Texas Legislation

Business Organizations Code Amendments

The Texas Legislature recently amended the Business Organizations Code to provide that acting as a governing person of a domestic or foreign entity that is registered to transact business in Texas is not an activity that constitutes transacting business in the state. A “governing person” is a person entitled to manage and direct the affairs of an entity and the governing documents of the entity. This change, effective September 1, 2021, is meant to address any contrary implication created by a 1983 Texas attorney general opinion. Another notable change to the Business Organizations Code is the requirement that certificates of formation include the initial mailing address of the filing entity. A “filing entity” is a domestic corporation, limited partnership, limited liability company, professional association, cooperative, or real estate investment trust. This change, effective January 1, 2022, was requested by the Texas Comptroller’s office to enhance its ability to communicate with new filing entities and assure franchise tax reporting compliance.