Texas Business Organizations Code - Section 1.002. Definitions
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§ 1.002. DEFINITIONS. In this code:
(1) "Affiliate" means a person who controls, is
controlled by, or is under common control with another person.
(2) "Associate," when used to indicate a relationship
with a person, means:
(A) a domestic or foreign entity or organization
for which the person:
(i) is an officer or governing person; or
(ii) beneficially owns, directly or
indirectly, either individually or through an affiliate, 10 percent
or more of a class of voting ownership interests or similar
securities of the entity or organization;
(B) a trust or estate in which the person has a
substantial beneficial interest or for which the person serves as
trustee or in a similar fiduciary capacity;
(C) the person's spouse or a relative of the
person related by consanguinity or affinity who resides with the
person; or
(D) a governing person or an affiliate or officer
of the person.
(3) "Association" means an entity governed as an
association under Title 6 or 7. The term includes a cooperative
association, nonprofit association, and professional association.
(4) "Assumed name" means a name adopted for use by a
person. The term includes an assumed name filed under Chapter 36,
Business & Commerce Code.
(5) "Business" means a trade, occupation, profession,
or other commercial activity.
(6) "Certificate of formation" means:
(A) the document required to be filed with the
filing officer under Chapter 3 to form a filing entity; and
(B) if appropriate, a restated certificate of
formation and all amendments of an original or restated certificate
of formation.
(7) "Certificated ownership interest" means an
ownership interest of a domestic entity represented by a
certificate issued in bearer or registered form.
(8) "Close corporation" means a for-profit
corporation that elects to be governed as a close corporation in
accordance with Subchapter O, Chapter 21.
(9) "Contribution" means a tangible or intangible
benefit that a person transfers to an entity in consideration for an
ownership interest in the entity or otherwise in the person's
capacity as an owner or a member. The benefit includes cash,
services rendered, a contract for services to be performed, a
promissory note or other obligation of a person to pay cash or
transfer property to the entity, or securities or other interests
in or obligations of an entity, but does not include cash or
property received by the entity:
(A) with respect to a promissory note or other
obligation to the extent that the agreed value of the note or
obligation has previously been included as a contribution; or
(B) that the person intends to be a loan to the
entity.
(10) "Conversion" means:
(A) the continuance of a domestic entity as a
foreign entity of any type;
(B) the continuance of a foreign entity as a
domestic entity of any type; or
(C) the continuance of a domestic entity of one
type as a domestic entity of another type.
(11) "Converted entity" means an entity resulting from
a conversion.
(12) "Converting entity" means an entity as the entity
existed before the entity's conversion.
(13) "Cooperative" or "cooperative association" means
an association governed as a cooperative association under Chapter
251.
(14) "Corporation" means an entity governed as a
corporation under Title 2 or 7. The term includes a for-profit
corporation, nonprofit corporation, and professional corporation.
(15) "Debtor in bankruptcy" means a person who is the
subject of:
(A) an order for relief under the United States
bankruptcy laws (Title 11, United States Code); or
(B) a comparable order under a:
(i) successor statute of general
applicability; or
(ii) federal or state law governing
insolvency.
(16) "Director" means an individual who serves on the
board of directors of a foreign or domestic corporation.
(17) "Domestic" means, with respect to an entity, that
the entity is formed under this code or the entity's internal
affairs are governed by this code.
(18) "Domestic entity" means an organization formed
under or he internal affairs of which are governed by this code.
(19) "Domestic entity subject to dissenters' rights"
means a domestic entity the owners of which have rights of dissent
and appraisal under this code or the governing documents of the
entity.
(20) "Effective date of this code" means January 1,
2006. The applicability of this code is governed by Title 8.
(20-a) "Electronic transmission" means a form of
communication that:
(A) does not directly involve the physical
transmission of paper;
(B) creates a record that may be retained,
retrieved, and reviewed by the recipient; and
(C) may be directly reproduced in paper form by
the recipient through an automated process.
(21) "Entity" means a domestic entity or foreign
entity.
(22) "Filing entity" means a domestic entity that is a
corporation, limited partnership, limited liability company,
professional association, cooperative, or real estate investment
trust.
(23) "Filing instrument" means an instrument,
document, or statement that is required or authorized by this code
to be filed by or for an entity with the filing officer in
accordance with Chapter 4.
(24) "Filing officer" means:
(A) with respect to an entity other than a
domestic real estate investment trust, the secretary of state; or
(B) with respect to a domestic real estate
investment trust, the county clerk of the county in which the real
estate investment trust's principal office is located in this
state.
(25) "For-profit corporation" means a corporation
governed as a for-profit corporation under Chapter 21.
(26) "For-profit entity" means an entity other than a
nonprofit entity.
(27) "Foreign" means, with respect to an entity, that
the entity is formed under, and the entity's internal affairs are
governed by, the laws of a jurisdiction other than this state.
(28) "Foreign entity" means an organization formed
under, and the internal affairs of which are governed by, the laws
of a jurisdiction other than this state.
(29) "Foreign filing entity" means a foreign entity,
other than a foreign limited liability partnership, that registers
or is required to register as a foreign entity under Chapter 9.
(30) "Foreign governmental authority" means a
governmental official, agency, or instrumentality of a
jurisdiction other than this state.
(31) "Foreign nonfiling entity" means a foreign entity
that is not a foreign filing entity.
(32) "Fundamental business transaction" means a
merger, interest exchange, conversion, or sale of all or
substantially all of an entity's assets.
(33) "General partner" means:
(A) each partner in a general partnership; or
(B) a person who is admitted to a limited
partnership as a general partner in accordance with the governing
documents of the limited partnership.
(34) "General partnership" means a partnership
governed as a general partnership under Chapter 152. The term
includes a general partnership registered as a limited liability
partnership.
(35)(A) "Governing authority" means a person or group
of persons who are entitled to manage and direct the affairs of an
entity under this code and the governing documents of the entity,
except that if the governing documents of the entity or this code
divide the authority to manage and direct the affairs of the entity
among different persons or groups of persons according to different
matters, "governing authority" means the person or group of persons
entitled to manage and direct the affairs of the entity with respect
to a matter under the governing documents of the entity or this
code. The term includes:
(i) the board of directors of a corporation
or other persons authorized to perform the functions of the board of
directors of a corporation;
(ii) the general partners of a general
partnership or limited partnership;
(iii) the managers of a limited liability
company that is managed by managers;
(iv) the members of a limited liability
company that is managed by members who are entitled to manage the
company;
(v) the board of directors of a cooperative
association; and
(vi) the trust managers of a real estate
investment trust.
(B) The term does not include an officer who is
acting in the capacity of an officer.
(36) "Governing documents" means:
(A) in the case of a domestic entity:
(i) the certificate of formation for a
domestic filing entity or the document or agreement under which a
domestic nonfiling entity is formed; and
(ii) the other documents or agreements
adopted by the entity under this code to govern the formation or the
internal affairs of the entity; or
(B) in the case of a foreign entity, the
instruments, documents, or agreements adopted under the law of its
jurisdiction of formation to govern the formation or the internal
affairs of the entity.
(37) "Governing person" means a person serving as part
of the governing authority of an entity.
(38) "Individual" means a natural person.
(39) "Insolvency" means the inability of a person to
pay the person's debts as they become due in the usual course of
business or affairs.
(40) "Insolvent" means a person who is unable to pay
the person's debts as they become due in the usual course of
business or affairs.
(41) "Interest exchange" means the acquisition of an
ownership or membership interest in a domestic entity as provided
by Subchapter B, Chapter 10. The term does not include a merger or
conversion.
(42) "Internal Revenue Code" means the Internal
Revenue Code of 1986, as amended. The term includes corresponding
provisions of subsequent federal tax laws.
(43) "Jurisdiction of formation" means:
(A) in the case of a domestic filing entity, this
state;
(B) in the case of a foreign filing entity, the
jurisdiction in which the entity's certificate of formation or
similar organizational instrument is filed; or
(C) in the case of a foreign or domestic
nonfiling entity:
(i) the jurisdiction the laws of which are
chosen in the entity's governing documents to govern its internal
affairs if that jurisdiction bears a reasonable relation to the
owners or members or to the domestic or foreign nonfiling entity's
business and affairs under the principles of this state that
otherwise would apply to a contract among the owners or members; or
(ii) if Subparagraph (i) does not apply,
the jurisdiction in which the entity has its chief executive
office.
(44) "Law" means, unless the context requires
otherwise, both statutory and common law.
(45) "License" means a license, certificate of
registration, or other legal authorization.
(46) "Limited liability company" means an entity
governed as a limited liability company under Title 3 or 7. The
term includes a professional limited liability company.
(47) "Limited liability limited partnership" means a
partnership governed as a limited liability partnership and a
limited partnership under Title 4.
(48) "Limited liability partnership" means a
partnership governed as a limited liability partnership under Title
4.
(49) "Limited partner" means a person who has been
admitted to a limited partnership as a limited partner as provided
by:
(A) in the case of a domestic limited
partnership, Chapter 153; or
(B) in the case of a foreign limited partnership,
the laws of its jurisdiction of formation.
(50) "Limited partnership" means a partnership that is
governed as a limited partnership under Title 4 and that has one or
more general partners and one or more limited partners. The term
includes a limited partnership registered as a limited liability
limited partnership.
(51) "Manager" means a person designated as a manager
of a limited liability company that is not managed by members of the
company.
(52) "Managerial official" means an officer or a
governing person.
(53) "Member" means:
(A) in the case of a limited liability company, a
person who is a member or has been admitted as a member in the
limited liability company under its governing documents;
(B) in the case of a nonprofit corporation, a
person who has membership rights in the nonprofit corporation under
its governing documents;
(C) in the case of a cooperative association, a
member of a nonshare or share association;
(D) in the case of a nonprofit association, a
person who has membership rights in the nonprofit association under
its governing documents; or
(E) in the case of a professional association, a
person who has membership rights in the professional association
under its governing documents.
(54) "Membership interest" means a member's interest
in an entity. With respect to a limited liability company, the term
includes a member's share of profits and losses or similar items and
the right to receive distributions, but does not include a member's
right to participate in management.
(55) "Merger" means:
(A) the division of a domestic entity into two or
more new domestic entities or other organizations or into a
surviving domestic entity and one or more new domestic or foreign
entities or non-code organizations; or
(B) the combination of one or more domestic
entities with one or more domestic entities or non-code
organizations resulting in:
(i) one or more surviving domestic entities
or non-code organizations;
(ii) the creation of one or more new
domestic entities or non-code organizations; or
(iii) one or more surviving domestic
entities or non-code organizations and the creation of one or more
new domestic entities or non-code organizations.
(56) "Non-code organization" means an organization
other than a domestic entity.
(57) "Nonfiling entity" means a domestic entity that
is not a filing entity. The term includes a domestic general
partnership and nonprofit association.
(58) "Nonprofit association" means an association
governed as a nonprofit association under Chapter 252.
(59) "Nonprofit corporation" means a corporation
governed as a nonprofit corporation under Chapter 22.
(60) "Nonprofit entity" means an entity that is a
nonprofit corporation, nonprofit association, or other entity that
is organized solely for one or more of the purposes specified by
Section 2.002.
(61) "Officer" means 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.
(62) "Organization" means a corporation, limited or
general partnership, limited liability company, business trust,
real estate investment trust, joint venture, joint stock company,
cooperative, association, bank, insurance company, credit union,
savings and loan association, or other organization, regardless of
whether the organization is for-profit, nonprofit, domestic, or
foreign.
(63) "Owner," for purposes of Title 1, 7, or 8, means:
(A) with respect to a foreign or domestic
for-profit corporation or real estate investment trust, a
shareholder;
(B) with respect to a foreign or domestic
partnership, a partner;
(C) with respect to a foreign or domestic limited
liability company or professional association, a member; or
(D) with respect to another foreign or domestic
entity, an owner of an equity interest in that entity.
(64) "Ownership interest" means an owner's interest in
an entity. The term includes the owner's share of profits and
losses or similar items and the right to receive distributions. The
term does not include an owner's right to participate in
management.
(65) "Parent" means an organization that, directly or
indirectly through or with one or more of its subsidiaries:
(A) owns at least 50 percent of the outstanding
ownership or membership interests of another organization; or
(B) possesses at least 50 percent of the voting
power of the owners or members of another organization.
(66) "Partner" means a limited partner or general
partner.
(67) "Partnership" means an entity governed as a
partnership under Title 4.
(68) "Partnership interest" means a partner's interest
in a partnership. The term includes the partner's share of profits
and losses or similar items and the right to receive distributions.
The term does not include a partner's right to participate in
management.
(69) "Party to the merger" means a domestic entity or
non-code organization that under a plan of merger is divided or
combined by a merger. The term does not include a domestic entity
or non-code organization that is not to be divided or combined into
or with one or more domestic entities or non-code organizations,
regardless of whether ownership interest of the entity are to be
issued under the plan of merger.
(70) "President" means the:
(A) individual designated as president of an
entity under the entity's governing documents; or
(B) officer or committee of persons authorized to
perform the functions of the principal executive officer of an
entity without regard to the designated name of the officer or
committee.
(71) "Professional association" has the meaning
assigned by Section 301.003.
(72) "Professional corporation" has the meaning
assigned by Section 301.003.
(73) "Professional entity" has the meaning assigned by
Section 301.003.
(74) "Professional individual" has the meaning
assigned by Section 301.003.
(75) "Professional limited liability company" has the
meaning assigned by Section 301.003.
(76) "Professional service" has the meaning assigned
by Section 301.003.
(77) "Property" includes tangible and intangible
property and an interest in that property.
(78) "Real estate investment trust" means an entity
governed as a real estate investment trust under Title 5.
(79) "Secretary" means the:
(A) individual designated as secretary of an
entity under the entity's governing documents; or
(B) officer or committee of persons authorized to
perform the functions of secretary of an entity without regard to
the designated name of the officer or committee.
(80) "Share" means a unit into which the ownership
interest in a for-profit corporation, professional corporation,
real estate investment trust, or professional association is
divided, regardless of whether the share is certificated or
uncertificated.
(81) "Shareholder" or "holder of shares" means the
person in whose name shares issued by a for-profit corporation,
professional corporation, or real estate investment trust are
registered in the share transfer records maintained by the
for-profit corporation, professional corporation, or real estate
investment trust.
(82) "Signature" means any symbol executed or adopted
by a person with present intention to authenticate a writing.
Unless the context requires otherwise, the term includes a digital
signature, an electronic signature, and a facsimile of a signature.
(83) "Subscriber" means a person who agrees with or
makes an offer to an entity to purchase by subscription an ownership
interest in the entity.
(84) "Subscription" means an agreement between a
subscriber and an entity, or a written offer made by a subscriber to
an entity before or after the entity's formation, in which the
subscriber agrees or offers to purchase a specified ownership
interest in the entity.
(85) "Subsidiary" means an organization for which
another organization, either directly or indirectly through or with
one or more of its other subsidiaries:
(A) owns at least 50 percent of the outstanding
ownership or membership interests of the organization; or
(B) possesses at least 50 percent of the voting
power of the owners or members of the organization.
(86) "Treasurer" means the:
(A) individual designated as treasurer of an
entity under the entity's governing documents; or
(B) officer or committee of persons authorized to
perform the functions of treasurer of an entity without regard to
the designated name of the officer or committee.
(87) "Uncertificated ownership interest" means an
ownership interest in a domestic entity that is not represented by
an instrument and is transferred by:
(A) amendment of the governing documents of the
entity; or
(B) registration on books maintained by or on
behalf of the entity for the purpose of registering transfers of
ownership interests.
(88) "Vice president" means the:
(A) individual designated as vice president of an
entity under the governing documents of the entity; or
(B) officer or committee of persons authorized to
perform the functions of the president of the entity on the death,
absence, or resignation of the president or on the inability of the
president to perform the functions of office without regard to the
designated name of the officer or committee.
(89) "Writing" or "written" means an expression of
words, letters, characters, numbers, symbols, figures, or other
textual information that is inscribed on a tangible medium or that
is stored in an electronic or other medium that is retrievable in a
perceivable form. Unless the context requires otherwise, the term:
(A) includes stored or transmitted electronic
data, electronic transmissions, and reproductions of writings; and
(B) does not include sound or video recordings of
speech other than transcriptions that are otherwise writings.
Acts 2003, 78th Leg., ch. 182, § 1, eff. Jan. 1, 2006. Amended by
Acts 2005, 79th Leg., ch. 64, § 1, eff. Jan. 1, 2006.
Section: 1.001 1.002 1.003 1.004 1.005 1.006 1.007 1.008 1.009 1.051 1.052 1.053 1.054 1.101 1.102
Last modified: August 11, 2007
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