Texas Business Organizations Code Company Agreement

For these limited liability companies before the TBOC, a member`s obligation to make a contribution or otherwise pay in cash is only in writing and signed by the member. (Art. 5.02A of the Old Law). A member who is required to contribute or the legal representative of such a member must do so, even if the member has died, is disabled or if circumstances have changed, unless the regulations change or all members accept non-payment. (Art. 5.02B and 5.02D of the Old Law). Even if a member or his legal representative has obtained the agreement of the other members in the event of non-payment, a creditor of the company who acts „in reasonable accord“ of the performance of this enforceable obligation may, before its cancellation, assert the original undertaking. Section 2.01 of the Old Law states that „a limited liability company… may engage in lawful business activities, unless their organizational articles or regulations specify a more limited purpose.“ Similar provisions of the TBOC for all reported agencies are contained in Chapter 2 of the TBOC. (e) This section shall not be interpreted to deprive a member of a limited liability corporation or other owner of a limited liability corporation of the benefits of the exceptional laws that apply to the member`s or owner`s affiliate interests.

Members of a limited liability company have the right to share the distribution of cash or other assets of the company under the company agreement/settlement. If the agreement/provisions of the company are implied, the distribution is consistent with the „agreed value“ of the members` interests. (TBOC 101.203/Art. 5.03 of the Old Law). Therefore, if the intention is that the distributions are disproportionate, this must be included in the company agreement/settlement. This contrasts with S-Companies, which, under current U.S. income tax legislation, do not allow disproportionate allowances. Therefore, limited liability companies that have accepted company status S should ensure that enterprise agreements/regulations do not allow disproportionate allocations and, if not, comply with S-share rules.