Some would say that changing the laws of the State of Texas is akin to watching the making of sausage. It can be a messy and confusing process. Some would say we are also fortunate that the process only occurs every other year. In the 2019 session of the Texas Legislature, various changes to business entity laws are expected to be adopted.
How do Texas lawyers find out about these changes in Texas law on a current basis? There will be several presentations at the 17th Annual “Choice, Governance & Acquisition of Entities” course to be held on May 24, in Dallas at the Park Cities Hilton. The course is co-sponsored by Texas Bar CLE and the Business Law Section of the State Bar of Texas. Video replays of the course will be held in Houston on June 21 and in San Antonio on June 28.
Committees of the State Bar Business Law Section have drafted a total of five bills that have been introduced in this session and have been passed or heard by House and Senate Committees. The bills are expected to pass the Texas Legislature.
One simple bill – House Bill 3609 (Rep. Martinez Fischer)/Senate Bill 1970 (Sen. Hancock) – amends the Texas Business and Commerce Code to eliminate the need for duplicative filings with both the Texas Secretary of State and county clerks of assumed name certificates for corporations, limited partnerships and limited liability companies. If passed, the sole required filing of an assumed name certificate for these types of entities would be with the Texas Secretary of State. These filings are available for public review through the website maintained by the Secretary of State.
HB 3608 (Martinez Fischer)/SB 1859 (Hancock) would clarify the authority in the Texas Business Organizations Code (or TBOC) given to business entities to maintain records through electronic data systems, including block chain technology. The changes would not mandate the use of such data systems but simply make it a possible alternative for record-keeping when such data systems become a viable means for that task. The same bill also improves the flexibility to file instruments with the Secretary of State on a delayed-effectiveness basis.
Another bill – HB 3603 (Martinez Fischer)/SB 1972 (Hancock) – would make more uniform the provisions in the TBOC relating to derivative proceedings on behalf of limited liability companies, for-profit corporations and limited partnerships.
HB 3602 (Martinez Fischer)/SB 1971 (Hancock) would update the provisions in the TBOC relating to ratification of defective corporate acts by for-profit corporations and two-step tender offers/mergers to match recent changes made in Delaware law. Another bill – HB 3606 (Martinez Fischer)/SB 1969 (Hancock) – would add provisions for nonprofit corporations to the TBOC for ratification of defective corporate acts that are similar to those provisions for for-profit corporations that have existed for several years.
Some of the presentations at the course will also focus on likely changes in state tax laws by the Texas Legislature.
One bill – HB 4149 (Leach)/SB 2259 (Hughes) – pending in the legislature would establish a statewide business court and appellate court system using appointed judges. This legislation would enhance the Texas judicial system and put the system on a par with numerous other states that have business courts or chancery courts to address complicated or special legal issues involving entity governance, transactions and ownership.
The one-day “Choice, Governance & Acquisition of Entities” course will be a handy way for practicing attorneys and others to learn about the latest developments relating to business entities coming out of the 2019 session of the Texas Legislature. Register today by visiting the event website.
Daryl Robertson is a partner in the Dallas office of Hunton Andrews Kurth. He focuses his practice on business and finance transactions, entity formation, M&A and securities law.