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Texas Business Organizations Code - Section 101.255. Contracts Or Transactions Involving Interested Governing Persons Or Officers

Legal Research Home > Texas Lawyer > Business Organizations Code > Texas Business Organizations Code - Section 101.255. Contracts Or Transactions Involving Interested Governing Persons Or Officers

§ 101.255. CONTRACTS OR TRANSACTIONS INVOLVING INTERESTED 
GOVERNING PERSONS OR OFFICERS.  (a) This section applies only to a 
contract or transaction between a limited liability company and:
		(1)  one or more of the company's governing persons or 
officers;  or        
		(2)  an entity or other organization in which one or 
more of the company's governing persons or officers:
			(A)  is a managerial official;  or                                           
			(B)  has a financial interest.                                               
	(b)  An otherwise valid contract or transaction is valid 
notwithstanding that a governing person or officer of the company 
is present at or participates in the meeting of the governing 
authority, or of a committee of the governing person's authority, 
that authorizes the contract or transaction or votes to authorize 
the contract or transaction, if:
		(1)  the material facts as to the relationship or 
interest and as to the contract or transaction are disclosed to or 
known by:
			(A)  the company's governing authority or a 
committee of the governing authority and the governing authority or 
committee in good faith authorizes the contract or transaction by 
the affirmative vote of the majority of the disinterested governing 
persons or committee members, regardless of whether the 
disinterested governing persons or committee members constitute a 
quorum;  or
			(B)  the members of the company, and the members 
in good faith approve the contract or transaction by vote of the 
members;  or
		(2)  the contract or transaction is fair to the company 
when the contract or transaction is authorized, approved, or 
ratified by the governing authority, a committee of the governing 
authority, or the members of the company.
	(c)  Common or interested governing persons of a limited 
liability company may be included in determining the presence of a 
quorum at a meeting of the company's governing authority or of a 
committee of the governing authority that authorizes the contract 
or transaction.

Acts 2003, 78th Leg., ch. 182, § 1, eff. Jan. 1, 2006.                     

Last modified: August 11, 2007