Texas Business Organizations Code - Section 2.104. Power To Make Guaranties
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§ 2.104. POWER TO MAKE GUARANTIES. (a) In this section,
"guaranty" means a mortgage, pledge, security agreement, or other
agreement making the domestic entity or its assets secondarily
liable for another person's contract, security, or other
obligation.
(b) Unless otherwise provided by its governing documents or
this code, a domestic entity may:
(1) make a guaranty on behalf of a parent, subsidiary,
or affiliate of the entity; or
(2) make a guaranty of the indebtedness of another
person if the guaranty may reasonably be expected directly or
indirectly to benefit the entity.
(c) For purposes of Subsection (b)(2), a decision by the
governing authority of the domestic entity that a guaranty may
reasonably be expected to benefit the entity is conclusive and not
subject to attack by any person, except:
(1) a guaranty may not be enforced by a person who
participated in a fraud on the domestic entity resulting in the
making of the guaranty or by a person who had notice of that fraud at
the time the person acquired rights under the guaranty;
(2) a proposed guaranty may be enjoined at the request
of an owner of the domestic entity on the ground that the guaranty
cannot reasonably be expected to benefit the domestic entity; or
(3) the domestic entity, whether acting directly or
through a receiver, trustee, or other legal representative, or
through an owner on behalf of the domestic entity, may bring suit
for damages against the managerial officials, owners, or members
who authorized the guaranty on the ground that the guaranty could
not reasonably be expected to benefit the domestic entity.
(d) This section does not:
(1) apply to a domestic entity governed by the
Insurance Code; or
(2) authorize a domestic entity that is not governed
by the Insurance Code to engage in a business or transaction
regulated by the Insurance Code.
Acts 2003, 78th Leg., ch. 182, § 1, eff. Jan. 1, 2006.
Section: 2.009 2.010 2.011 2.012 2.101 2.102 2.103 2.104 2.105 2.106 2.107 2.108 2.109 2.110 2.111
Last modified: August 11, 2007
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