Texas Business Organizations Code 22.054 – Authorized Benefits and Distributions
Terms Used In Texas Business Organizations Code 22.054
- Assets: (1) The property comprising the estate of a deceased person, or (2) the property in a trust account.
- 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
- Fiduciary: A trustee, executor, or administrator.
- Internal Revenue Code: means the Internal Revenue Code of 1986, as amended. See Texas Business Organizations Code 1.002
- Liabilities: The aggregate of all debts and other legal obligations of a particular person or legal entity.
A corporation may:
(1) pay compensation in a reasonable amount to the members, directors, or officers of the corporation for services provided;
(2) confer benefits on the corporation’s members in conformity with the corporation’s purposes;
(3) make distributions to the corporation’s members on winding up and termination to the extent authorized by this chapter; and
(4) make distributions of its income to the corporation’s members who are nonprofit corporations organized under this code and who are exempt from income taxation under Section 501(a), Internal Revenue Code of 1986, by being listed under Section 501(c)(3) of that code, if:
(A) the distributions are made in accordance with the purpose or purposes of the corporation as stated in the certificate of formation and with the fiduciary responsibilities of the board of directors, including the duty to safeguard restricted funds for their intended purposes; and
(B) after the distributions are complete:
(i) the corporation would be able to pay the corporation’s debts as they become due in the usual course of its activities; and
(ii) the corporation’s total assets would at least equal the sum of its total liabilities.