Texas Business Organizations Code - Section 10.005. Creation Of Holding Company By Merger
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§ 10.005. CREATION OF HOLDING COMPANY BY MERGER. (a) In
this section:
(1) "Direct or indirect wholly owned subsidiary"
means, with respect to a domestic entity, another domestic entity,
all of the outstanding voting ownership or membership interests of
which are owned by the domestic entity or by one or more other
domestic entities or non-code organizations, all of the outstanding
voting ownership or membership interests of which are owned by the
domestic entity or one or more other wholly owned domestic entities
or non-code organizations.
(2) "Holding company" means a domestic entity that,
from its organization until a merger takes effect, was at all times
a direct or indirect wholly owned subsidiary of the merging
domestic entity and the ownership or membership interests of which
are issued to the members or owners of the merging domestic entity
in the merger.
(3) "Merging domestic entity" means the original
domestic entity that is a party to a merger that is intended to
create a holding company structure under a plan of merger that
satisfies the requirements of this section and whose members or
owners are not required to approve the plan of merger under
Subsection (b).
(4) "Surviving entity subsidiary" means the surviving
entity in a merger of a merging domestic entity and a direct or
indirect wholly owned subsidiary of the merging domestic entity,
which immediately following the merger is a direct or indirect
wholly owned subsidiary of the holding company.
(b) A domestic entity may, without owner approval and
pursuant to a plan of merger, restructure the ownership structure
of that entity to create a holding company structure under this
chapter and the provisions of this code under which the entity was
formed. The approval of the owners or members of a merging domestic
entity that is a party to a merger under a plan of merger that
creates a holding company is not required if:
(1) the holding company is a domestic entity of the
same organizational form as the merging domestic entity;
(2) approval is not otherwise required by the
governing documents of the merging domestic entity;
(3) the merging domestic entity merges with a direct
or indirect wholly owned subsidiary;
(4) after the merger the merging domestic entity or
its successor is a direct or indirect wholly owned subsidiary of a
holding company;
(5) the merging domestic entity and the direct or
indirect wholly owned subsidiary are the only parties to the
merger;
(6) each ownership or membership interest of the
merging domestic entity that is outstanding preceding the merger is
converted in the merger into an ownership or membership interest of
the holding company having the same designations, preferences,
limitations, and relative rights and corresponding obligations in
respect of the ownership or membership interest as the ownership or
membership interest held by the owner or member in the merging
domestic entity;
(7) except as provided by Subsection (c), the
governing documents of the holding company immediately following
the merger contain provisions substantively identical to the
governing documents of the merging domestic entity immediately
preceding the merger;
(8) except as provided by Subsections (c) and (d), the
governing documents of the surviving entity subsidiary immediately
following the merger contain provisions substantively identical to
the governing documents of the merging domestic entity immediately
preceding the merger;
(9) the governing persons of the merging domestic
entity become or remain the governing persons of the holding
company when the merger takes effect;
(10) the owners or members of the merging domestic
entity will not recognize gain or loss for United States federal
income tax purposes, the United States federal tax classification
of the holding company will be the same as that of the merging
domestic entity, and the merger will not result in the loss of any
tax benefit or attribute of the merging domestic entity, each as
determined by the governing authority of the merging domestic
entity; and
(11) the governing authority of the merging domestic
entity adopts a resolution approving the plan of merger.
(c) Subsections (b)(7) and (8) do not require identical
provisions regarding the organizer or organizers, the entity name,
the registered office and agent, the initial governing persons, and
the initial subscribers of ownership interests and provisions
contained in any amendment to the governing documents as were
necessary to effect a change, exchange, reclassification, or
cancellation of ownership or membership interests, if the change,
exchange, reclassification, or cancellation was in effect
preceding the merger.
(d) Notwithstanding Subsection (b)(8):
(1) the governing documents of the surviving entity
subsidiary must require that an act or transaction by or involving
the surviving entity subsidiary, other than the election or removal
of the governing persons of the surviving entity subsidiary, that
requires for its approval under this code or the governing
documents of the surviving entity subsidiary the approval of the
owners or members of the surviving entity subsidiary must, by
specific reference to this section, require the approval of the
owners or members of the holding company, or any successor by
merger, by the same vote as is required by this code and the
governing documents of the surviving entity subsidiary;
(2) if the surviving entity subsidiary is not of the
same organizational form as the merging domestic entity, the
governing documents of the surviving entity subsidiary may differ
from the governing documents of the merging domestic entity to the
minimum extent necessary to make a change that takes into account
the differences between the types of entities, including a change
in reference to the types of owners, members, ownership interests,
membership interests, governing persons, or governing authority,
each as determined by the governing authority of the merging
domestic entity;
(3) if the surviving entity subsidiary is not of the
same organizational form as the merging domestic entity, the
governing documents of the surviving entity subsidiary must require
that:
(A) the surviving entity subsidiary obtain the
approval of the owners or members of the holding company for any act
or transaction by or involving the surviving entity subsidiary,
other than the election or removal of the governing persons of the
surviving entity subsidiary, that would require the approval of the
owners or members of the surviving entity subsidiary if the
surviving entity subsidiary were of the same organizational form as
the merging domestic entity;
(B) any amendment to the governing documents of
the surviving entity subsidiary that would, if adopted by an entity
of the same organizational form as the merging domestic entity, be
required to be included in the certificate of formation of the
entity also require, by specific reference to this section, the
approval of the owners or members of the holding company, or any
successor by merger, by the same vote as is required by this code or
by the governing documents of the surviving entity subsidiary; and
(C) the business affairs of the surviving entity
subsidiary be managed by or under the direction of governing
persons who are:
(i) subject to the same fiduciary duties
applicable to the governing persons of an entity of the same
organizational form as the merging domestic entity subject to this
code; and
(ii) liable for the breach of any duties to
the same extent as governing persons of that form of entity;
(4) the governing documents of the surviving entity
subsidiary may change the classes and series of ownership or
membership interests and the number of ownership or membership
interests that the surviving entity subsidiary is authorized to
issue; and
(5) this subsection or a provision of a surviving
entity subsidiary's governing documents required by this
subsection may not be construed as requiring the approval of the
owners or members of the holding company to elect or remove
governing persons of the surviving entity subsidiary.
(e) To the extent the provisions contained in Section 21.606
apply to a merging domestic entity and its owners or members when a
merger takes effect under this section, those provisions continue
to apply to the holding company and its owners or members
immediately after the merger takes effect as though the holding
company were the merging domestic entity. All ownership or
membership interests of the holding company acquired in the merger,
for purposes of Section 21.606, are considered to have been
acquired at the time the ownership or membership interest of the
merging domestic entity converted in the merger was acquired. Any
owner or member who, preceding the merger, was not an affiliated
owner or member as described by Section 21.606 does not solely by
reason of the merger become an affiliated owner or member of the
holding company.
(f) If the name of a holding company immediately following
the effectiveness of a merger under this section is the same as the
name of the merging domestic entity preceding the merger, the
ownership or membership interests of the holding company into which
the ownership or membership interests of the merging domestic
entity are converted pursuant to the merger will be represented by
the certificates, if any, that previously represented the ownership
or membership interests in the merging domestic entity.
(g) This section shall not apply to a merger of a
partnership with or into a domestic entity without the approval of
the owners or members of the partnership and domestic entity as
provided by this code.
Acts 2003, 78th Leg., ch. 182, § 1, eff. Jan. 1, 2006. Amended by
Acts 2005, 79th Leg., ch. 64, § 33, eff. Jan. 1, 2006.
Section: 9.251 9.252 9.301 10.001 10.002 10.003 10.004 10.005 10.006 10.007 10.008 10.009 10.010 10.051 10.052
Last modified: August 11, 2007
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