Texas Codes

Tex. Bus. Orgs. Code § 101.255 (2026)

Contracts Or Transactions Involving Interested Governing Persons Or Officers

✓ current as of May 2026

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Sec. 101.255. CONTRACTS OR TRANSACTIONS INVOLVING INTERESTED GOVERNING PERSONS OR OFFICERS. (a) This section applies to a contract or transaction between a limited liability company and:

(1) one or more governing persons or officers, or one or more affiliates or associates of one or more governing persons or officers, of the company; or

(2) an entity or other organization in which one or more governing persons or officers, or one or more affiliates or associates of one or more governing persons or officers, of the company:

(A) is a managerial official; or

(B) has a financial interest.

(b) An otherwise valid and enforceable contract or transaction described by Subsection (a) is valid and enforceable, and is not void or voidable, notwithstanding any relationship or interest described by Subsection (a), if any one of the following conditions is satisfied:

(1) the material facts as to the relationship or interest described by Subsection (a) and as to the contract or transaction are disclosed to or known by:

(A) the company's governing authority or a committee of the governing authority and the governing authority or committee in good faith authorizes the contract or transaction by the approval of the majority of the disinterested governing persons or committee members, regardless of whether the disinterested governing persons or committee members constitute a quorum; or

(B) the members of the company, and the members in good faith approve the contract or transaction by vote of the members; or

(2) the contract or transaction is fair to the company when the contract or transaction is authorized, approved, or ratified by the governing authority, a committee of the governing authority, or the members of the company.

(c) Common or interested governing persons of a limited liability company may be included in determining the presence of a quorum at a meeting of the company's governing authority or of a committee of the governing authority that authorizes the contract or transaction.

(d) A person who has the relationship or interest described by Subsection (a) may:

(1) be present at or participate in and, if the person is a governing person or committee member, may vote at a meeting of the governing authority or of a committee of the governing authority that authorizes the contract or transaction; or

(2) sign, in the person's capacity as a governing person or committee member, a written consent of the governing persons or committee members to authorize the contract or transaction.

(e) If at least one of the conditions of Subsection (b) is satisfied, neither the company nor any of the company's members will have a cause of action against any of the persons described by Subsection (a) for breach of duty with respect to the making, authorization, or performance of the contract or transaction because the person had the relationship or interest described by Subsection (a) or took any of the actions authorized by Subsection (d).

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

Amended by:

Acts 2009, 81st Leg., R.S., Ch. 84 (S.B. 1442), Sec. 44, eff. September 1, 2009.

Acts 2011, 82nd Leg., R.S., Ch. 139 (S.B. 748), Sec. 38, eff. September 1, 2011.

Notes of Decisions

Cited in 4 cases (2 in the last 5 years), 2011–2025 · leading case: LeBlanc v. Lange, 365 S.W.3d 70 (Tex. App. 2011).

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LeBlanc v. Lange, 365 S.W.3d 70 (Tex. App. 2011). “1997) (now-expired version of Texas Limited Liability Company Act applicable to transaction in question) (current version at Tex. Bus. Orgs. Code Ann. § 101.255 (Vernon Supp.”

Hubert \Bud\" Kott v. Brian T. Miller & MK Developers L.C." (Tex. App. 2025). · cites it 4× “Tex. Bus. Orgs. Code § 101.255(b); see In re Estate of Poe, 648 S.”

Linda Fitzerman v. Classic Americana, LLC (Tex. App. 2016). “See TEX. BUS. ORGS. CODE ANN. § 101.255; see also Twenty First Century Holdings, Inc.”

Newstream Roanoke 6.125, LLC v. Jonell Shore, Young Ok Kim, & Soon Boon Change (Tex. App. 2023). “See Tex. Bus. Orgs. Code Ann. § 101.255 (b)(1)–(2) (providing that “[a]n otherwise valid and enforceable contract or transaction” is valid and enforceable if one of the stated conditions is satisfied).”

— Tex. Bus. Orgs. Code § 101.255(b) — 1 case

Hubert \Bud\" Kott v. Brian T. Miller & MK Developers L.C." (Tex. App. 2025). “Tex. Bus. Orgs. Code § 101.255(b); see In re Estate of Poe, 648 S.”

— Tex. Bus. Orgs. Code § 101.255(b)(1) — 1 case

Hubert \Bud\" Kott v. Brian T. Miller & MK Developers L.C." (Tex. App. 2025). “Tex. Bus. Orgs. Code § 101.255(b); see In re Estate of Poe, 648 S.”

— Tex. Bus. Orgs. Code § 101.255(b)(2) — 1 case

Hubert \Bud\" Kott v. Brian T. Miller & MK Developers L.C." (Tex. App. 2025). “Tex. Bus. Orgs. Code § 101.255(b); see In re Estate of Poe, 648 S.”

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