Texas Business Organizations Code 21.401 – Management by Board of Directors
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(a) Except as provided by § 21.101 or Subchapter O, the board of directors of a corporation shall:
(1) exercise or authorize the exercise of the powers of the corporation; and
(2) direct the management of the business and affairs of the corporation.
(b) In discharging the duties of director under this code or otherwise and in considering the best interests of the corporation, a director is entitled to consider the long-term and short-term interests of the corporation and the shareholders of the corporation, including the possibility that those interests may be best served by the continued independence of the corporation.
Terms Used In Texas Business Organizations Code 21.401
- Business: means a trade, occupation, profession, or other commercial activity. See Texas Business Organizations Code 1.002
- 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. See Texas Business Organizations Code 1.002 - Corporation: A legal entity owned by the holders of shares of stock that have been issued, and that can own, receive, and transfer property, and carry on business in its own name.
- Corporation: means an entity governed as a corporation under Title 2 or 7. See Texas Business Organizations Code 1.002
- Director: means an individual who serves on the board of directors of a foreign or domestic corporation. 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
- Social purposes: means one or more purposes of a for-profit corporation that are specified in the corporation's certificate of formation and consist of promoting one or more positive impacts on society or the environment or of minimizing one or more adverse impacts of the corporation's activities on society or the environment. See Texas Business Organizations Code 1.002
(c) In discharging the duties of a director under this code or otherwise, a director is entitled to consider any social purposes specified in the corporation’s certificate of formation.
(d) Subject to direction by the board of directors of the corporation, in discharging the duties of an officer under this code or otherwise, an officer is entitled to consider:
(1) the long-term and short-term interests of the corporation and of the corporation’s shareholders, including the possibility that those interests may be best served by the continued independence of the corporation; and
(2) any social purposes specified in the corporation’s certificate of formation.
(e) Nothing in this section prohibits or limits a director or officer of a corporation that does not have a social purpose specified as a purpose in the corporation’s certificate of formation from considering, approving, or taking an action that promotes or has the effect of promoting a social, charitable, or environmental purpose.