Business Law Updates from the 86th Legislature – Part 2

This is part 2 of the series discussing updates to the Texas Business Organizations Code (“BOC”) from the 86th Legislative session. This article reviews the changes to the delayed effective filing provisions contained contained in Senate Bill 1859 (“SB 1859), which go into effect September 1, 2019.

New Delayed Effectiveness of Filing with the Secretary of State

SB 1859 modified the BOC’s provisions on delayed effectiveness of filings by both expanding the number of events that could be identified for delayed filings and clarifying how those events are identified. Once effective, these amendments will double the number of delayed effectiveness options. The BOC will then allow a filing to take effect:

(1) at a specified date;

(2) at a specified date and time;

(3) on the occurrence of a specified future event or fact, including an act of any person; or

(4) after the occurrence of a future event or fact, including the act of any person, at a specified date, at a specified date and time, or after the passage of a specified period fo time.

Tex. Bus. Org. Code §4.052(b)(1)-(4) (Eff. Sep. 1, 2019).

Any delayed effectiveness based on a future date and time / date must be identified in the instrument. As with the previous laws governing delayed filings, that date and time / date cannot be later than 90 days after the date the instrument is signed. This 90 day limitation similarly applies to future events or facts that are identified to effectuate a filing.

While the language above greatly expands the events that can trigger a delayed effective date, the drafters modified BOC §§ 4.054 and 4.055 to ensure proper identification of the future event or fact by the filing entity. For example, effectiveness based on a future event or fact requires a statement, filed within the 90 day deadline discussed above, confirming that the event or fact has occurred or that the condition was waived. It must also state the date and time at which the filing instrument took effect. Failing to file such as statement will result in the filing instrument being ineffective under BOC § 4.056.