Legal Alert

All Texas Entities to be Governed by the TBOC Effective January 1, 2010
by Forrest Gordon
December 11, 2009

On January 1, 2010, all entities organized in Texas prior to January 1, 2006 under statutes other than the Texas Business Organizations Code ("TBOC") will cease to be governed by the statutes under which they were formed and automatically, without any notice to or action required by the entity's owners and management, become governed by the TBOC.

What does this mean for pre-TBOC entities that have not taken any action to early adopt the TBOC?

Provided that the formation documents of the entity complied with the statute under which it was formed, no further action is required of the entity to bring it into compliance with the TBOC. Fortunately, the TBOC includes a list of synonymous terms so that any reference in an entity's governing documents to now obsolete terms such as "articles of incorporation" and "regulations" are treated as legally synonymous with their TBOC equivalents (which, for the above terms would be "certificate of formation" and "company agreement").

That being said, owners and management should be aware that all actions taken by their entity on or after January 1, 2010 will be governed by the TBOC, regardless of when that entity was formed. Additionally, the entity will be required to conform its articles of incorporation to the TBOC if and when it ever files an amendment to that document with the Texas Secretary of State.