TEXAS BUSINESS ORGANIZATIONS CODE

TITLE 3. LIMITED LIABILITY COMPANIES

CHAPTER 101. LIMITED LIABILITY COMPANIES

SUBCHAPTER C. MEMBERSHIP

Sec. 101.101. MEMBERS REQUIRED.
(a) A limited liability company may have one or more members. Except as provided by this section, a limited liability company must have at least one member.
(b) A limited liability company that has managers is not required to have any members during a reasonable period between the date the company is formed and the date the first member is admitted to the company.
(c) A limited liability company is not required to have any members during the period between the date the continued membership of the last remaining member of the company is terminated and the date the agreement to continue the company described by Section 11.056 is executed.

Sec. 101.102. QUALIFICATION FOR MEMBERSHIP.
(a) A person may be a member of or acquire a membership interest in a limited liability company unless the person lacks capacity apart from this code.
(b) A person is not required, as a condition to becoming a member of or acquiring a membership interest in a limited liability company, to:
(1) make a contribution to the company;
(2) otherwise pay cash or transfer property to the company; or
(3) assume an obligation to make a contribution or otherwise pay cash or transfer property to the company.
(c) If one or more persons own a membership interest in a limited liability company, the company agreement may provide for a person to be admitted to the company as a member without acquiring a membership interest in the company.

Sec. 101.103. EFFECTIVE DATE OF MEMBERSHIP.
(a) In connection with the formation of a company, a person becomes a member of the company on the date the company is formed if the person is named as an initial member in the company’s certificate of formation.
(b) In connection with the formation of a company, a person being admitted as a member of the company but not named as an initial member in the company’s certificate of formation becomes a member of the company on the latest of:
(1) the date the company is formed;
(2) the date stated in the company’s records as the date the person becomes a member of the company; or
(3) if the company’s records do not state a date described by Subdivision (2), the date the person’s admission to the company is first reflected in the company’s records.
(c) A person who, after the formation of a limited liability company, acquires directly or is assigned a membership interest in the company or is admitted as a member of the company without acquiring a membership interest becomes a member of the company on approval or consent of all of the company’s members.

Sec. 101.104. CLASSES OR GROUPS OF MEMBERS OR MEMBERSHIP INTERESTS.
(a) The company agreement of a limited liability company may:
(1) establish within the company classes or groups of one or more members or membership interests each of which has certain expressed relative rights, powers, and duties, including voting rights; and
(2) provide for the manner of establishing within the company additional classes or groups of one or more members or membership interests each of which has certain expressed relative rights, powers, and duties, including voting rights.
(b) The rights, powers, and duties of a class or group of members or membership interests described by Subsection (a)(2) may be stated in the company agreement or stated at the time the class or group is established.
(c) If the company agreement of a limited liability company does not provide for the manner of establishing classes or groups of members or membership interests under Subsection (a)(2), additional classes or groups of members or membership interests may be established only by the adoption of an amendment to the company agreement.
(d) The rights, powers, or duties of any class or group of members or membership interests of a limited liability company may be senior to the rights, powers, or duties of any other class or group of members or membership interests in the company, including a previously established class or group.

Sec. 101.105. ISSUANCE OF MEMBERSHIP INTERESTS AFTER FORMATION OF COMPANY.
A limited liability company, after the formation of the company, may:
(1) issue membership interests in the company to any person with the approval of all of the members of the company; and
(2) if the issuance of a membership interest requires the establishment of a new class or group of members or membership interests, establish a new class or group as provided by Sections 101.104(a)(2), (b), and (c).

Sec. 101.106. NATURE OF MEMBERSHIP INTEREST.
(a) A membership interest in a limited liability company is personal property.
(b) A member of a limited liability company or an assignee of a membership interest in a limited liability company does not have an interest in any specific property of the company.

Sec. 101.107. WITHDRAWAL OR EXPULSION OF MEMBER PROHIBITED.
A member of a limited liability company may not withdraw or be expelled from the company.

Sec. 101.108. ASSIGNMENT OF MEMBERSHIP INTEREST.
(a) A membership interest in a limited liability company may be wholly or partly assigned.
(b) An assignment of a membership interest in a limited liability company:
(1) is not an event requiring the winding up of the company; and
(2) does not entitle the assignee to:
(A) participate in the management and affairs of the company;
(B) become a member of the company; or
(C) exercise any rights of a member of the company.

Sec. 101.109. RIGHTS AND DUTIES OF ASSIGNEE OF MEMBERSHIP INTEREST BEFORE MEMBERSHIP.
(a) A person who is assigned a membership interest in a limited liability company is entitled to:
(1) receive any allocation of income, gain, loss, deduction, credit, or a similar item that the assignor is entitled to receive to the extent the allocation of the item is assigned;
(2) receive any distribution the assignor is entitled to receive to the extent the distribution is assigned;
(3) require, for any proper purpose, reasonable information or a reasonable account of the transactions of the company; and
(4) make, for any proper purpose, reasonable inspections of the books and records of the company.
(b) An assignee of a membership interest in a limited liability company is entitled to become a member of the company on the approval of all of the company’s members.
(c) An assignee of a membership interest in a limited liability company is not liable as a member of the company until the assignee becomes a member of the company.

Sec. 101.110. RIGHTS AND LIABILITIES OF ASSIGNEE OF MEMBERSHIP INTEREST AFTER BECOMING MEMBER.
(a) An assignee of a membership interest in a limited liability company, after becoming a member of the company, is:
(1) entitled, to the extent assigned, to the same rights and powers granted or provided to a member of the company by the company agreement or this code;
(2) subject to the same restrictions and liabilities placed or imposed on a member of the company by the company agreement or this code; and
(3) except as provided by Subsection (b), liable for the assignor’s obligation to make contributions to the company.
(b) An assignee of a membership interest in a limited liability company, after becoming a member of the company, is not obligated for a liability of the assignor that:
(1) the assignee did not have knowledge of on the date the assignee became a member of the company; and
(2) could not be ascertained from the company agreement.

Sec. 101.111. RIGHTS AND DUTIES OF ASSIGNOR OF MEMBERSHIP INTEREST.
(a) An assignor of a membership interest in a limited liability company continues to be a member of the company and is entitled to exercise any unassigned rights or powers of a member of the company until the assignee becomes a member of the company.
(b) An assignor of a membership interest in a limited liability company is not released from the assignor’s liability to the company, regardless of whether the assignee of the membership interest becomes a member of the company.

Sec. 101.112. MEMBER’S MEMBERSHIP INTEREST SUBJECT TO CHARGING ORDER.
(a) On application by a judgment creditor of a member of a limited liability company or of any other owner of a membership interest in a limited liability company, a court having jurisdiction may charge the membership interest of the judgment debtor to satisfy the judgment.
(b) If a court charges a membership interest with payment of a judgment as provided by Subsection (a), the judgment creditor has only the right to receive any distribution to which the judgment debtor would otherwise be entitled in respect of the membership interest.
(c) A charging order constitutes a lien on the judgment debtor’s membership interest.
(d) The entry of a charging order is the exclusive remedy by which a judgment creditor of a member or of any other owner of a membership interest may satisfy a judgment out of the judgment debtor’s membership interest.
(e) This section may not be construed to deprive a member of a limited liability company or any other owner of a membership interest in a limited liability company of the benefit of any exemption laws applicable to the membership interest of the member or owner.
(f) A creditor of a member or of any other owner of a membership interest does not have the right to obtain possession of, or otherwise exercise legal or equitable remedies with respect to, the property of the limited liability company.

Sec. 101.113. PARTIES TO ACTIONS.
A member of a limited liability company may be named as a party in an action by or against the limited liability company only if the action is brought to enforce the member’s right against or liability to the company.

Sec. 101.114. LIABILITY FOR OBLIGATIONS.
Except as and to the extent the company agreement specifically provides otherwise, a member or manager is not liable for a debt, obligation, or liability of a limited liability company, including a debt, obligation, or liability under a judgment, decree, or order of a court.