CHAPTER 7. LIABILITY - Texas Statutes

BUSINESS ORGANIZATIONS CODE

TITLE 1. GENERAL PROVISIONS

CHAPTER 7. LIABILITY

Sec. 7.001. LIMITATION OF LIABILITY OF GOVERNING PERSON. (a)

Subsections (b) and (c) apply to:

(1) a domestic entity other than a partnership or limited

liability company;

(2) another organization incorporated or organized under another

law of this state; and

(3) to the extent permitted by federal law, a federally

chartered bank, savings and loan association, or credit union.

(b) The certificate of formation or similar instrument of an

organization to which this section applies may provide that a

governing person of the organization is not liable, or is liable

only to the extent provided by the certificate of formation or

similar instrument, to the organization or its owners or members

for monetary damages for an act or omission by the person in the

person's capacity as a governing person.

(c) Subsection (b) does not authorize the elimination or

limitation of the liability of a governing person to the extent

the person is found liable under applicable law for:

(1) a breach of the person's duty of loyalty, if any, to the

organization or its owners or members;

(2) an act or omission not in good faith that:

(A) constitutes a breach of duty of the person to the

organization; or

(B) involves intentional misconduct or a knowing violation of

law;

(3) a transaction from which the person received an improper

benefit, regardless of whether the benefit resulted from an

action taken within the scope of the person's duties; or

(4) an act or omission for which the liability of a governing

person is expressly provided by an applicable statute.

(d) The liability of a governing person may be limited or

restricted:

(1) in a general partnership to the extent permitted under

Chapter 152;

(2) in a limited partnership to the extent permitted under

Chapter 153 and, to the extent applicable to limited

partnerships, Chapter 152; and

(3) in a limited liability company to the extent permitted under

Section 101.401.

Acts 2003, 78th Leg., ch. 182, Sec. 1, eff. Jan. 1, 2006.