Texas Business Organizations Code 101.463 – Closely Held Limited Liability Company
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(a) In this section, “closely held limited liability company” means a limited liability company that has:
(1) fewer than 35 members; and
(2) no membership interests listed on a national securities exchange or regularly quoted in an over-the-counter market by one or more members of a national securities association.
(b) Sections 101.452-101.460 do not apply to a claim or a derivative proceeding by a member of a closely held limited liability company against a governing person, member, or officer of the limited liability company. In the event the claim or derivative proceeding is also made against a person who is not that governing person, member, or officer, this subsection applies only to the claim or derivative proceeding against the governing person, member, or officer.
Terms Used In Texas Business Organizations Code 101.463
- Association: means an entity governed as an association under Title 6 or 7. See Texas Business Organizations Code 1.002
- Governing person: means a person serving as part of the governing authority of an entity. See Texas Business Organizations Code 1.002
- Justice: when applied to a magistrate, means justice of the peace. See Texas Government Code 312.011
- Law: means , unless the context requires otherwise, both statutory and common law. See Texas Business Organizations Code 1.002
- Limited liability company: means an entity governed as a limited liability company under Title 3 or 7. See Texas Business Organizations Code 1.002
- Member: means :
(A) in the case of a limited liability company, a person who has become, and has not ceased to be, a member in the limited liability company as provided by its governing documents or this code;
(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. See Texas Business Organizations Code 1.002 - National securities exchange: means an exchange registered as a national securities exchange under Section 6, Securities Exchange Act of 1934 (15 U. See Texas Business Organizations Code 1.002
- 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. See Texas Business Organizations Code 1.002
- Person: means an individual or a corporation, partnership, limited liability company, business trust, trust, association, or other organization, estate, government or governmental subdivision or agency, or other legal entity, or a protected series or registered series of a domestic limited liability company or foreign entity. See Texas Business Organizations Code 1.002
- Plaintiff: The person who files the complaint in a civil lawsuit.
(c) If Sections 101.452-101.460 do not apply because of Subsection (b) and if justice requires:
(1) a derivative proceeding brought by a member of a closely held limited liability company may be treated by a court as a direct action brought by the member for the member’s own benefit; and
(2) a recovery in a direct or derivative proceeding by a member may be paid directly to the plaintiff or to the limited liability company if necessary to protect the interests of creditors or other members of the limited liability company.
(d) Other provisions of state law govern whether a member has a direct cause of action or right to sue a governing person, member, or officer, and this section may not be construed to create that direct cause of action or right to sue.