Texas Business Organizations Code
§ 2.104 — POWER TO MAKE GUARANTIES
BO § 2.104Title 1. GENERAL PROVISIONS · Ch. 2. PURPOSES AND POWER OF DOMESTIC ENTITY · Art. B. POWERS OF DOMESTIC ENTITY
Statute text
View on source(a)In this section, "guaranty" means a guaranty, mortgage, pledge, security agreement, or other agreement making the domestic entity or its assets liable for another person's contract, security, or other obligation.
(b)Unless otherwise provided by its governing documents or this code, a domestic entity may:
(1)make a guaranty on behalf of a parent, subsidiary, or affiliate of the entity; or
(2)make a guaranty of the indebtedness of another person if the guaranty may reasonably be expected directly or indirectly to benefit the entity.
(c)For purposes of Subsection (b)(2), a decision by the governing authority of the domestic entity that a guaranty may reasonably be expected to benefit the entity is conclusive and not subject to attack by any person, except:
(1)a guaranty may not be enforced by a person who participated in a fraud on the domestic entity resulting in the making of the guaranty or by a person who had notice of that fraud at the time the person acquired rights under the guaranty;
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Legislative history
Acts 2007, 80th Leg., R.S., Ch. 688 (H.B. 1737), Sec. 8, eff. September 1, 2007.