Texas Business Organizations Code 21.905 – Shareholder Approval of Ratified Defective Corporate Act Required; Exception
Terms Used In Texas Business Organizations Code 21.905
- 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
- Governing documents: means :
(A) in the case of a domestic entity:
(i) the certificate of formation for a domestic filing entity or the document or agreement under which a domestic nonfiling entity is formed; and
(ii) the other documents or agreements adopted by the entity under this code to govern the formation or the internal affairs of the entity; or
(B) in the case of a foreign entity, the instruments, documents, or agreements adopted under the law of its jurisdiction of formation to govern the formation or the internal affairs of the entity. See Texas Business Organizations Code 1.002 - Statute: A law passed by a legislature.
Each defective corporate act ratified under § 21.903 must be submitted to shareholders for approval as provided by Sections 21.906 and 21.907, unless:
(1)(A) no other provision of the corporate statute, no provision of the corporation‘s governing documents, and no provision of any plan or agreement to which the corporation is a party would have required shareholder approval of:
(i) the defective corporate act to be ratified at the time of that defective corporate act; or
(ii) the type of defective corporate act to be ratified at the time the board of directors adopts the resolutions ratifying that defective corporate act under § 21.903; and
(B) the defective corporate act to be ratified did not result from a failure to comply with Subchapter M; or
(2) as of the record date for determining the shareholders entitled to vote on the ratification of the defective corporate act, there are no valid shares outstanding and entitled to vote on the ratification, regardless of whether as of that record date there exist any putative shares.