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May 1, 2020Elizabeth S. Miller
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.
March 20, 2025Howard Nirken
Fiduciary Duties of Governing Persons in Texas Business Entities
This set of slides describes the relationship and duties of the Board of Directors to corporation and how that affects corporate governance.
November 10, 2017Debra Gatison Hatter, Cody Dreibelbis
A Look at Board Duties and Conflicts for Corporations and LLCs
The world of corporate governance is experiencing a paradigm shift in recent years—with the movement away from a passive governing board and a rise in shareholder activism and shareholder democracy. This shift is marked by some inherent conflict-of-interest issues including (1) an increase in the number of constituent representatives on the board; (2) the rise of the influence of private equity; and (3) equity-interest owners demanding a right to nominate directors and managers.
May 26, 2012Byron F. Egan
Choice of Entity and Acquisition Structure Decision Tree
These are the presentation slides.
May 26, 2012Charles Henry Still
Director and Officer and Controlling Shareholder Duties and Liabilities Under Texas Law - Fiduciary Duties and Shareholder Oppression
The prior corporation laws and other entity statutes were codified in the Texas Business Organizations Code, which became effective for all Texas corporations on January 1, 2010. The Texas Business Corporation Act (“TBCA”) provisions referred to herein have been carried forward substantially in the Texas Business Organizations Code, which is referred to throughout as the “BOC” or the “Texas BOC”.
November 2, 2012Ladd A. Hirsch, James D. Sheppard
Am I My Brother's Keeper: The Rights and Duties that Co-Owners Owe to Each Other in Private Companies under Texas and Delaware Law
This article focuses on conflicts among minority and majority owners of privately-held companies. As the national economy has suffered since at least 2008, lawsuits by minority owners in private companies appear to be increasing. This article does not include a statistical analysis of this trend, but the common sense explanation is that a down economy eliminates, or sharply reduces, the prospect for minority owners in private companies to cash out. As a result, many investors/owners in private businesses have become frustrated by their inability to monetize their investments.
October 15, 2011Douglas K. Moll
Shareholder Oppression in Texas Close Corporations: Majority Rule (Still) Isn't What it Used to Be.
The doctrine of shareholder oppression protects the close corporation minority stockholder from the improper exercise of majority control. Although the Texas Supreme Court has not explicitly recognized the doctrine, appellate courts in Texas and in other jurisdictions have recognized and applied it in numerous decisions.
May 28, 2011Byron F. Egan
Choice of Entity and Acquisition Structure Decision Tree
These are the presentation slides.
May 22, 2009Byron F. Egan
Director Duties in Troubles Times: Process and Proof
The conduct of corporate directors and officers in Texas is subject to particular scrutiny in the context of executive compensation and other affiliated party transactions, business combinations, whether friendly or hostile, and when the corporation is charged with illegal conduct. The high profile stories of how much corporations are paying their chief executive officer (“CEO”) and other executives, corporate scandals, bankruptcies and related developments have further focused attention on how directors and officers discharge their duties, and have caused much reexamination of how corporations are governed and how they relate to their shareholders. The individuals who serve in leadership roles for corporations are fiduciaries in relation to the corporation and its owners. These troubled times make it appropriate to focus upon the fiduciary and other duties of directors and officers, including their duties of care, loyalty and oversight. Increasingly the courts are applying principals articulated in cases involving mergers and acquisitions (“M&A”) to cases involving executive compensation, perhaps because both areas often involve conflicts of interest and self-dealing or because in Delaware, where many of the cases are tried, the same judges are writing significant opinions in both areas. Director and officer fiduciary duties are generally owed to the corporation and its shareholders, but when the corporation is on the penumbra of insolvency, the beneficiaries of those duties may begin to expand to include the creditors.