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Michael Powell Office of the Secretary of State 18th Annual Texas Crime Stoppers Conference San Antonio, Texas May 19, 2 PowerPoint Presentation
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Michael Powell Office of the Secretary of State 18th Annual Texas Crime Stoppers Conference San Antonio, Texas May 19, 2006. The New Business Organizations Code And How it Applies to Nonprofit Corporations. Business and Public Filings Division. Statutory Revision Program.

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Michael PowellOffice of the Secretary of State18th Annual Texas Crime Stoppers ConferenceSan Antonio, TexasMay 19, 2006

The New Business Organizations Code

And How it Applies to Nonprofit Corporations

Business and Public Filings Division

statutory revision program

Statutory Revision Program

  • Section 323.007 of the Texas Government Code directs that the Texas Legislative Council execute a permanent statutory revision program for the revision of the statutes on a topical or code basis.
  • Purpose of the program is to clarify and simplify the statutes and to make the statutes more accessible, understandable and usable.

Business and Public Filings Division

statutory revision program1

Statutory Revision Program

  • TLC may not alter the sense, meaning or effect of the statute.
  • Statutory revision process is nearing completion with enacted codes covering almost all areas of the Texas statutes.
  • The BOC was not a TLC statutory revision. The BOC was a product of a State Bar Ad Hoc Committee and does include changes.

Business and Public Filings Division

texas business organizations code codifies the following statutes

Texas Business Organizations Code codifies the following statutes:

  • Texas Business Corporation Act
  • Texas Non-Profit Corporation Act
  • Texas Professional Corporation Act
  • Texas Professional Association Act
  • Texas Miscellaneous Corporation Laws Act
  • Texas Revised Partnership Act
  • Texas Revised Limited Partnership Act

Business and Public Filings Division

texas business organizations code codifies the following statutes1

Texas Business Organizations Code codifies the following statutes:

  • Texas Limited Liability Company Act
  • Texas Real Estate Investment Trust Act
  • Texas Cooperative Association Act
  • Texas Uniform Unincorporated Nonprofit Association Act

Business and Public Filings Division

code structure

Code Structure

Provisions common to most forms of entities are placed in a single title with provisions specific to entity type being placed in separate titles.

  • Title 1. General Provisions
  • Title 2. Corporations
  • Title 3. Limited Liability Companies
  • Title 4. Partnerships
  • Title 5. Real Estate Investment Trusts
  • Title 6. Associations
  • Title 7. Professional Entities
  • Title 8. Miscellaneous and Transition Provisions

Business and Public Filings Division

the wheel

The Wheel

Business and Public Filings Division

general provisions

General Provisions

Title 1

“The Hub”

Business and Public Filings Division

  • Provisions applicable to most entities
  • Contains 12 Chapters pulling together similar or overlapping provisions found in prior law
  • Intent--to standardize, organize, and simplify
hub chapters title 1

Hub ChaptersTitle 1

  • Chapter 1: Definitions (key chapter)
  • Chapter 2: Purposes and Powers of Texas entities (Prohibited Purposes)

Business and Public Filings Division

more hub provisions

More Hub Provisions

  • Chapter 3: Formation and Governance
    • Subchapter A--Requirements for certificates of formation for all entities
    • Subchapter B--Amendments and restatements

Business and Public Filings Division

chapter 4

Chapter 4

  • Filings
    • Subchapter A--General provisions applicable to signatures, liability for false filing instruments, facsimile copies
    • Subchapter B--When Filings Take Effect
      • General rule: On Filing
      • Delayed effective dates and conditions
      • Abandonments before effectiveness

Business and Public Filings Division

chapter 4 continued

Chapter 4 Continued

  • Subchapter C: Certificates of correction
  • Subchapter D: FILING FEES!

Business and Public Filings Division

All Entities 4.151

For-Profit 4.152

Nonprofit 4.153 etc.

filing fees nonprofit corporations

Filing FeesNonprofit Corporations

  • Fees for nonprofit corporation filings remain the same.

Business and Public Filings Division

chapter 5

Chapter 5

  • Names of Entities; Registered Agents and Registered Offices
  • Subchapter B: Names
      • May use assumed name
      • Unauthorized purpose in name prohibited
      • May not be same as or deceptively similar

Business and Public Filings Division

more on names in chapter 5

More on Names in Chapter 5

  • Organizational identifiers for all names
  • Professional entity names must not be contrary to regulatory statute.
  • Cannot use “Lotto” or “Lottery”
  • Unauthorized use of certain words in veterans organizations

Business and Public Filings Division

chapter 51

Chapter 5

  • Name reservations in Subchapter C
  • Name registrations in Subchapter D

Business and Public Filings Division

registered agents and offices subchapter e

Registered Agents and OfficesSubchapter E

  • Designation of agent and office
  • Changes to registered agent/office
  • Change by a registered agent to name or address
  • Resignation of registered agent

Business and Public Filings Division

other chapters

Other Chapters

  • Chapter 6: Meetings and Voting
  • Chapter 7: Liability
  • Chapter 8: Indemnification and Insurance

Business and Public Filings Division

chapter 9 foreign entities

Chapter 9: Foreign Entities

  • Foreign entities required to register
  • Permissive registration
  • Registration procedures
  • Name changes
  • Withdrawal of registration

Business and Public Filings Division

chapter 9 again

Chapter 9 Again

  • Failure to register--late filing fee
  • Revocation of registration by SOS
  • Reinstatement after revocation
  • Activities not constituting the transaction of business

Business and Public Filings Division

chapter 10 mergers interest exchanges conversions and sales of assets

Chapter 10: Mergers, Interest Exchanges, Conversions and Sales of Assets

  • Subchapter A--Mergers
  • Subchapter B--Exchanges of Interests
  • Subchapter C--Conversions
  • Subchapter D--Certificates filed with the SOS
  • Subchapter E--Abandonment of Merger, Exchange, or Conversion

Business and Public Filings Division

chapter 11 winding up and termination

Chapter 11: Winding up and Termination

  • The new dissolution provisions
  • Includes voluntary and involuntary terminations
  • Also reinstatement procedures

Business and Public Filings Division

chapter 12 administrative powers of sos and oag

Chapter 12Administrative Powers of SOS and OAG

  • Adoption of procedural rules
  • Interrogatories
  • Appeal from SOS decisions

Business and Public Filings Division

the spokes

The Spokes

Title 2 through Title 8

Business and Public Filings Division

title 2

Title 2

Corporations

For-Profit

Nonprofit

Special-Purpose Corporations

Lodges

Business and Public Filings Division

title 6

Title 6

Associations

Cooperative Associations

Unincorporated Nonprofit Associations

Business and Public Filings Division

structure and organization texas business organizations code

Structure and OrganizationTexas Business Organizations Code

Title 1

Common Provisions

Apply to all entities

Chapters

1, 4, & 5

Title 2

Corporations

Title 3

Limited Liability Companies

Title 4

Partnerships

Title 5

REITS

Title 6

Associations

Title 7

Professional

Entities

Chap. 20

General Provisions

Chap. 151

General Provisions

Chap. 251

Cooperative

Association

Chap. 252

Unincorporated

Nonprofit

Associations

Chap. 301

General Provisions

Definitions

Chap. 21

For-profit

Corporation

Chap. 22

Nonprofit

Corporation

Chap. 152

General

Partnership (LLPs)

Chap. 153

Limited

Partnership

Chap. 304

Professional

Limited Liability Co.

Chap. 302

Professional

Association

Chap. 303

Professional

Corporation

navigating the boc

Navigating the BOC

  • Look to Title 1 for the general provision.
  • Then look to the specific title governing the entity--The “spoke” E.g., corporations--Title 2.
    • If the provision of Title 1 conflicts with a provision in the specific title governing the entity, the provision in the specific title supercedes the provision in Title 1.

Business and Public Filings Division

short titles for spoke provisions

Short Titles for Spoke Provisions

  • Texas Corporation Law

Title 2 and Title 1 to the extent applicable to

corporations

    • Texas Nonprofit Corporation Law

Chapters 20 and 22 and Title 1 to the extent applicable to nonprofit corporations

Business and Public Filings Division

the business organizations code effective dates and transition issues

The Business Organizations Code Effective Dates and Transition Issues

Business and Public Filings Division

effective dates of code

Effective Dates of Code

  • Applies to all new Texas entities created on or after January 1, 2006.
  • Applies to all foreign filing entities registering with the SOS after January 1, 2006.

Business and Public Filings Division

effective date for existing entities

Effective Date for Existing Entities

  • On January 1, 2010,the “mandatory” application date, BOC applies to domestic entities existing and foreign filing entities registered with SOS before January 1, 2006.
  • Existing entities may opt in earlier by filing a statement of early adoption with the SOS.

Business and Public Filings Division

non code entities

Non-Code Entities

Source law, such as the Texas Non-Profit Corporation Act will continue to govern entities formed prior to January 1, 2006 until January 1, 2010, UNLESS such entities “opt into” the Code, which they may do at any time on or after January 1, 2006, by making a filing with the SOS.

Business and Public Filings Division

transition issues

Transition Issues

Early Adoption of the Code

Does the Secretary of State have “opt in” or “early adoption” forms? YES

Use Form 808 for early election by Texas nonprofits; use form 809 for early election by foreign or out-of-state entities.

Business and Public Filings Division

transition issues1

Transition Issues

Early Adoption of the Code

What is the filing fee for an early adoption statement?

Business and Public Filings Division

The filing fee for a nonprofit corporation or cooperative association is $5.

opt in and comply

Opt-in and Comply?

  • Art. 402.003 of the Code states that a domestic filing entity may adopt the Code by following amendment procedures to opt-in and by causing “its governing documents to comply with this Code”.
  • SOS will not require amendments to governing documents as a precondition to filing the opt-in statement.

Business and Public Filings Division

transition issues2

Transition Issues

Application of BOC

Section 402.006 of the Code states that existing statutes will continue to govern the acts, contracts and transactions of non-Code entities until January 1, 2010 (unless they adopt the Code).

Business and Public Filings Division

transition issues3

Transition Issues

Expiration of Prior Law

All prior law continues in effect (except fees).

Provisions have been added to all of the Acts being codified to indicate that they will expire on January 1, 2010.

Business and Public Filings Division

transition issues4

Transition Issues

What does a nonprofit corporation need to do on January 1, 2010?

No action is necessary. The BOC is automatically applicable to the nonprofit corporation on January 1, 2010. If necessary, the corporation shall conform its governing documents to the BOC when it next files an amendment to its certificate of formation.

Business and Public Filings Division

what does the code change

What Does the Code Change?

  • New organization of statutes
  • Standardization of provisions
  • New terminology
  • Simplification of filing provisions

Business and Public Filings Division

substantive changes

Substantive Changes

  • Numbering and organization of business law statutes was changing.
  • BOC Committee used opportunity to harmonize the statutes and provide more uniformity among entity types.
  • Uses common provisions when possible.

Business and Public Filings Division

code does not

Code Does Not

  • Change the management structure
  • Change the liability of the entity or its principals
  • Change the operation of the entity
  • Change the way external parties do business with
  • the entity
  • Change state agencies enforcement activities against
  • those entities

Business and Public Filings Division

new vocabulary synonymous terms

New Vocabulary & Synonymous Terms

Business and Public Filings Division

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Organization— a corporation, LP, general partnership, LLC, business trust, REIT, joint venture, joint stock company, cooperative, association, bank, insurance company, credit union, savings and loan association, or any other organization, regardless of whether it is for-profit, nonprofit, domestic, or foreign.

Entity— domestic entity or foreign entity.

Business and Public Filings Division

slide45

Domestic Entity—an organization formed under or the internal affairs of which are governed by the BOC. (Does not include banks, insurance companies, telephone cooperatives, or other corporations formed under a Texas law other than the BOC.)

Nonfiling Entity—a domestic entity that is not a filing entity. (Includes unincorporated nonprofit associations and domestic general partnerships.)

Business and Public Filings Division

slide46

Filing Entity—a domestic entity that is a corporation (including a nonprofit corporation), LP, LLC, PA, cooperative, or REIT. (Does not include LLPs.)

Foreign Entity—an organization formed under, and the internal affairs of which are governed by, the laws of a jurisdiction other than Texas.

Foreign Filing Entity—a foreign entity is required to register as a foreign entity under Chapter 9 of the BOC (Includes out-of-state nonprofit corporations).

Business and Public Filings Division

slide47

Governing Authority—a person or group of persons who are entitled to manage and direct the affairs of an entity under the BOC and the entity’s governing documents.

  • Includes:
  • board of directors or trustees of a nonprofit corporation
  • members of a nonprofit corporation if the certificate of formation vests the management of the affairs solely in its members

Does not include

      • an officer.

Business and Public Filings Division

slide48

Governing Person—a person serving as part of a governing authority.

Officer—an individual elected, appointed, or designated as an officer of an entity by the entity’s governing authority or under the entity’s governing documents.

Managerial Official—officer or governing person.

Individual—a natural person. BOC clarifies that officers and directors must be individuals.

Business and Public Filings Division

slide49

Governing Documents

  • For domestic entities:
    • itscertificate of formation (or any other document or agreement under which it was formed); PLUS
    • other documents (bylaws) or agreements adopted by the entity under the BOC to govern the formation or the internal affairs of the entity.

Business and Public Filings Division

slide50

Filing Instrument—instrument, document, or statement that is required or authorized by the BOC to be filed by or for an entity with the filing officer

Filing Officer—For all entities other than domestic REIT: Secretary of State.

Business and Public Filings Division

slide51
A Note About BOC “Nonprofits”
  • A nonprofit entity includes nonprofit corporations, nonprofit associations, as well as LLCs or other entities that are organized solely for one or more of the nonprofit purposes specified by Sec. 2.002 BOC.
  • Nonprofit purposes include:
    • Providing professional, commercial, or trade associations; and
    • Serving charitable, benevolent, religious, fraternal, social, educational, athletic, patriotic, and civic purposes.

Business and Public Filings Division

slide52
A Note About BOC “Nonprofits”
  • If the BOC refers to a nonprofit corporation, it does not include other nonprofit entities.
    • For example, fees for nonprofit corporations do not apply to LLCs that have a nonprofit purpose.
    • Periodic reports required to be filed by nonprofit corporations are not required of other nonprofit entities.

Business and Public Filings Division

synonymous terms

Synonymous Terms

Section 1.006 of the BOC sets forth terms that have the same meaning or significance.

Business and Public Filings Division

slide54

Articles of Incorporation, Articles of Organization, Articles of Association, & Certificate of Limited Partnership

Certificate of Formation

Business and Public Filings Division

slide55

Application for Certificate of Authority, App’n for Registration of Foreign LP, Statement of Qual. of Foreign LLP

Application for Registration

Business and Public Filings Division

slide56
Certificate of Termination
  • Articles of
  • Dissolution
  • Certificate of
  • Cancellation

Business and Public Filings Division

slide57
Art. of Amendment =

Art. of Merger =

Art. of Exchange =

Art. of Conversion =

Cert. of Amendment

Cert. of Merger

Cert. of Exchange

Cert. of Conversion

Business and Public Filings Division

business and public filings division

Formation Filings

Business and Public Filings Division

business and public filings division1

Certificates of Formation

  • Domestic filing entities are formed by filing a certificate of formation with the filing officer.
  • Any certificate of formation filed with an effective date on or after January 1, 2006:
    • creates a BOC entity
    • must comply with BOC filing requirements
    • is subject to the new BOC fee schedule

Business and Public Filings Division

business and public filings division2

Certificates of formation are governed by § 3.001 et seq.

  • Every certificate of formation must contain:
    • The name of the filing entity to be formed
    • The type of filing entity to be formed (e.g., nonprofit corp)
    • Purpose
    • Duration, if not perpetual
    • Registered office street address; registered agent’s name
    • Name and address of organizers

Business and Public Filings Division

business and public filings division3

Supplemental requirements for certificates of formations are set out for:

      • For-profit corporations § 3.007
      • Close corporations § 3.008
      • Nonprofit corporations § 3.009
      • Limited Liability Companies § 3.010
      • Limited Partnerships § 3.011
      • Real Estate Investment Trusts § 3.012
      • Cooperative Associations § 3.013
      • Professional Entities § 3.014
      • Professional Associations § 3.015

Business and Public Filings Division

supplemental provisions for a nonprofit corporation

Supplemental Provisionsfor a Nonprofit Corporation

  • If the nonprofit is to have no members, a statement to that effect.
  • If management of the nonprofit corporation’s affairs is to be vested solely in the nonprofit corporation’s members, a statement to that effect.

Business and Public Filings Division

supplemental provisions for a nonprofit corporation1

Supplemental Provisionsfor a Nonprofit Corporation

  • The number of directors and the names and addresses of those directors. OR, if the management is vested solely in the members, a statement to that effect.
  • If the corporation is authorized on its winding up to

distribute its assets in a manner other than provided in

Sec. 22.304, a statement describing the distribution.

Business and Public Filings Division

business and public filings division4

Names

  • Name availability standards and rules remain the same. § 5.001 et seq.
  • Nonprofit corporations are not required to use an organizational designation. § 5.054(b)

Business and Public Filings Division

business and public filings division5

Duration

  • A domestic entity’s duration is assumed to be perpetual unless stated otherwise in its governing documents. § 3.003
  • If a domestic entity’s duration is not perpetual, its certificate of formation must state the period of duration. § 3.005(4)
  • SOS forms for certificates of formation do not include a duration clause. Limited durations can be set out in the “Supplemental Text” area of the forms.

Business and Public Filings Division

business and public filings division6

Purpose

  • Nonprofit corporations can state a general nonprofit purpose. Specifying the nonprofit purpose is no longer required for formation. § 22.051 May be required for IRS tax exemption!
  • BOC provisions specifically applicable to nonprofit corporations do not apply to other nonprofit entities.
    • Power to act as trustee in § 2.106
    • Default tax provisions of § 2.107

Business and Public Filings Division

business and public filings division7

Registered Agent Requirements

  • Registered Agent may be:
    • an individual resident of Texas, or
    • a domestic or foreign entity that is registered to do business in Texas.
  • Registered agent’s business office address must be the same address as the registered office.

Business and Public Filings Division

business and public filings division8

Registered Office Requirements

  • Registered Office:
    • Must be located at a street address where process may be personally served on the registered agent;
    • Is not required to be the business office address of the represented entity; and
    • May not be solely a mailbox service or telephone answering service.

Business and Public Filings Division

slide69

Foreign Entities

Transacting Business in Texas After January 1, 2006

Business and Public Filings Division

slide70

Foreign Entities

Title 1, Chapter 9 of the BOC

New terminology is used, such as “registration” and “foreign filing entity.”

Business and Public Filings Division

slide71

Foreign Entities Required to Register

  • A foreign entity must register to transact business in Texas if:
  • The entity affords limited liability under the laws of its jurisdiction of formation for any member or owner, unless the foreign entity is authorized to transact business under other state law.

Business and Public Filings Division

slide72

What is “Transacting Business” ?

  • Transacting business is not defined.
  • List of “not-transacting business” activities same as those provided under prior law.
  • We do not have authority to issue formal binding legal opinions.
  • Look to judicial opinions for guidance.

Business and Public Filings Division

slide73

What is Considered Foreign in Texas?

A. Anything organized outside of Austin.

B. Anything organized outside of Texas.

C. Anything organized outside of the United States.

D. Both B & C.

Business and Public Filings Division

slide74

What is Considered Transacting Business

in Texas?

  • Entity has an employee who resides in Texas.
  • Entity is pursuing its purpose in Texas.
  • Entity owns & receives income from property in Texas.
  • Entity maintains a business office in Texas.
  • Activities that are purely interstate commerce-- Business conducted by fax, mail, email & telephone.

Business and Public Filings Division

slide75
Foreign Corporation Changes
  • Application for Registration not Certificate of Authority.
  • State date entity began transacting business in Texas.
  • Late filing fee of $25 per year if foreign nonprofit corporation transacts business in Texas for more than 90 days without registering.
  • Statement of existence included in application; no certificate of existence from home state required.

Business and Public Filings Division

slide76

Foreign Entities--Failure to Register

  • Attorney General may enjoin entity from transacting business.
  • Entity cannot maintain an action or proceeding in court until registered.
  • Civil penalty in an amount equal to all fees and taxes that would have been imposed.

Business and Public Filings Division

slide77

Foreign Entities--Failure to Register

  • Late filing penalty equal to registration fee for each year of delinquency.
  • Application for registration must be filed within 90 days of the beginning date of transacting business in the state.

Business and Public Filings Division

slide78
SOS Forms

Name Reservations

Registrations and Change Filings

Business and Public Filings Division

slide79
Forms

Section 4.006 of the BOC authorizes the SOS to promulgate forms for any filing instrument or report required or permitted to be filed with the SOS.

Business and Public Filings Division

forms

Forms

  • Available on the SOS web site at:

http://www.sos.state.tx.us/corp/forms_option.shtml

  • Split into BOC Forms and Pre-BOC
  • When possible, SOS promulgated forms that complied with BOC as well as prior law
  • Use of SOS forms permissive not mandatory

Business and Public Filings Division

name reservations

Name Reservations

  • Any person may reserve the use of a name under chapter 5 of the BOC.
  • The filing fee is $40.
  • The name is reserved for a period of 120 days.

Business and Public Filings Division

slide82
Renewal of Name Reservations
  • Under the BOC, all name reservations can be renewed for additional 120-day periods.
  • File a new application within 30 days prior to expiration ($40). If not using SOS form, please identify the reservation as a renewal.
  • Renewal must be made by applicant of record. If not, transfer of name reservation required ($15).

Business and Public Filings Division

slide83
Signing False Documents

BOC Chapter 4. Filings

General Provisions

Business and Public Filings Division

slide84
False or Fraudulent Filings

Under prior law, it was a Class A misdemeanor to knowingly sign a document that was materially false with the intent that it be filed with the SOS.

House Bill 1507, effective Sept. 1, 2005, amended the TBCA to increase the offense to a state jail felony if the person signing a document intended to defraud or harm another.

Business and Public Filings Division

slide85
False or Fraudulent Filings
  • BOC penalties for false or fraudulent filing apply to all entities, including nonprofit corporations.
  • As of Jan. 1, 2006, it is a Class A misdemeanor to knowingly sign a filing instrument that is materially false with the intent that it be filed with the SOS. §4.008
    • Class A misdemeanor is punishable by a sentence of up to 180 days, a fine of up to $4,000, or both.

Business and Public Filings Division

slide86
False or Fraudulent Filings
  • BOC increases offense to a State jail felony if there is intent to defraud or harm another.
      • State jail felonies are generally punishable by a sentence of 180 days to 2 years plus a fine of up to $10,000.

Business and Public Filings Division

slide87
Enforcement
  • The SOS does not have the power to prosecute anyone for criminal violations associated with fraudulent filings.
  • If there is a basis for criminal action, victims can file a complaint with the District or County Attorney.

Business and Public Filings Division

slide88
Civil Liabilities
  • A person may recover civil damages if the person incurs a loss caused by:
    • a forged filing instrument;
    • a filing instrument that constitutes an offense under § 4.008;
    • reasonable reliance upon a false statement of material fact in a filed filing instrument; or
    • the omission of a material fact that is required to be in a filing instrument. § 4.007(a)

Business and Public Filings Division

slide89
Civil Liabilities
  • An injured person may recover from:
    • each person who forged or knowingly signed a false instrument;
    • any managerial official who directed the signing and filing of the filing instrument who knew or should have known of the false statement or omission; or
    • the entity that authorizes the filing of the filing instrument. § 4.007(b)

Business and Public Filings Division

slide90
Enforcement
  • The SOS does not have authority to bring suit on behalf of parties harmed by a fraudulent filing.
  • Injured parties can initiate their own civil lawsuits.

Business and Public Filings Division

mergers conversions exchanges

Mergers, Conversions & Exchanges

Chapter 10 of the BOC governs the general requirements for mergers, interest exchanges, and conversions.

Business and Public Filings Division

mergers of nonprofit corporations

Mergers of Nonprofit Corporations

Under existing law, a nonprofit corporation may merge only with other domestic or foreign nonprofit corporations and only one party to the merger can be the survivor.

BOC has more permissive merger provisions for nonprofit corporations with limitations.

Business and Public Filings Division

what s new

What’s New?

A domestic nonprofit corporation may merge with a for-profit entity or non-code organization. The domestic nonprofit may not merge with a for-profit entity if:

  • The domestic nonprofit corporation does not continue as the surviving entity; or
  • If the nonprofit corporation will lose or impair its tax-exempt status.
  • Filing fee for this type of transaction: $300.

Business and Public Filings Division

nonprofit merger limitations

Nonprofit Merger Limitations

  • May not merge into another entity, if the NP corporation would lose charitable status.
  • May merge with for-profit or non-code entities if the nonprofit continues as the surviving entity.

Business and Public Filings Division

what s new for nonprofits

What’s New for nonprofits?

  • TNPCA did not authorize the creation of a nonprofit corporation by conversion.
  • BOC authorizes creation of a nonprofit corporation by conversion. Certificate of formation of converted entity must contain the additional statements relating to the conversion.
  • Domestic nonprofit corporation may not convert to a for-profit entity.

Business and Public Filings Division

involuntary terminations

Involuntary Terminations

Circumstances giving rise to an involuntary termination by the SOS.

  • Failure to file a report within the period required by law;
  • Failure to pay a fee or penalty prescribed by law when due and payable;
  • Failure to pay a filing fee, or payment of the fee was dishonored when presented by the state for payment;
  • Failure to maintain a registered agent or registered office.

Business and Public Filings Division

reinstatements

Reinstatements

  • “Finality is not the language of politics.”
    • Benjamin Disraeli
  • “It ain’t over til it’s over.”
    • Yogi Berra

Business and Public Filings Division

reinstatements1

Reinstatements

  • BOC Sections 11.201 and 11.202
  • Reinstatements under the BOC have longer time periods during which a reinstatement can be filed.
  • Change in substantive law
  • Time frames similar for all Code entities

Business and Public Filings Division

reinstatements2

Reinstatements

PRIOR LAW:

BOC:

Non-profit corporations have an unlimited amount of time to reinstate following an involuntary dissolution for failure to file a report under Art. 1396-9.01 of the Texas Non-Profit Corporation Act.

No change. Same under BOC.

Business and Public Filings Division

reinstatements3

Reinstatements

PRIOR LAW:

BOC:

Corporations and LLC’s have an unlimited amount of time to reinstate following a forfeiture for failure to comply with provisions of the Texas Tax Code.

No change. See, BOC §§ 11.201(b) & 11.254.

Business and Public Filings Division

reinstatements4

Reinstatements

Tax Code Reinstatements (Revivals of Charter) continue to be governed by the Tax Code. See, §§ 171.312 through 171.315 of the Texas Tax Code.

BOC sets the fee for reinstatements following a tax forfeiture for for-profit corporations and LLCs at $75.

No fee for reinstatement of a nonprofit corporation following a tax forfeiture.

Business and Public Filings Division

reinstatement following a voluntary termination

ReinstatementFollowing a Voluntary Termination

  • Entity terminated inadvertently or by mistake;
  • Termination occurred without the approval of the entity’s governing persons when approval required by BOC;
  • Entity terminated before winding up completed; or
  • The entity’s legal existence is necessary to convey or assign property, to settle or release a claim or liability, to take an action, or sign an instrument or agreement.

Business and Public Filings Division

boc reinstatement requirements

BOC Reinstatement Requirements

  • Reinstatement must be approved in manner provided by the BOC;
  • Entity name must be available;
  • Tax clearance for reinstatement; and
  • If involuntarily terminated, entity must correct circumstances giving rise to involuntary termination.
  • Reinstatement must provide registered agent/office information.

Business and Public Filings Division

need help contact sos by email

Need Help? Contact SOSby Email

Corphelp@sos.state.tx.us

mpowell@sos.state.tx.us

first initial last name@sos.state.tx.us

Business and Public Filings Division

need help call

Need Help?Call

Mike Powell 463-9856Nahdiah Hoang 475-0218 Robert Sumners 463-5590

Carmen Flores 463-5588

Lorna Wassdorf 463-5591

Business and Public Filings Division