CHAPTER 7. LIABILITY
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.