Delaware Articles 5.11, 5.12, and 5.13 of the Texas Business Corporation Act are legislative provisions that deal with various aspects pertaining to Texas corporations. It is worth noting that these are specific sections of the Texas Business Corporation Act and not the Delaware state-specific regulations. When referencing Delaware in this context, it means that the Texas Act has modeled some provisions after the Delaware General Corporation Law (DCL), which is known for its business-friendly regulations. Let's explore each of these articles in more detail: 1. Article 5.11: "Preemptive Rights" Under Article 5.11 of the Texas Business Corporation Act, preemptive rights are defined and outlined for shareholders. Preemptive rights give shareholders the first opportunity to purchase additional shares issued by the corporation to maintain their proportional ownership. These rights protect existing shareholders from dilution and allow them to maintain their percentage of ownership when the company seeks to raise additional capital. The specific provisions regarding preemptive rights can help corporations in Texas determine the conditions and limitations under which such rights can be exercised. 2. Article 5.12: "Authorized, Issued, and Outstanding Shares" Article 5.12 concerns the authorized, issued, and outstanding shares of a Texas corporation. It outlines the different classes and series of shares that a corporation can issue, as well as the procedures for authorizing and issuing shares to shareholders. This article further clarifies the rights and restrictions associated with each class or series of shares, including their voting power, dividend entitlements, and liquidation preferences. Understanding Article 5.12 is essential for corporations in Texas as it governs the structure of share capital and the corresponding rights and obligations of shareholders. 3. Article 5.13: "Preferred Stock" Article 5.13 of the Texas Business Corporation Act deals with preferred stock, a class of shares that grants specific rights and privileges to shareholders over common stockholders. It outlines the characteristics of preferred stock, such as dividend preferences, liquidation preferences, redemption provisions, and conversion rights. This article allows Texas corporations to issue preferred stock to attract investors who prefer more predictable returns or certain privileges associated with this class of equity ownership. While these articles refer to provisions in the Texas Business Corporation Act, it is important to understand that Delaware state law has greatly influenced the drafting of these sections. By incorporating aspects from Delaware's DCL, Texas aimed to provide corporations operating within their jurisdiction with regulatory familiarity and certainty. Please note that the specific articles or sections within the Delaware General Corporation Law (DCL) may not directly correspond to the 5.11, 5.12, or 5.13 references in the Texas Business Corporation Act.
Delaware Articles 5.11, 5.12 and 5.13 of Texas Business Corporation Act
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Under Article 2.21 of the Texas Business Corporation Act (TBCA), for example, shareholders or affiliates cannot be held liable for a corporation's contractual obligations unless they caused the corporation to be used to perpetrate ?an actual fraud? primarily for the purpose of personal benefit?.
4. The right to make changes in governing documentation: Shareholders can vote for any changes to the governing documents, such as the charter or the bylaws amendments.
DeCarerra explains, ?For new businesses and particularly small businesses, I generally recommend they organize an LLC in their home state. Even if you organize in Delaware, you'll still need to pay fees in your home state to register as a foreign business authorized to do business in the state.?
Bylaws cover a range of topics, including finances, voting, appointing officers and directors, and much more. While you won't need to file your corporate bylaws with the Secretary of State?unlike the Texas Certificate of Formation?every Texas corporation is required to have bylaws.
Choose a name for your business. ... Designate a Registered Agent in Texas. ... File Articles of Incorporation in Texas. ... Create your Corporate Bylaws. ... Appoint your Corporate Directors. ... Hold the First Meeting of the Board of Directors. ... Authorize the issuance of shares of stock. ... Obtain your Texas business licenses and permits.