(a) Subject to Subsection (b), a shareholder may not institute or maintain a derivative proceeding unless:
(1) the shareholder:
(A) was a shareholder of the corporation at the time of the act or omission complained of; or
(B) became a shareholder by operation of law originating from a person that was a shareholder at the time of the act or omission complained of; and
(2) the shareholder fairly and adequately represents the interests of the corporation in enforcing the right of the corporation.
(b) If the converted entity in a conversion is a corporation, a shareholder of that corporation may not institute or maintain a derivative proceeding based on an act or omission that occurred with respect to the converting entity before the date of the conversion unless:
(1) the shareholder was an equity owner of the converting entity at the time of the act or omission; and
(2) the shareholder fairly and adequately represents the interests of the corporation in enforcing the right of the corporation.

Terms Used In Texas Business Organizations Code 21.552

  • Conversion: means :
    (A) the continuance of a domestic entity as a non-code organization of any type;
    (B) the continuance of a non-code organization as a domestic entity of any type;
    (C) the continuance of a domestic entity of one type as a domestic entity of another type;
    (D) the continuance of a domestic entity of one type as a foreign entity of the same type that may be treated as a domestication, continuance, or transfer transaction under the laws of the jurisdiction of formation of the foreign entity; or
    (E) the continuance of a foreign entity of one type as a domestic entity of the same type that may be treated as a domestication, continuance, or transfer transaction under the laws of the jurisdiction of formation of the foreign entity. See Texas Business Organizations Code 1.002
  • Converted entity: means an organization resulting from a conversion. See Texas Business Organizations Code 1.002
  • Converting entity: means an organization as the organization existed before the organization's conversion. 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
  • Entity: means a domestic entity or foreign entity. See Texas Business Organizations Code 1.002
  • Law: means , unless the context requires otherwise, both statutory and common law. 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
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