The Texas legislature’s 2013 regular session produced a number of bills that amend or alter laws affecting businesses in Texas. Below is a summary of key bills passed by this legislature that affect Texas businesses, some of which will be addressed in more detail in later posts. There is also a list of other bills of interest at the end of the discussion.
Senate Bill 847: Amendments to the Texas Business Organization Code
SB 847 takes effect September 1, 2013, and made a number of amendments to the Business Organizations Code. Below is a list of amendments in this bill:
- Removed the requirement that restated certificates of formation that make amendments identify by reference or description each added, altered, or deleted provision.
- Clarified that partnerships, limited partnerships, and limited liability companies have the right to limit or eliminate the liability of a governing person of the organization to the same extent as a corporation.
- Added a requirement that limited partnerships send written notice of the winding up to each known claimant against the entity during the winding up process.
- Added the authority for a limited liability company to grant rights to a person, including a person who is not a party to the agreement, in the company agreement.
- Added the authority for a partnership to grant rights to a person, including a person who is not a party to the agreement, in the partnership agreement.
- Clarified a number of rights for series LLC’s including:
- the right of a series to acquire and sell title to assets;
- exercise any power or privilege appropriate to the conduct of the activities of the series;
- the rights and powers of the governing persons and officers of a series; and
- specified that a series is not a separate domestic entity or organization.
Senate Bill 849: Social Purpose Corporations
SB 849 takes effect September 1, 2013, and authorizes for-profit corporations to include a social purpose in its certificate of formation. The bill also states that directors and officers are entitled to consider social purposes identified in the certificate of formation when making business decisions.
Previously for-profit corporations and their directors were (presumably) required to make business decisions with the primary goal of increasing profit and shareholder value. This bill follows a growing national trend that recognizes corporations can play an important role in promoting and supporting social issues that are not necessarily in contravention of their for-profit purposes. It also recognizes that there is a growing social entrepreneurship trend through which entrepreneur’s attempt to affect change in a social purpose through business.
The permitted social purposes include promoting one or more positive impacts on society or the environment or minimizing or or more adverse impacts on society or the environment.
Senate Bill 953: Uniform Trade Secrets Act
SB 953 represents a significant addition to Texas law protecting trade secrets and is effective September 1, 2013. This is a significant bill that will be addressed in detail in a later post here, but below is a summary of the bill. Texas has not had a central law governing the protection of trade secrets prior to enactment of this bill.
SB 953 adopts a modified version of the Uniform Trade Secrets Act to provide consistent and predictable statutory language for trade secret protection. The bill updates the definition of “trade secret” to reflect current business practices and technologies and also clarifies that certain business practices do not constitute misappropriation of trade secrets. It provides easily applied standards for injunctive relief along with an avenue for recovering attorney’s fees against willful and malicious misappropriators.
Senate Bill 699: Modification to Assumed Name Certificate Requirements
SB 699, effective September 1, 2013, eliminates the requirement that an assumed name certificate include the registered office information for the filing entity because that information is included in the information on the original filing certificate. The bill also clarifies the information required on the assumed name certificate regarding an entity’s principal office.
House Bill 1624: Naming Series LLC
HB 1624 provides that an assumed name certificate be filed for each series in a series LLC under the assumed name statutory framework. This bill is effective September 1, 2013.
Other Bills of Interest
HB 194: Adds disabled veterans to the definition of economically disadvantaged persons in determining whether a business is a historically underutilized business for purposes of state contracting. The bill also includes a requirement for the Comptroller to provide goals for increasing awards to qualifying disabled veteran-owned businesses.
HB 500: Provides small business franchise tax exemption levels, across the board franchise tax reductions for 2014 and 2015 (with Comptroller’s certification), as well as a number of industry specific exemptions. The bill also provides for a deduction of relocation costs for businesses moving to Texas. Effective January 1, 2014.
HB 1979: This bill addresses the right of a creditor and obligor to define the method of computing annual interest and the use of compound interest or payment-in-kind interest in commercial loan transactions. Effective September 1, 2013.
HB 2918: Amends the current durable power of attorney form to change it from an opt-out type form to an opt-in type form. Effective January 1, 2014.
HB 3714: Establishes the Office of Small Business Assistance Advisory Task Force to advise and assist the Governor, Lieutenant Governor, and Speak of the House by providing information in plain language to the public on issues related to small businesses. The bill also establishes reporting requirements.
SB 230: Addresses and modifies certain fund transfers that were removed from UCC 4A because of changes to definitions in the Electronic Fund Transfer Act made by the Dodd-Frank Wall Street Reform and Consumer Protection Act. Effective September 1, 2013.
SB 474: Modifies information required in financing statements and other secured transaction records to comply with changes to forms approved by the International Association of Commercial Administrators. Effective July 1, 2013.