Texas § BO.101.463 - CLOSELY HELD LIMITED LIABILITY COMPANY

§ BO.101.463. CLOSELY HELD LIMITED LIABILITY COMPANY

CLOSELY HELD LIMITED LIABILITY COMPANY. (a) In this section, "closely held limited liability company" means a limited liability company that has: (1) fewer than 35 members; and (2) no membership interests listed on a national securities exchange or regularly quoted in an over-the-counter market by one or more members of a national securities association. (b) Sections 101.452-101.460 do not apply to a derivative proceeding by a member of a closely held limited liability company against a present or former governing person, member, or officer of the limited liability company. In the event the member also asserts a claim in the derivative proceeding against a person who is not a present or former governing person, member, or officer, this subsection applies only to a claim in the derivative proceeding against a present or former governing person, member, or officer. (c) If Sections 101.452-101.460 do not apply because of Subsection (b) and if justice requires: (1) a derivative proceeding brought by a member of a closely held limited liability company may be treated by a court as a direct action brought by the member for the member's own benefit; and (2) a recovery in a direct or derivative proceeding by a member may be paid directly to the plaintiff or to the limited liability company if necessary to protect the interests of creditors or other members of the limited liability company. (d) Other provisions of state law govern whether a member has a direct cause of action or right to sue a governing person, member, or officer, and this section may not be construed to create that direct cause of action or right to sue. Acts 2003, 78th Leg., ch. 182, Sec. 1, eff. Jan. 1, 2006. Amended by: Acts 2007, 80th Leg., R.S., Ch. 688 (H.B. 1737 ), Sec. 100, eff. September 1, 2007. Acts 2019, 86th Leg., R.S., Ch. 899 (H.B. 3603 ), Sec. 24, eff. September 1, 2019. Acts 2025, 89th Leg., R.S., Ch. 199 (S.B. 2411 ), Sec. 50, eff. September 1, 2025. SUBCHAPTER K. SUPPLEMENTAL RECORDKEEPING REQUIREMENTS