Texas Business Organizations Code

§ 21.554 — DETERMINATION BY DIRECTORS OR INDEPENDENT PERSONS

BO § 21.554Title 2. CORPORATIONS · Ch. 21. FOR-PROFIT CORPORATIONS · Art. L. DERIVATIVE PROCEEDINGS

Statute text

(a)A determination of how to proceed on allegations made in a demand or petition relating to a derivative proceeding must be made by an affirmative vote of the majority of:

(1)all independent and disinterested directors of the corporation, regardless of whether the independent and disinterested directors constitute a quorum of the board of directors;

(2)a committee consisting of one or more independent and disinterested directors appointed by an affirmative vote of the majority of one or more independent and disinterested directors, regardless of whether the independent and disinterested directors constitute a quorum of the board of directors; or

(3)a panel of one or more independent and disinterested individuals appointed by the court on a motion by the corporation listing the names of the individuals to be appointed and stating that, to the best of the corporation's knowledge, the individuals to be appointed are disinterested and qualified to make the determinations contemplated by Section 21.558.

(b)The court shall appoint a panel under Subsection (a)(3) if the court finds that the individuals recommended by the corporation are independent and disinterested and are otherwise qualified with respect to expertise, experience, independent judgment, and other factors considered appropriate by the court under the circumstances to make the determinations. An individual appointed by the court to a panel under this section may be a director. An individual appointed by the court to a panel under this section may not be held liable to the corporation or the corporation's shareholders for an action taken or omission made by the individual in that capacity, except for an act or omission constituting fraud or wilful misconduct.

(c)Before the corporation's determination of how to proceed on the allegations under Subsection (a), the corporation may petition the court having jurisdiction to make a finding as to whether the directors identified or appointed under Subsection (a)(1) or (2) are independent and disinterested with respect to the allegations made in the demand.

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Legislative history

Acts 2019, 86th Leg., R.S., Ch. 899 (H.B. 3603), Sec. 4, eff. September 1, 2019. Acts 2025, 89th Leg., R.S., Ch. 21 (S.B. 29), Sec. 14, eff. May 14, 2025.