolution authorizing thesale of all or substantially all of the assets of thecorporation. The members must approve the plan or resolution bythe vote required by Section 22.164.(c)For a meeting to vote on a plan of merger, the notice of themeeting must contain the plan of merger or a summary of the planof merger.(d)For a corporation the management of the affairs of which isvested in its members under Section 22.202, the notice of themeeting is subject to the provisions of the certificate offormation or bylaws of the corporation.Acts 2003, 78th Leg., ch. 182, Sec. 1, eff. Jan. 1, 2006.Sec. 22.254.PLEDGE, MORTGAGE, DEED OF TRUST, OR TRUSTINDENTURE.(a)Except as otherwise provided by Subsection (b)or by the corporation's certificate of formation:(1)the board of directors of a corporation may authorize apledge, mortgage, deed of trust, or trust indenture; and(2)an authorization or consent of members is not required forthe validity of the transaction or for any sale under the termsof the transaction.(b)If the management of the affairs of a corporation is vestedin the corporation's members under Section 22.202:(1)the members may authorize a pledge, mortgage, deed of trust,or trust indenture in the manner provided by Section 22.252(c)for a sale of all or substantially al
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  • BUSINESS ORGANIZATIONS CODE

    TITLE 2. CORPORATIONS

    CHAPTER 22. NONPROFIT CORPORATIONS

    SUBCHAPTER A. GENERAL PROVISIONS

    Sec. 22.001. DEFINITIONS. In this chapter:

    (1) "Board of directors" means the group of persons vested with

    the management of the affairs of the corporation, regardless of

    the name used to designate the group.

    (2) "Bylaws" means the rules adopted to regulate or manage the

    corporation, regardless of the name used to designate the rules.

    (3) "Corporation" or "domestic corporation" means a domestic

    nonprofit corporation subject to this chapter.

    (4) "Foreign corporation" means a foreign nonprofit corporation.

    (5) "Nonprofit corporation" means a corporation no part of the

    income of which is distributable to a member, director, or

    officer of the corporation.

    (6) "Ordinary care" means the care that an ordinarily prudent

    person in a similar position would exercise under similar

    circumstances.

    Acts 2003, 78th Leg., ch. 182, Sec. 1, eff. Jan. 1, 2006.

    Sec. 22.002. MEETINGS BY REMOTE COMMUNICATIONS TECHNOLOGY.

    Subject to the provisions of this code and the certificate of

    formation and bylaws of a corporation, a meeting of the members

    of a corporation, the board of directors of a corporation, or any

    committee designated by the board of directors of a corporation

    may be held by means of a remote electronic communications

    system, including videoconferencing technology or the Internet,

    only if:

    (1) each person entitled to participate in the meeting consents

    to the meeting being held by means of that system; and

    (2) the system provides access to the meeting in a manner or

    using a method by which each person participating in the meeting

    can communicate concurrently with each other participant.

    Acts 2003, 78th Leg., ch. 182, Sec. 1, eff. Jan. 1, 2006.

    SUBCHAPTER B. PURPOSES AND POWERS

    Sec. 22.051. GENERAL PURPOSES. A nonprofit corporation may be

    formed for any lawful purpose or purposes not expressly

    prohibited under this chapter or Chapter 2, including any purpose

    described by Section 2.002.

    Acts 2003, 78th Leg., ch. 182, Sec. 1, eff. Jan. 1, 2006.

    Sec. 22.052. DENTAL HEALTH SERVICE CORPORATION. (a) A

    charitable corporation may be formed to operate a dental health

    service corporation that manages and coordinates the relationship

    between a dentist who contracts to perform dental services and a

    patient who will receive the services as a member of a group that

    contracted with the dental health service corporation to provide

    dental care to group members.

    (b) The certificate of formation for a charitable corporation

    formed under this section must have attached as an exhibit:

    (1) an affidavit of the organizer or organizers stating:

    (A) that not less than 30 percent of the dentists legally

    engaged in the practice of dentistry in this state have signed a

    contract to perform the required dental services for a period of

    at least one year after incorporation; and

    (B) the names and addresses of those dentists; and

    (2) a certification by the State Board of Dental Examiners that:

    (A) the applicants are reputable residents of this state of good

    moral character; and

    (B) the corporation will be in the best interest of the public

    health.

    (c) A corporation formed under this section must have at least

    12 directors, including 9 directors who are licensed to practice

    dentistry in this state and are actively engaged in the practice

    of dentistry in this state.

    (d) A corporation formed under this section shall maintain as

    participating or contracting dentists at least 30 percent of the

    number of dentists actually engaged in the practice of dentistry

    in this state. The corporation shall file annually in September

    with the State Board of Dental Examiners the name and address of

    each participating or contracting dentist.

    (e) A corporation formed under this section may not:

    (1) prevent a patient from selecting the licensed dentist of the

    patient's choice to provide dental services to the patient;

    (2) deny a licensed dentist the right to participate as a

    contracting dentist to perform the dental services contracted for

    by the patient;

    (3) discriminate among patients or licensed dentists regarding

    payment or reimbursement for the cost of performing dental

    services; or

    (4) authorize any person to regulate, interfere with, or

    intervene in any manner in the diagnosis or treatment provided by

    a licensed dentist to a patient.

    (f) A corporation formed under this section may require the

    attending dentist to provide a narrative oral or written

    description of the dental services provided to determine benefits

    or provide proof of treatment. The corporation may request but

    may not require diagnostic aids used in the course of treatment.

    Acts 2003, 78th Leg., ch. 182, Sec. 1, eff. Jan. 1, 2006.

    Sec. 22.053. DIVIDENDS PROHIBITED. A dividend may not be paid

    to, and no part of the income of a corporation may be distributed

    to, the corporation's members, directors, or officers.

    Acts 2003, 78th Leg., ch. 182, Sec. 1, eff. Jan. 1, 2006.

    Sec. 22.054. AUTHORIZED BENEFITS AND DISTRIBUTIONS. A

    corporation may:

    (1) pay compensation in a reasonable amount to the members,

    directors, or officers of the corporation for services provided;

    (2) confer benefits on the corporation's members in conformity

    with the corporation's purposes; and

    (3) make distributions to the corporation's members on winding

    up and termination to the extent authorized by this chapter.

    Acts 2003, 78th Leg., ch. 182, Sec. 1, eff. Jan. 1, 2006.

    Sec. 22.055. POWER TO ASSIST EMPLOYEE OR OFFICER. (a) A

    corporation may lend money to or otherwise assist an employee or

    officer of the corporation, but not a director, if the loan or

    assistance may reasonably be expected to directly or indirectly

    benefit the corporation.

    (b) A loan made to an officer must be:

    (1) made for the purpose of financing the officer's principal

    residence; or

    (2) set in an original principal amount that does not exceed:

    (A) 100 percent of the officer's annual salary, if the loan is

    made before the first anniversary of the officer's employment; or

    (B) 50 percent of the officer's annual salary, if the loan is

    made in any subsequent year.

    Acts 2003, 78th Leg., ch. 182, Sec. 1, eff. Jan. 1, 2006.

    Sec. 22.056. HEALTH ORGANIZATION CORPORATION. (a) Doctors of

    medicine and osteopathy licensed by the Texas State Board of

    Medical Examiners and podiatrists licensed by the Texas State

    Board of Podiatric Medical Examiners may form a corporation that

    is jointly owned, managed, and controlled by those practitioners

    to perform a professional service that falls within the scope of

    practice of those practitioners and consists of:

    (1) carrying out research in the public interest in medical

    science, medical economics, public health, sociology, or a

    related field;

    (2) supporting medical education in medical schools through

    grants or scholarships;

    (3) developing the capabilities of individuals or institutions

    studying, teaching, or practicing medicine, including podiatric

    medicine;

    (4) delivering health care to the public; or

    (5) instructing the public regarding medical science, public

    health, hygiene, or a related matter.

    (b) When doctors of medicine, osteopathy, and podiatry form a

    corporation that is jointly owned by those practitioners, the

    authority of each of the practitioners is limited by the scope of

    practice of the respective practitioners and none can exercise

    control over the other's clinical authority granted by their

    respective licenses, either through agreements, the certificate

    of formation or bylaws of the corporation, directives, financial

    incentives, or other arrangements that would assert control over

    treatment decisions made by the practitioner. The Texas State

    Board of Medical Examiners and the Texas State Board of Podiatric

    Medical Examiners continue to exercise regulatory authority over

    their respective licenses.

    Acts 2003, 78th Leg., ch. 182, Sec. 1, eff. Jan. 1, 2006.

    SUBCHAPTER C. FORMATION AND GOVERNING DOCUMENTS

    Sec. 22.101. INCORPORATION OF CERTAIN ORGANIZATIONS. A

    religious society, a charitable, benevolent, literary, or social

    association, or a church may incorporate as a corporation

    governed by this chapter with the consent of a majority of its

    members. Those members shall authorize the organizers to execute

    the certificate of formation.

    Acts 2003, 78th Leg., ch. 182, Sec. 1, eff. Jan. 1, 2006.

    Sec. 22.102. BYLAWS. (a) The initial bylaws of a corporation

    shall be adopted by the corporation's board of directors or, if

    the management of the corporation is vested in the corporation's

    members, by the members.

    (b) The bylaws may contain provisions for the regulation and

    management of the affairs of the corporation that are consistent

    with law and the certificate of formation.

    (c) The board of directors may amend or repeal the bylaws, or

    adopt new bylaws, unless:

    (1) this chapter or the corporation's certificate of formation

    wholly or partly reserves the power exclusively to the

    corporation's members;

    (2) the management of the corporation is vested in the

    corporation's members; or

    (3) in amending, repealing, or adopting a bylaw, the members

    expressly provide that the board of directors may not amend or

    repeal the bylaw.

    Acts 2003, 78th Leg., ch. 182, Sec. 1, eff. Jan. 1, 2006.

    Sec. 22.103. INCONSISTENCY BETWEEN CERTIFICATE OF FORMATION AND

    BYLAW. (a) A provision of a certificate of formation of a

    corporation that is inconsistent with a bylaw controls over the

    bylaw, except as provided by Subsection (b).

    (b) A change in the number of directors by amendment to the

    bylaws controls over the number stated in the certificate of

    formation, unless the certificate of formation provides that a

    change in the number of directors may be made only by amendment

    to the certificate.

    Acts 2003, 78th Leg., ch. 182, Sec. 1, eff. Jan. 1, 2006.

    Sec. 22.104. ORGANIZATION MEETING. (a) After the certificate

    of formation is filed, the board of directors named in the

    certificate of formation of a corporation shall hold an

    organization meeting of the board, either in or out of this

    state, at the call of the organizers or a majority of the

    directors to adopt bylaws and elect officers and for other

    purposes determined by the board at the meeting. The organizers

    or directors calling the meeting shall send notice of the time

    and place of the meeting to each director named in the

    certificate of formation not later than the third day before the

    date of the meeting.

    (b) A first meeting of the members may be held at the call of

    the majority of the directors on notice provided not later than

    the third day before the date of the meeting. The notice must

    state the purposes of the meeting.

    (c) If the management of a corporation is vested in the

    corporation's members, the members shall hold the organization

    meeting on the call of an organizer. An organizer who calls the

    meeting shall:

    (1) send notice of the time and place of the meeting to each

    member not later than the third day before the date of the

    meeting;

    (2) if the corporation is a church, make an oral announcement of

    the time and place of the meeting at a regularly scheduled

    worship service before the meeting; or

    (3) send notice of the meeting in the manner provided by the

    certificate of formation.

    Acts 2003, 78th Leg., ch. 182, Sec. 1, eff. Jan. 1, 2006.

    Amended by:

    Acts 2005, 79th Leg., Ch.

    64, Sec. 66, eff. January 1, 2006.

    Sec. 22.105. PROCEDURES TO ADOPT AMENDMENT TO CERTIFICATE OF

    FORMATION BY MEMBERS HAVING VOTING RIGHTS. (a) Except as

    provided by Section 22.107(b), to amend the certificate of

    formation of a corporation with members having voting rights, the

    board of directors of the corporation must adopt a resolution

    specifying the proposed amendment and directing that the

    amendment be submitted to a vote at an annual or special meeting

    of the members having voting rights.

    (b) Written notice containing the proposed amendment or a

    summary of the changes to be effected by the amendment shall be

    given to each member entitled to vote at the meeting within the

    time and in the manner provided by this chapter for giving notice

    of a meeting of members.

    (c) The proposed amendment shall be adopted on receiving the

    vote required by Section 22.164.

    Acts 2003, 78th Leg., ch. 182, Sec. 1, eff. Jan. 1, 2006.

    Sec. 22.106. PROCEDURES TO ADOPT AMENDMENT TO CERTIFICATE OF

    FORMATION BY MANAGING MEMBERS. (a) To be approved, a proposed

    amendment to the certificate of formation of a corporation the

    management of the affairs of which is vested in the corporation's

    members under Section 22.202 must be submitted to a vote at an

    annual, regular, or special meeting of the members.

    (b) Except as otherwise provided by the certificate of formation

    or bylaws, notice containing the proposed amendment or a summary

    of the changes to be effected by the amendment shall be given to

    the members within the time and in the manner provided by this

    chapter for giving notice of a meeting of members.

    (c) The proposed amendment shall be adopted on receiving the

    vote required by Section 22.164.

    Acts 2003, 78th Leg., ch. 182, Sec. 1, eff. Jan. 1, 2006.

    Sec. 22.107. PROCEDURES TO ADOPT AMENDMENT TO CERTIFICATE OF

    FORMATION BY BOARD OF DIRECTORS. (a) If a corporation has no

    members or has no members with voting rights, or in the case of

    an amendment under Subsection (b), an amendment to the

    corporation's certificate of formation shall be adopted at a

    meeting of the board of directors on receiving the vote of

    directors required by Section 22.164.

    (b) Except as otherwise provided by the certificate of

    formation, the board of directors of a corporation with members

    having voting rights may, without member approval, adopt

    amendments to the certificate of formation to:

    (1) extend the duration of the corporation if the corporation

    was incorporated when limited duration was required by law;

    (2) delete the names and addresses of the initial directors;

    (3) delete the name and address of the initial registered agent

    or registered office, if a statement of change is on file with

    the secretary of state; or

    (4) change the corporate name by:

    (A) substituting the word "corporation," "incorporated,"

    "company," or "limited," or the abbreviation "corp.," "inc.,"

    "co.," or "ltd.," for a similar word or abbreviation in the name;

    or

    (B) adding, deleting, or changing a geographical attribution to

    the name.

    Acts 2003, 78th Leg., ch. 182, Sec. 1, eff. Jan. 1, 2006.

    Sec. 22.108. NUMBER OF AMENDMENTS SUBJECT TO VOTE AT MEETING.

    Any number of amendments to the corporation's certificate of

    formation may be submitted to and voted on by a corporation's

    members at any one meeting of the members.

    Acts 2003, 78th Leg., ch. 182, Sec. 1, eff. Jan. 1, 2006.

    Sec. 22.109. RESTATED CERTIFICATE OF FORMATION. (a) The board

    of directors of a corporation may adopt a restated certificate of

    formation as provided by Subchapter B, Chapter 3, by following

    the same procedure to amend the corporation's certificate of

    formation provided by Sections 22.104-22.107, except that member

    approval is required only if the restated certificate of

    formation contains an amendment.

    (b) A person shall file a restated certificate of formation as

    provided by Chapter 4, and the restated certificate of formation

    takes effect as provided by Subchapter B, Chapter 3.

    Added by Acts 2005, 79th Leg., Ch.

    64, Sec. 67, eff. January 1, 2006.

    SUBCHAPTER D. MEMBERS

    Sec. 22.151. MEMBERS. (a) A corporation may have one or more

    classes of members or may have no members.

    (b) If the corporation has one or more classes of members, the

    corporation's certificate of formation or bylaws must include:

    (1) a designation of each class;

    (2) the manner of the election or appointment of the members of

    each class; and

    (3) the qualifications and rights of the members of each class.

    (c) A corporation may issue a certificate, card, or other

    instrument evidencing membership rights, voting rights, or

    ownership rights as authorized by the certificate of formation or

    bylaws.

    Acts 2003, 78th Leg., ch. 182, Sec. 1, eff. Jan. 1, 2006.

    Sec. 22.152. IMMUNITY FROM LIABILITY. The members of a

    corporation are not personally liable for a debt, liability, or

    obligation of the corporation.

    Acts 2003, 78th Leg., ch. 182, Sec. 1, eff. Jan. 1, 2006.

    Sec. 22.153. ANNUAL MEETING. (a) Except as provided by

    Subsection (b), a corporation shall hold an annual meeting of the

    members at a time that is stated in or determined in accordance

    with the corporation's bylaws.

    (b) If the bylaws provide for more than one regular meeting of

    members each year, an annual meeting is not required. If an

    annual meeting is not required, directors may be elected at a

    meeting as provided by the bylaws.

    Acts 2003, 78th Leg., ch. 182, Sec. 1, eff. Jan. 1, 2006.

    Sec. 22.154. FAILURE TO CALL ANNUAL MEETING. (a) If the board

    of directors of a corporation fails to call the annual meeting of

    members when required, a member of the corporation may demand

    that the meeting be held within a reasonable time. The demand

    must be made in writing and sent to an officer of the corporation

    by registered mail.

    (b) If a required annual meeting is not called before the 61st

    day after the date of demand, a member of the corporation may

    compel the holding of the meeting by legal action directed

    against the board of directors, and each of the extraordinary

    writs of common law and of courts of equity are available to the

    member to compel the holding of the meeting. Each member has a

    justiciable interest sufficient to enable the member to institute

    and prosecute the legal proceedings.

    (c) Failure to hold a required annual meeting at the designated

    time does not result in the winding up and termination of the

    corporation.

    Acts 2003, 78th Leg., ch. 182, Sec. 1, eff. Jan. 1, 2006.

    Amended by:

    Acts 2007, 80th Leg., R.S., Ch.

    688, Sec. 87, eff. September 1, 2007.

    Sec. 22.155. SPECIAL MEETINGS OF MEMBERS. A special meeting of

    the members of a corporation may be called by:

    (1) the president;

    (2) the board of directors;

    (3) members having not less than one-tenth of the votes entitled

    to be cast at the meeting; or

    (4) other officers or persons as provided by the certificate of

    formation or bylaws of the corporation.

    Acts 2003, 78th Leg., ch. 182, Sec. 1, eff. Jan. 1, 2006.

    Sec. 22.156. NOTICE OF MEETING. (a) A corporation other than a

    church shall provide written notice of the place, date, and time

    of a meeting of the members of the corporation and, if the

    meeting is a special meeting, the purpose or purposes for which

    the meeting is called. The notice shall be delivered to each

    member entitled to vote at the meeting not later than the 10th

    day and not earlier than the 60th day before the date of the

    meeting. Notice may be delivered personally or in accordance with

    Section 6.051(b).

    (b) Notice of a meeting of the members of a corporation that is

    a church is sufficient if given by oral announcement at a

    regularly scheduled worship service before the meeting or as

    otherwise provided by the certificate of formation or bylaws of

    the corporation.

    Acts 2003, 78th Leg., ch. 182, Sec. 1, eff. Jan. 1, 2006.

    Sec. 22.157. SPECIAL BYLAWS AFFECTING NOTICE. (a) A

    corporation may provide in the corporation's bylaws that notice

    of an annual or regular meeting is not required.

    (b) A corporation having more than 1,000 members at the time a

    meeting is scheduled or called may provide notice of a meeting by

    publication in a newspaper of general circulation in the

    community in which the principal office of the corporation is

    located, if the corporation provides for that notice in its

    bylaws.

    Acts 2003, 78th Leg., ch. 182, Sec. 1, eff. Jan. 1, 2006.

    Sec. 22.158. PREPARATION AND INSPECTION OF LIST OF VOTING

    MEMBERS. (a) After setting a record date for the notice of a

    meeting, a corporation shall prepare an alphabetical list of the

    names of all its voting members. The list must identify:

    (1) the members who are entitled to notice and the members who

    are not entitled to notice of the meeting;

    (2) the address of each voting member; and

    (3) the number of votes each voting member is entitled to cast

    at the meeting.

    (b) Not later than the second business day after the date notice

    is given of a meeting for which a list was prepared in accordance

    with Subsection (a), and continuing through the meeting, the list

    of voting members must be available at the corporation's

    principal office or at a reasonable place in the municipality in

    which the meeting will be held, as identified in the notice of

    the meeting, for inspection by members entitled to vote at the

    meeting for the purpose of communication with other members

    concerning the meeting.

    (c) A voting member or voting member's agent or attorney is

    entitled on written demand to inspect and, at the member's

    expense and subject to Section 22.351, copy the list at a

    reasonable time during the period the list is available for

    inspection.

    (d) The corporation shall make the list of voting members

    available at the meeting. A voting member or voting member's

    agent or attorney is entitled to inspect the list at any time

    during the meeting or an adjournment of the meeting.

    Acts 2003, 78th Leg., ch. 182, Sec. 1, eff. Jan. 1, 2006.

    Sec. 22.159. QUORUM OF MEMBERS. (a) Unless otherwise provided

    by the certificate of formation or bylaws of a corporation,

    members of the corporation holding one-tenth of the votes

    entitled to be cast, in person or by proxy, constitute a quorum.

    (b) The vote of the majority of the votes entitled to be cast by

    the members present or represented by proxy at a meeting at which

    a quorum is present is the act of the members meeting, unless the

    vote of a greater number is required by law or the certificate of

    formation or bylaws.

    (c) Unless otherwise provided by the certificate of formation or

    bylaws, a church incorporated before May 12, 1959, is considered

    to have provided in the certificate of formation or bylaws that

    members present at a meeting for which notice has been given

    constitute a quorum.

    Acts 2003, 78th Leg., ch. 182, Sec. 1, eff. Jan. 1, 2006.

    Sec. 22.160. VOTING OF MEMBERS. (a) Each member of a

    corporation, regardless of class, is entitled to one vote on each

    matter submitted to a vote of the corporation's members, except

    to the extent that the voting rights of members of a class are

    limited, enlarged, or denied by the certificate of formation or

    bylaws of the corporation.

    (b) A member may vote in person or, unless otherwise provided by

    the certificate of formation or bylaws, by proxy executed in

    writing by the member or the member's attorney-in-fact.

    (c) Unless otherwise provided by the proxy, a proxy is revocable

    and expires 11 months after the date of its execution. A proxy

    may not be irrevocable for longer than 11 months.

    (d) If authorized by the certificate of formation or bylaws of

    the corporation, a member vote on any matter may be conducted by

    mail, by facsimile transmission, by electronic message, or by any

    combination of those methods.

    Acts 2003, 78th Leg., ch. 182, Sec. 1, eff. Jan. 1, 2006.

    Sec. 22.161. ELECTION OF DIRECTORS. (a) A member entitled to

    vote at an election of directors is entitled to vote, in person

    or by proxy, for as many persons as there are directors to be

    elected and for whose election the member has a right to vote.

    (b) If expressly authorized by the corporation's certificate of

    formation, the member may cumulate the member's vote by:

    (1) giving one candidate a number of votes equal to the number

    of the directors to be elected multiplied by the member's vote;

    or

    (2) distributing the votes on the same principle among any

    number of the candidates.

    (c) A member who intends to cumulate votes under Subsection (b)

    shall give written notice of the member's intention to the

    secretary of the corporation not later than the day preceding the

    date of the election.

    Acts 2003, 78th Leg., ch. 182, Sec. 1, eff. Jan. 1, 2006.

    Sec. 22.162. GREATER VOTING REQUIREMENTS UNDER CERTIFICATE OF

    FORMATION. If the corporation's certificate of formation

    requires the vote or concurrence of a greater proportion of the

    members of a corporation than is required by this chapter with

    respect to an action to be taken by the members, the certificate

    of formation controls.

    Acts 2003, 78th Leg., ch. 182, Sec. 1, eff. Jan. 1, 2006.

    Sec. 22.163. RECORD DATE FOR DETERMINATION OF MEMBERS. (a) The

    record date for determining members of a corporation may be set

    as provided by Section 6.101.

    (b) If a record date is not set under Section 6.101:

    (1) members on the date of the meeting who are otherwise

    eligible to vote are entitled to vote at the meeting;

    (2) members at the close of business on the business day

    preceding the date notice is given, or if notice is waived, at

    the close of business on the business day preceding the date of

    the meeting, are entitled to notice of a meeting of members; and

    (3) members at the close of business on the later of the day the

    board of directors adopts the resolution relating to the action

    or the 60th day before the date of the action are entitled to

    exercise any rights regarding any other lawful action.

    (c) The record date for the determination of members entitled to

    notice of or to vote at a meeting is effective for an adjournment

    of the meeting unless the board of directors of a corporation

    sets a new date for determining the right to notice of or to vote

    at the adjournment.

    Acts 2003, 78th Leg., ch. 182, Sec. 1, eff. Jan. 1, 2006.

    Amended by:

    Acts 2007, 80th Leg., R.S., Ch.

    688, Sec. 88, eff. September 1, 2007.

    Sec. 22.164. VOTE REQUIRED TO APPROVE FUNDAMENTAL ACTION. (a)

    In this section, "fundamental action" means:

    (1) an amendment of a certificate of formation, including an

    amendment required for the cancellation of an event requiring

    winding up in accordance with Section 11.152(b);

    (2) a voluntary winding up under Chapter 11;

    (3) a revocation of a voluntary decision to wind up under

    Section 11.151;

    (4) a cancellation of an event requiring winding up under

    Section 11.152(a);

    (5) a reinstatement under Section 11.202;

    (6) a distribution plan under Section 22.305;

    (7) a plan of merger under Subchapter F;

    (8) a sale of all or substantially all of the assets of a

    corporation under Subchapter F;

    (9) a plan of conversion under Subchapter F; or

    (10) a plan of exchange under Subchapter F.

    (b) Except as otherwise provided by Subsection (c) or the

    certificate of formation in accordance with Section 22.162, the

    vote required for approval of a fundamental action is:

    (1) at least two-thirds of the votes that members present in

    person or by proxy are entitled to cast at the meeting at which

    the action is submitted for a vote, if the corporation has

    members with voting rights;

    (2) at least two-thirds of the votes of members present at the

    meeting at which the action is submitted for a vote, if the

    management of the affairs of the corporation is vested in the

    corporation's members under Section 22.202; or

    (3) the affirmative vote of the majority of the directors in

    office, if the corporation has no members or has no members with

    voting rights.

    (c) If any class of members is entitled to vote on the

    fundamental action as a class by the terms of the certificate of

    formation or the bylaws, the vote required for the approval of

    the fundamental action is the vote required by Subsection (b)(1)

    and at least two-thirds of the votes that the members of each

    class in person or by proxy are entitled to cast at the meeting

    at which the action is submitted for a vote.

    Acts 2003, 78th Leg., ch. 182, Sec. 1, eff. Jan. 1, 2006.

    Amended by:

    Acts 2007, 80th Leg., R.S., Ch.

    688, Sec. 89, eff. September 1, 2007.

    SUBCHAPTER E. MANAGEMENT

    Sec. 22.201. MANAGEMENT BY BOARD OF DIRECTORS. Except as

    provided by Section 22.202, the affairs of a corporation are

    managed by a board of directors. The board of directors may be

    designated by any name appropriate to the customs, usages, or

    tenets of the corporation.

    Acts 2003, 78th Leg., ch. 182, Sec. 1, eff. Jan. 1, 2006.

    Sec. 22.202. MANAGEMENT BY MEMBERS. (a) The certificate of

    formation of a corporation may vest the management of the affairs

    of the corporation in the members of the corporation. If the

    corporation has a board of directors, the corporation may limit

    the authority of the board to the extent provided by the

    certificate of formation or bylaws.

    (b) A corporation is considered to have vested the management of

    the corporation's affairs in the board of directors of the

    corporation in the absence of a provision to the contrary in the

    certificate of formation, unless the corporation is a church

    organized and operating under a congregational system that:

    (1) was incorporated before January 1, 1994; and

    (2) has the management of its affairs vested in the

    corporation's members.

    Acts 2003, 78th Leg., ch. 182, Sec. 1, eff. Jan. 1, 2006.

    Sec. 22.203. BOARD MEMBER ELIGIBILITY REQUIREMENTS. A director

    of a corporation is not required to be a resident of this state

    or a member of the corporation unless the certificate of

    formation or a bylaw of the corporation imposes that requirement.

    The certificate of formation or bylaws may prescribe other

    qualifications for directors.

    Acts 2003, 78th Leg., ch. 182, Sec. 1, eff. Jan. 1, 2006.

    Sec. 22.204. NUMBER OF DIRECTORS. (a) If the corporation has a

    board of directors, a corporation may not have fewer than three

    directors. The number of directors shall be set by, or in the

    manner provided by, the certificate of formation or bylaws of the

    corporation, except that the number of directors on the initial

    board of directors must be set by the certificate of formation.

    (b) The number of directors may be increased or decreased by

    amendment to, or in the manner provided by, the certificate of

    formation or bylaws. A decrease in the number of directors may

    not shorten the term of an incumbent director.

    (c) In the absence of a provision of the certificate of

    formation or a bylaw setting the number of directors or providing

    for the manner in which the number of directors shall be

    determined, the number of directors is the same as the number

    constituting the initial board of directors.

    Acts 2003, 78th Leg., ch. 182, Sec. 1, eff. Jan. 1, 2006.

    Sec. 22.205. DESIGNATION OF INITIAL BOARD OF DIRECTORS. If the

    corporation is to be managed by a board of directors, the

    certificate of formation of a corporation must state the names of

    the members of the initial board of directors of the corporation.

    Acts 2003, 78th Leg., ch. 182, Sec. 1, eff. Jan. 1, 2006.

    Sec. 22.206. ELECTION OR APPOINTMENT OF BOARD OF DIRECTORS.

    Directors other than the initial directors are elected,

    appointed, or designated in the manner provided by the

    certificate of formation or bylaws. If the method of election,

    designation, or appointment is not provided by the certificate of

    formation or bylaws, directors other than the initial directors

    are elected by the board of directors.

    Acts 2003, 78th Leg., ch. 182, Sec. 1, eff. Jan. 1, 2006.

    Sec. 22.207. ELECTION AND CONTROL BY CERTAIN ENTITIES. (a) The

    board of directors of a religious, charitable, educational, or

    eleemosynary corporation may be affiliated with, elected, and

    controlled by an incorporated or unincorporated convention,

    conference, or association organized under the laws of this or

    another state, the membership of which is composed of

    representatives, delegates, or messengers from a church or other

    religious association.

    (b) The board of directors of a corporation may be wholly or

    partly elected by one or more associations or corporations

    organized under the laws of this or another state if:

    (1) the certificate of formation or bylaws of the corporation

    provide for that election; and

    (2) the corporation has no members with voting rights.

    Acts 2003, 78th Leg., ch. 182, Sec. 1, eff. Jan. 1, 2006.

    Sec. 22.208. TERM OF OFFICE. (a) Unless the director resigns

    or is removed, a director on the initial board of directors of a

    corporation holds office until the first annual election of

    directors or for the period specified in the certificate of

    formation or bylaws of the corporation. Directors other than the

    initial directors are elected, appointed, or designated for the

    terms provided by the certificate of formation or bylaws.

    (b) In the absence of a provision in the certificate of

    formation or bylaws setting the term of office for directors, a

    director holds office until the next annual election of directors

    and until a successor is elected, appointed, or designated and

    qualified.

    (c) A director may be removed from office as provided in Section

    22.211.

    Acts 2003, 78th Leg., ch. 182, Sec. 1, eff. Jan. 1, 2006.

    Amended by:

    Acts 2005, 79th Leg., Ch.

    64, Sec. 68, eff. January 1, 2006.

    Sec. 22.209. CLASSIFICATION OF DIRECTORS. Directors may be

    divided into classes. The terms of office of the several classes

    are not required to be uniform.

    Acts 2003, 78th Leg., ch. 182, Sec. 1, eff. Jan. 1, 2006.

    Sec. 22.210. EX OFFICIO MEMBER OF BOARD. (a) The certificate

    of formation or bylaws of a corporation may provide that a person

    may be an ex officio member of the board of directors of the

    corporation.

    (b) A person designated as an ex officio member of the board is

    entitled to receive notice of and to attend board meetings.

    (c) An ex officio member is not entitled to vote unless the

    certificate of formation or bylaws authorize the member to vote.

    An ex officio member of the board who is not entitled to vote

    does not have the duties or liabilities of a director provided by

    this chapter.

    Acts 2003, 78th Leg., ch. 182, Sec. 1, eff. Jan. 1, 2006.

    Sec. 22.211. REMOVAL OF DIRECTOR. (a) A director of a

    corporation may be removed from office under any procedure

    provided by the certificate of formation or bylaws of the

    corporation.

    (b) In the absence of a provision for removal in the certificate

    of formation or bylaws, a director may be removed from office,

    with or without cause, by the persons entitled to elect,

    designate, or appoint the director. If the director was elected

    to office, removal requires an affirmative vote equal to the vote

    necessary to elect the director.

    Acts 2003, 78th Leg., ch. 182, Sec. 1, eff. Jan. 1, 2006.

    Sec. 22.2111. RESIGNATION OF DIRECTOR. Except as provided by

    the certificate of formation or bylaws, a director of a

    corporation may resign at any time by providing written notice to

    the corporation.

    Added by Acts 2005, 79th Leg., Ch.

    64, Sec. 69, eff. January 1, 2006.

    Sec. 22.212. VACANCY. (a) Unless otherwise provided by the

    certificate of formation or bylaws of the corporation, a vacancy

    in the board of directors of a corporation shall be filled by the

    affirmative vote of the majority of the remaining directors,

    regardless of whether that majority is less than a quorum. A

    director elected to fill a vacancy is elected for the unexpired

    term of the member's predecessor in office.

    (b) A vacancy in the board occurring because of an increase in

    the number of directors shall be filled by election at an annual

    meeting or at a special meeting of members called for that

    purpose. If a corporation has no members or has no members with

    the right to vote on the vacancy, the vacancy shall be filled as

    provided by the certificate of formation or bylaws.

    Acts 2003, 78th Leg., ch. 182, Sec. 1, eff. Jan. 1, 2006.

    Sec. 22.213. QUORUM. (a) A quorum for the transaction of

    business by the board of directors of a corporation is the lesser

    of:

    (1) the majority of the number of directors set by the

    corporation's bylaws or, in the absence of a bylaw setting the

    number of directors, a majority of the number of directors stated

    in the corporation's certificate of formation; or

    (2) any number, not less than three, set as a quorum by the

    certificate of formation or bylaws.

    (b) A director present by proxy at a meeting may not be counted

    toward a quorum.

    Acts 2003, 78th Leg., ch. 182, Sec. 1, eff. Jan. 1, 2006.

    Sec. 22.214. ACTION BY DIRECTORS. The act of a majority of the

    directors present in person or by proxy at a meeting at which a

    quorum is present is the act of the board of directors of a

    corporation, unless the act of a greater number is required by

    the certificate of formation or bylaws of the corporation.

    Acts 2003, 78th Leg., ch. 182, Sec. 1, eff. Jan. 1, 2006.

    Sec. 22.215. VOTING IN PERSON OR BY PROXY. A director of a

    corporation may vote in person or, if authorized by the

    certificate of formation or bylaws of the corporation, by proxy

    executed in writing by the director.

    Acts 2003, 78th Leg., ch. 182, Sec. 1, eff. Jan. 1, 2006.

    Sec. 22.216. TERM AND REVOCABILITY OF PROXY. (a) A proxy

    expires three months after the date the proxy is executed.

    (b) A proxy is revocable unless otherwise provided by the proxy

    or made irrevocable by law.

    Acts 2003, 78th Leg., ch. 182, Sec. 1, eff. Jan. 1, 2006.

    Sec. 22.217. NOTICE OF MEETING; WAIVER OF NOTICE. (a) Regular

    meetings of the board of directors of a corporation may be held

    with or without notice as prescribed by the corporation's bylaws.

    (b) Special meetings of the board of directors shall be held

    with notice as prescribed by the bylaws. Attendance of a director

    at a meeting constitutes a waiver of notice, unless the director

    attends a meeting for the express purpose of objecting to the

    transaction of any business on the ground that the meeting is not

    lawfully called or convened.

    (c) Unless required by the bylaws, the business to be transacted

    at, or the purpose of, a regular or special meeting of the board

    of directors is not required to be specified in the notice or

    waiver of notice of the meeting.

    (d) Notice may be delivered personally or in accordance with

    Section 6.051(b).

    Acts 2003, 78th Leg., ch. 182, Sec. 1, eff. Jan. 1, 2006.

    Sec. 22.218. MANAGEMENT COMMITTEE. (a) If authorized by the

    certificate of formation or bylaws of the corporation, the board

    of directors of a corporation, by resolution adopted by the

    majority of the directors in office, may designate one or more

    committees to have and exercise the authority of the board in the

    management of the corporation to the extent provided by:

    (1) the resolution;

    (2) the certificate of formation; or

    (3) the bylaws.

    (b) A committee designated under this section must consist of at

    least two persons. Except as provided by Subsection (b-1), the

    majority of the persons on the committee must be directors. If

    provided by the certificate of formation or bylaws, the remaining

    persons on the committee are not required to be directors.

    (b-1) If a corporation is a religious institution and if

    provided by the corporation's certificate of formation or bylaws,

    a committee designated under this section may be composed

    entirely of persons who are not directors of the corporation.

    (c) The designation of a committee and the delegation of

    authority to the committee does not operate to relieve the board

    of directors, or an individual director, of any responsibility

    imposed on the board or director by law. A committee member who

    is not a director has the same responsibility with respect to the

    committee as a committee member who is a director.

    Acts 2003, 78th Leg., ch. 182, Sec. 1, eff. Jan. 1, 2006.

    Amended by:

    Acts 2009, 81st Leg., R.S., Ch.

    1007, Sec. 1, eff. September 1, 2009.

    Sec. 22.219. OTHER COMMITTEES. (a) The board of directors of a

    corporation, by resolution adopted by the majority of the

    directors at a meeting at which a quorum is present, or the

    president, if authorized by a similar resolution of the board of

    directors or by the certificate of formation or bylaws of the

    corporation, may designate and appoint one or more committees

    that do not have the authority of the board of directors in the

    management of the corporation.

    (b) The membership on a committee designated under this section

    may be limited to directors.

    Acts 2003, 78th Leg., ch. 182, Sec. 1, eff. Jan. 1, 2006.

    Sec. 22.220. ACTION WITHOUT MEETING OF DIRECTORS OR COMMITTEE.

    (a) The certificate of formation or bylaws of a corporation may

    provide that an action required by this chapter to be taken at a

    meeting of the corporation's directors or an action that may be

    taken at a meeting of the directors or a committee may be taken

    without a meeting if a written consent, stating the action to be

    taken, is signed by the number of directors or committee members

    necessary to take that action at a meeting at which all of the

    directors or committee members are present and voting. The

    consent must state the date of each director's or committee

    member's signature.

    (b) Prompt notice of the taking of an action by directors or a

    committee without a meeting by less than unanimous written

    consent shall be given to each director or committee member who

    did not consent in writing to the action.

    Acts 2003, 78th Leg., ch. 182, Sec. 1, eff. Jan. 1, 2006.

    Amended by:

    Acts 2007, 80th Leg., R.S., Ch.

    688, Sec. 90, eff. September 1, 2007.

    Sec. 22.221. GENERAL STANDARDS FOR DIRECTORS. (a) A director

    shall discharge the director's duties, including duties as a

    committee member, in good faith, with ordinary care, and in a

    manner the director reasonably believes to be in the best

    interest of the corporation.

    (b) A director is not liable to the corporation, a member, or

    another person for an action taken or not taken as a director if

    the director acted in compliance with this section. A person

    seeking to establish liability of a director must prove that the

    director did not act:

    (1) in good faith;

    (2) with ordinary care; and

    (3) in a manner the director reasonably believed to be in the

    best interest of the corporation.

    Acts 2003, 78th Leg., ch. 182, Sec. 1, eff. Jan. 1, 2006.

    Sec. 22.222. RELIGIOUS CORPORATION DIRECTOR'S GOOD FAITH

    RELIANCE ON CERTAIN INFORMATION. A director of a religious

    corporation, in the discharge of a duty imposed or power

    conferred on the director, including a duty imposed or power

    conferred as a committee member, may rely in good faith on

    information or on an opinion, report, or statement, including a

    financial statement or other financial data, concerning the

    corporation or another person that was prepared or presented by:

    (1) a religious authority; or

    (2) a minister, priest, rabbi, or other person whose position or

    duties in the religious organization the director believes

    justify reliance and confidence and whom the director believes to

    be reliable and competent in the matters presented.

    Acts 2003, 78th Leg., ch. 182, Sec. 1, eff. Jan. 1, 2006.

    Amended by:

    Acts 2007, 80th Leg., R.S., Ch.

    688, Sec. 91, eff. September 1, 2007.

    Sec. 22.223. NOT A TRUSTEE. A director of a corporation is not

    considered to have the duties of a trustee of a trust with

    respect to the corporation or with respect to property held or

    administered by the corporation, including property subject to

    restrictions imposed by the donor or transferor of the property.

    Acts 2003, 78th Leg., ch. 182, Sec. 1, eff. Jan. 1, 2006.

    Sec. 22.224. DELEGATION OF INVESTMENT AUTHORITY. (a) The board

    of directors of a corporation may:

    (1) contract with an advisor who is an investment counsel or a

    trust company, bank, investment advisor, or investment manager;

    and

    (2) confer on that advisor the authority to:

    (A) purchase or otherwise acquire a stock, bond, security, or

    other investment on behalf of the corporation; and

    (B) sell, transfer, or otherwise dispose of an asset or property

    of the corporation at a time and for a consideration the advisor

    considers appropriate.

    (b) The board of directors may:

    (1) confer on an advisor described by Subsection (a) other

    powers regarding the corporation's investments as the board

    considers appropriate; and

    (2) authorize the advisor to hold title to an asset or property

    of the corporation, in the advisor's own name or in the name of a

    nominee, for the benefit of the corporation.

    (c) The board of directors is not liable for an action taken or

    not taken by an advisor under this section if the board acted in

    good faith and with ordinary care in selecting the advisor. The

    board of directors may remove or replace the advisor, with or

    without cause, if the board considers that action appropriate or

    necessary.

    Acts 2003, 78th Leg., ch. 182, Sec. 1, eff. Jan. 1, 2006.

    Sec. 22.225. LOAN TO DIRECTOR PROHIBITED. (a) A corporation

    may not make a loan to a director.

    (b) The directors of a corporation who vote for or assent to the

    making of a loan to a director, and any officer who participates

    in making the loan, are jointly and severally liable to the

    corporation for the amount of the loan until the loan is repaid.

    Acts 2003, 78th Leg., ch. 182, Sec. 1, eff. Jan. 1, 2006.

    Sec. 22.226. DIRECTOR LIABILITY FOR CERTAIN DISTRIBUTIONS OF

    ASSETS. (a) In addition to any other liability imposed by law

    on the directors of a corporation, the directors who vote for or

    assent to a distribution of assets other than in payment of the

    corporation's debts, when the corporation is insolvent or when

    distribution would render the corporation insolvent, or during

    the liquidation of the corporation, without the payment and

    discharge of or making adequate provisions for any known debt,

    obligation, or liability of the corporation, are jointly and

    severally liable to the corporation for the value of the assets

    distributed, to the extent that the debt, obligation, or

    liability is not paid and discharged.

    (b) A director is not liable under this section if, in voting

    for or assenting to a distribution, the director:

    (1) relied in good faith and with ordinary care on information

    or an opinion, report, or statement in accordance with Section

    3.102;

    (2) acting in good faith and with ordinary care, considered the

    assets of the corporation to be at least equal to their book

    value; or

    (3) in determining whether the corporation made adequate

    provision for the discharge of all of its liabilities and

    obligations as provided in Section 11.053, relied in good faith

    and with ordinary care on financial statements of, or other

    information concerning, a person who was or became contractually

    obligated to discharge some or all of those liabilities or

    obligations.

    Acts 2003, 78th Leg., ch. 182, Sec. 1, eff. Jan. 1, 2006.

    Sec. 22.227. DISSENT TO ACTION. (a) A director of a

    corporation who is present at a meeting of the board of directors

    at which action is taken on a corporate matter described by

    Section 22.226(a) is presumed to have assented to the action

    unless:

    (1) the director's dissent has been entered in the minutes of

    the meeting;

    (2) the director has filed a written dissent to the action with

    the person acting as the secretary of the meeting before the

    meeting is adjourned; or

    (3) the director has sent a written dissent by registered mail

    to the secretary of the corporation immediately after the meeting

    has been adjourned.

    (b) The right to dissent under this section does not apply to a

    director who voted in favor of the action.

    Acts 2003, 78th Leg., ch. 182, Sec. 1, eff. Jan. 1, 2006.

    Sec. 22.228. RELIANCE ON WRITTEN OPINION OF ATTORNEY. A

    director is not liable under Section 22.226 or 22.227 if, in the

    exercise of ordinary care, the director acted in good faith and

    in reliance on the written opinion of an attorney for the

    corporation.

    Acts 2003, 78th Leg., ch. 182, Sec. 1, eff. Jan. 1, 2006.

    Sec. 22.229. RIGHT TO CONTRIBUTION. A director against whom a

    claim is asserted under Section 22.226 or 22.227 and who is held

    liable on the claim is entitled to contribution from persons who

    accepted or received the distribution knowing the distribution to

    have been made in violation of that section, in proportion to the

    amounts received by those persons.

    Acts 2003, 78th Leg., ch. 182, Sec. 1, eff. Jan. 1, 2006.

    Sec. 22.230. CONTRACTS OR TRANSACTIONS INVOLVING INTERESTED

    DIRECTORS, OFFICERS, AND MEMBERS. (a) This section applies only

    to a contract or transaction between a corporation and:

    (1) one or more of the corporation's directors, officers, or

    members; or

    (2) an entity or other organization in which one or more of the

    corporation's directors, officers, or members:

    (A) is a managerial official or a member; or

    (B) has a financial interest.

    (b) An otherwise valid contract or transaction is valid

    notwithstanding that a director, officer, or member of the

    corporation is present at or participates in the meeting of the

    board of directors, of a committee of the board, or of the

    members that authorizes the contract or transaction, or votes to

    authorize the contract or transaction, if:

    (1) the material facts as to the relationship or interest and as

    to the contract or transaction are disclosed to or known by:

    (A) the corporation's board of directors, a committee of the

    board of directors, or the members, and the board, the committee,

    or the members in good faith and with ordinary care authorize the

    contract or transaction by the affirmative vote of the majority

    of the disinterested directors, committee members or members,

    regardless of whether the disinterested directors, committee

    members or members constitute a quorum; or

    (B) the members entitled to vote on the authorization of the

    contract or transaction, and the contract or transaction is

    specifically approved in good faith and with ordinary care by a

    vote of the members; or

    (2) the contract or transaction is fair to the corporation when

    the contract or transaction is authorized, approved, or ratified

    by the board of directors, a committee of the board of directors,

    or the members.

    (c) Common or interested directors or members of a corporation

    may be included in determining the presence of a quorum at a

    meeting of the board, a committee of the board, or members that

    authorizes the contract or transaction.

    Acts 2003, 78th Leg., ch. 182, Sec. 1, eff. Jan. 1, 2006.

    Sec. 22.231. OFFICERS. (a) The officers of a corporation shall

    include a president and a secretary and may include one or more

    vice presidents, a treasurer, and other officers and assistant

    officers as considered necessary. Any two or more offices, other

    than the offices of president and secretary, may be held by the

    same person.

    (b) A properly designated committee may perform the functions of

    an officer. A single committee may perform the functions of any

    two or more officers, including the functions of president and

    secretary.

    (c) The officers of a corporation may be designated by other or

    additional titles as provided by the certificate of formation or

    bylaws of the corporation.

    Acts 2003, 78th Leg., ch. 182, Sec. 1, eff. Jan. 1, 2006.

    Sec. 22.232. ELECTION OR APPOINTMENT OF OFFICERS. (a) An

    officer of a corporation shall be elected or appointed at the

    time, in the manner, and for the terms prescribed by the

    certificate of formation or bylaws of the corporation. The term

    of an officer may not exceed three years.

    (b) If the certificate of formation or bylaws do not include

    provisions for the election or appointment of officers, the

    officers shall be elected or appointed annually by the board of

    directors or, if the management of the corporation is vested in

    the corporation's members, by the members.

    Acts 2003, 78th Leg., ch. 182, Sec. 1, eff. Jan. 1, 2006.

    Sec. 22.233. APPLICATION TO CHURCH. A corporation that is a

    church is not required to have officers as provided by this

    subchapter. The duties and responsibilities of the officers may

    be vested in the corporation's board of directors or other

    designated body in any manner provided for by the certificate of

    formation or bylaws of the corporation.

    Acts 2003, 78th Leg., ch. 182, Sec. 1, eff. Jan. 1, 2006.

    Sec. 22.234. RELIGIOUS CORPORATION OFFICER'S GOOD FAITH RELIANCE

    ON CERTAIN INFORMATION. An officer of a religious corporation,

    in the discharge of a duty imposed or power conferred on the

    officer, may rely in good faith and with ordinary care on

    information or on an opinion, report, or statement, including a

    financial statement or other financial data, concerning the

    corporation or another person that was prepared or presented by:

    (1) a religious authority; or

    (2) a minister, priest, rabbi, or other person whose position or

    duties in the religious organization the officer believes justify

    reliance and confidence and whom the officer believes to be

    reliable and competent in the matters presented.

    Acts 2003, 78th Leg., ch. 182, Sec. 1, eff. Jan. 1, 2006.

    Amended by:

    Acts 2007, 80th Leg., R.S., Ch.

    688, Sec. 92, eff. September 1, 2007.

    Sec. 22.235. OFFICER LIABILITY. (a) An officer is not liable

    to the corporation or any other person for an action taken or

    omission made by the officer in the person's capacity as an

    officer unless the officer's conduct was not exercised:

    (1) in good faith;

    (2) with ordinary care; and

    (3) in a manner the officer reasonably believes to be in the

    best interest of the corporation.

    (b) This section shall not affect the liability of the

    corporation for an act or omission of the officer.

    Acts 2003, 78th Leg., ch. 182, Sec. 1, eff. Jan. 1, 2006.

    SUBCHAPTER F. FUNDAMENTAL BUSINESS TRANSACTIONS

    Sec. 22.251. APPROVAL OF MERGER. (a) A domestic corporation

    that is a party to a merger under Chapter 10 must approve the

    merger by complying with this section.

    (b) If the corporation that is a party to the merger has no

    members or has no members with voting rights, the plan of merger

    must be approved by the vote of directors required by Section

    22.164.

    (c) If the management of the affairs of the corporation that is

    a party to the merger is vested in its members under Section

    22.202, the plan of merger:

    (1) must be submitted to a vote at an annual, regular, or

    special meeting of the members; and

    (2) must be approved by the members by the vote required by

    Section 22.164.

    (d) If the corporation that is a party to the merger has members

    with voting rights:

    (1) the board of directors must adopt a resolution that:

    (A) approves the plan of merger; and

    (B) directs that the plan be submitted to a vote at an annual or

    special meeting of the members having voting rights; and

    (2) the members must approve the plan of merger by the vote

    required by Section 22.164.

    Acts 2003, 78th Leg., ch. 182, Sec. 1, eff. Jan. 1, 2006.

    Sec. 22.252. APPROVAL OF SALE OF ALL OR SUBSTANTIALLY ALL OF

    ASSETS. (a) A corporation must approve the sale of all or

    substantially all of its assets by complying with this section.

    (b) If the corporation has no members or has no members with

    voting rights, the sale of all or substantially all of the assets

    of the corporation must be authorized by the vote of directors

    required by Section 22.164.

    (c) If the management of the affairs of the corporation is

    vested in its members under Section 22.202, a resolution

    authorizing a sale of all or substantially all of the assets of

    the corporation:

    (1) must be submitted to a vote at an annual, regular, or

    special meeting of the members; and

    (2) must be approved by the members by the vote required by

    Section 22.164.

    (d) If the corporation has members with voting rights:

    (1) the board of directors of the corporation must adopt a

    resolution that:

    (A) recommends the sale; and

    (B) directs that the resolution be submitted to a vote at an

    annual or special meeting of the members having voting rights;

    and

    (2) the members must approve the resolution by the vote required

    by Section 22.164.

    (e) At the meeting required by Subsection (c) or (d), in

    addition to approving the resolution authorizing the sale, the

    members may set, or authorize the board of directors to set, the

    terms and conditions of the sale and the consideration to be

    received by the corporation for the sale by the same vote of

    members.

    (f) After the members authorize a sale under Subsection (d), the

    board of directors may abandon the sale, subject to the rights of

    third parties under any contracts relating to the sale, without

    further action or approval by members.

    (g) Notwithstanding Subsection (d), if a corporation is

    insolvent, a sale of all or substantially all of the assets of

    the corporation may be authorized on receiving the affirmative

    vote of the majority of the directors in office.

    (h) The phrase "sale of all or substantially all of the assets"

    means the sale, lease, exchange, or other disposition, other than

    a pledge, mortgage, deed of trust, or trust indenture unless

    otherwise provided by the certificate of formation, of all or

    substantially all of the property and assets of a domestic

    corporation that is not made in the usual and regular course of

    the corporation's activities without regard to whether the

    disposition is made with the goodwill of the corporation's

    activities. The term does not include a transaction that results

    in the corporation directly or indirectly:

    (1) continuing to engage in one or more activities; or

    (2) applying a portion of the consideration received in

    connection with the transaction to the conduct of an activity

    that the corporation engages in after the transaction.

    Acts 2003, 78th Leg., ch. 182, Sec. 1, eff. Jan. 1, 2006.

    Sec. 22.253. MEETING OF MEMBERS; NOTICE. (a) The corporation

    must give to each member entitled to vote at a meeting described

    by Section 22.251(c) or (d) or Section 22.252(c) or (d) a written

    notice stating that the purpose or one of the purposes of the

    meeting is to consider the plan of merger or the sale of all or

    substantially all of the assets of the corporation. The notice

    must be given in the time and manner provided by Chapter 6 and

    this chapter for giving notice of a meeting to members.

    (b) A vote of members entitled to vote at the meeting shall be

    taken on the plan of merger or the resolution authorizing the

    sale of all or substantially all of the assets of the

    corporation. The members must approve the plan or resolution by

    the vote required by Section 22.164.

    (c) For a meeting to vote on a plan of merger, the notice of the

    meeting must contain the plan of merger or a summary of the plan

    of merger.

    (d) For a corporation the management of the affairs of which is

    vested in its members under Section 22.202, the notice of the

    meeting is subject to the provisions of the certificate of

    formation or bylaws of the corporation.

    Acts 2003, 78th Leg., ch. 182, Sec. 1, eff. Jan. 1, 2006.

    Sec. 22.254. PLEDGE, MORTGAGE, DEED OF TRUST, OR TRUST

    INDENTURE. (a) Except as otherwise provided by Subsection (b)

    or by the corporation's certificate of formation:

    (1) the board of directors of a corporation may authorize a

    pledge, mortgage, deed of trust, or trust indenture; and

    (2) an authorization or consent of members is not required for

    the validity of the transaction or for any sale under the terms

    of the transaction.

    (b) If the management of the affairs of a corporation is vested

    in the corporation's members under Section 22.202:

    (1) the members may authorize a pledge, mortgage, deed of trust,

    or trust indenture in the manner provided by Section 22.252(c)

    for a sale of all or substantially al

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