Texas Business Corporation Act - Article 12.51. Judicial Proceedings Relating To A Close Corporation
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Article: 12.33 12.34 12.35 12.36 12.37 12.38 12.39 12.51 12.52 12.53 12.54 13.01 13.02 13.03 13.04
Art. 12.51. Judicial Proceedings Relating to a Close Corporation
A. Definitions. As used in this article and the succeeding articles
of this part, unless the context otherwise requires:
(1) "Court of competent jurisdiction" means a district court in the
county in which the close corporation has its principal office.
(2) "Provisional director" means a person appointed by a court of
competent jurisdiction in conformance with Article 12.53 of this
(3) "Custodian" means a person appointed by a court of competent
jurisdiction in conformance with Article 12.54 of this Act.
(4) "Shareholder" means any person who is a record or beneficial
owner of shares in a close corporation, including any person
holding a beneficial interest in the shares under an inter vivos,
testamentary, or voting trust, or any person who is the personal
representative, as that term is defined in the Texas Probate Code,
of a record or beneficial owner.
B. Proceedings Authorized. In addition to any other judicial
proceeding pertaining to an ordinary corporation provided for in
this Act or by law, a proceeding may be brought in a court of
competent jurisdiction by a close corporation or a shareholder to:
(1) enforce a close corporation provision;
(2) appoint a provisional director; or
(3) appoint a custodian.
C. Notice; Intervention. Notice of the commencement of a
proceeding must be given in the manner prescribed by this Act or
other law and otherwise in a manner consistent with due process of
law as directed by the court, to the close corporation, if not a
plaintiff, and to each shareholder that is not a plaintiff. The
close corporation or any shareholder may intervene in the
D. Proceeding Nonexclusive. Except as otherwise provided in
Section E of this article, the right of the close corporation or a
shareholder to commence a proceeding permitted by Section B of this
article is in addition to any other right or remedy the plaintiff
may have under this Act or other law.
E. Unavailability of Proceeding. A shareholder may not commence a
proceeding before any nonjudicial remedy in a close corporation
provision, such as arbitration, for resolution of the issues that
are in dispute has been exhausted unless the shareholder proves
that the close corporation, the shareholders as a whole, or the
shareholder will suffer irreparable harm before the nonjudicial
remedy is exhausted. A shareholder may not commence a proceeding to
seek damages or other monetary relief if the shareholder has the
right to dissent from any proposed action and to receive the fair
value of his shares under this Act or a shareholders' agreement.
Added by Acts 1981, 67th Leg., p. 3102, ch. 818, Sec. 1, eff. Aug.
Last modified: August 11, 2007