Overview of Fiduciary Duties, Exculpation, and Indemnification in Texas Business Organizations

Statutory developments beginning in the 1990s have impacted the analysis of fiduciary duties in the Texas business organizations context. The duties of general partners are now defined by statutory provisions that delineate the duties without referring to them as “fiduciary” duties and specifically provide that partners shall not be held to the standard of a trustee. Whether limited partners in a limited partnership have fiduciary duties is not well-settled, but the Texas Business Organizations Code (BOC) clarifies that a limited partner does not owe the duties of a general partner solely by reason of being a limited partner. While the fiduciary duties of directors are still principally defined by common law, various provisions of the corporate statutes are relevant to the application of fiduciary-duty concepts in the corporate context. Because limited liability companies (LLCs) are a relatively recent phenomenon and the Texas LLC statutes do not specify duties of managers and members, there is some uncertainty with regard to the duties in this area, but the LLC statutes allude to or imply the existence of duties, and managers in a manager-managed LLC and members in a member-managed LLC should expect to be held to fiduciary duties similar to the duties of corporate directors or general partners. In each type of entity, the governing documents may vary (at least to some extent) the duties and liabilities of managerial or governing persons. The power to define duties, eliminate liability, and provide for indemnification is addressed somewhat differently in the statutes governing the various forms of business entities.

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Texas Business Corporation Act Texas Miscellaneous Corporation Laws Act Texas Limited Liability Company Act Texas Securities Act Delaware Limited Liability Company Act Texas Revised Partnership Act Texas Uniform Partnership Act Revised Uniform Partnership Act Texas Revised Limited Partnership Act 443 S.W.3d 856 741 F.2d 707 844 F. Supp. 300 830 F. Supp. 351 213 S.W. 259 404 F. Supp. 1172 73 Tex. 619 141 S.W.2d 425 65 S.W. 509 591 S.W.2d 932 158 F.R.D. 101 44 F. Supp. 307 867 F. Supp. 512 812 F. Supp. 722 1993 WL 414679 2015 WL 8523103 216 B.R. 563 2006 WL 2844245 2008 WL 4155465 2020 WL 2521292 285 S.W.3d 451 999 S.W.2d 615 465 S.W.3d 169 2018 WL 4139001 709 S.W.2d 358 368 S.W.2d 567 82 S.W.3d 666 73 S.W.3d 193 971 S.W.2d 472 762 S.W.2d 145 755 S.W.2d 151 199 S.W.3d 262 150 S.W.3d 785 463 S.W.3d 200 707 F. Supp. 885 879 S.W.2d 10 2012 WL 5046820 367 S.W.3d 355 2000 WL 1780236 720 F. Supp. 2d 792 445 B.R. 677 2011 WL 5921529 2011 WL 6338813 2018 WL 3454800 2012 WL 5354681 440 S.W.3d 798 2013 WL 5935616 514 B.R. 790 444 S.W.3d 110 2017 WL 1227313 2017 WL 1160512 2018 WL 8576652 2020 WL 1698826 409 B.R. 187 292 B.R. 255 2007 WL 1643182 817 A.2d 160 725 N.E.2d 1193 2018 WL 6566642 571 S.W.3d 864 132 Tex. 148 546 S.W.2d 685 904 S.W.2d 617 288 S.W.3d 886 572 S.W.3d 213 338 S.W.3d 562 178 S.W.3d 883 457 S.W.3d 4 445 B.R. 6 394 F.3d 347 2007 WL 2285947 423 B.R. 215 605 B.R. 758 2008 WL 2754526 565 F.3d 171 637 F.3d 615 989 F.2d 779 565 B.R. 367 507 S.W.3d 360 2014 WL 1796217 2015 WL 5714728 594 S.W.3d 524 2019 WL 2647791 544 S.W.3d 899 530 B.R. 360 2014 WL 1856846 2011 WL 13182857 448 S.W.3d 88 2018 WL 6411410 670 S.W.2d 327 457 S.W.3d 427 360 B.R. 231 910 F.2d 255 2001 WL 1029522 701 S.W.2d 677 959 S.W.2d 171 134 S.W.3d 411 2015 WL 1040443 2017 WL 1455407 427 B.R. 392 212 B.R. 898 371 S.W.3d 267 1999 WL 550350 1993 WL 285900 751 N.W.2d 206 773 S.W.2d 338 500 S.W.3d 474 464 S.W.3d 353 2019 WL 6606406 344 S.W.3d 41 Winding Up Weight of Evidence Waiver Ultra Vires Trustee Tort Termination Surety Summary Judgment Statute of Limitations Standing Standard of Care Shareholder Securities Renunciation Receivership Reasonable Person Real Property Real Estate Preliminary Injunction Power of Attorney Personal Representative Nominal Party Minority Shareholder Malfeasance Limited Partnership Limited Partner Limited Liability Company Limited Liability Jury Instructions Jury Charge Judicial Interference Joint Venture Investment Injunctive Relief Indemnify Incorporation Implied Covenant of Good Faith and Fair Dealing Gross Negligence Good Faith General Partner Full Disclosure Fraud Franchise Tax Forfeiture First Impression Fiduciary Relationship Fiduciary Duty Fair Dealing Exemplary Damages Exclusive Right Embezzlement Duty of Care Due Care Directors and Officers Directors Derivative Action Default Rule Corporate Opportunity Corporate Governance Contract Constructive Trust Conflict of Interest Confidential Relation Common Law Close Corporation Clear and Convincing Evidence Certificate of Incorporation Business Entity Breach of Contract Board of Directors Best Interests Beneficiary Bench Trial Bankruptcy Court Bankruptcy Bad Faith Articles of Incorporation Application Date Apparent Authority Abuse of Discretion