Tex. Codes » Business Organizations Code · TITLE 3. LIMITED LIABILITY COMPANIES · CHAPTER 101. LIMITED LIABILITY COMPANIES
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Tex. Bus. Orgs. Code § 101.463 (2026)

Closely Held Limited Liability Company

✓ current as of May 2026
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Sec. 101.463. CLOSELY HELD LIMITED LIABILITY COMPANY. (a) In this section, "closely held limited liability company" means a limited liability company that has:

(1) fewer than 35 members; and

(2) no membership interests listed on a national securities exchange or regularly quoted in an over-the-counter market by one or more members of a national securities association.

(b) Sections 101.452-101.460 do not apply to a derivative proceeding by a member of a closely held limited liability company against a present or former governing person, member, or officer of the limited liability company. In the event the member also asserts a claim in the derivative proceeding against a person who is not a present or former governing person, member, or officer, this subsection applies only to a claim in the derivative proceeding against a present or former governing person, member, or officer.

(c) If Sections 101.452-101.460 do not apply because of Subsection (b) and if justice requires:

(1) a derivative proceeding brought by a member of a closely held limited liability company may be treated by a court as a direct action brought by the member for the member's own benefit; and

(2) a recovery in a direct or derivative proceeding by a member may be paid directly to the plaintiff or to the limited liability company if necessary to protect the interests of creditors or other members of the limited liability company.

(d) Other provisions of state law govern whether a member has a direct cause of action or right to sue a governing person, member, or officer, and this section may not be construed to create that direct cause of action or right to sue.

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

Amended by:

Acts 2007, 80th Leg., R.S., Ch. 688 (H.B. 1737), Sec. 100, eff. September 1, 2007.

Acts 2019, 86th Leg., R.S., Ch. 899 (H.B. 3603), Sec. 24, eff. September 1, 2019.

Acts 2025, 89th Leg., R.S., Ch. 199 (S.B. 2411), Sec. 50, eff. September 1, 2025.

SUBCHAPTER K. SUPPLEMENTAL RECORDKEEPING REQUIREMENTS


Notes of Decisions
Cited in 16 cases (9 in the last 5 years), 2012–2026 · leading case: In re Lonestar Logo & Signs, LLC, 552 S.W.3d 342 (Tex. App. 2018).
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In re Lonestar Logo & Signs, LLC, 552 S.W.3d 342 (Tex. App. 2018). · cites it 3× “See Tex. Bus. Orgs. Code § 101.463. See id. § 101.”
Robert B. Allen v. Devon Energy Holdings, L.L.C. F/K/A Chief Holdings, L.L.C, & Trevor D. Rees-Jones, 367 S.W.3d 355 (Tex. App. 2012). “Compare Tex. Bus. Orgs.Code Ann. § 101.463(a) (defining closely-held LLC as LLC with fewer than 35 members that has no membership interests listed on national securities exchange or regularly quoted in over-the-counter market), with id.”
Dallas Sports Club v. DSE Hockey Arena, 2026 Tex. Bus. 15 (Tex. Bus. Ct. 2026). · cites it 2× “See generally, TEX. BUS. ORG. CODE §§ 101.463 and 153.413 (permitting derivative actions to treated as direct actions and providing direct recoveries in suits involving closely held limited liability companies and limited partnerships).”
In Re Kona Coast Venture, LTD; Kona Coast, LLC; William Korioth; WTK Dev., LLC; Guadalupe 306, LP; Guadalupe 306 GP, LLC; Oxbow Land Partners, LLC; Hideout on the Horseshoe, LLC; Whitewater Sports, LLC; & TBOTG Dev., Inc. v. the State of Texas (2026). · cites it 3× “13 See Tex. Bus. Orgs. Code §§ 101.463 (defining closely held LLC); 153.”
In Re Kona Coast Venture, LTD; Kona Coast, LLC; William Korioth; WTK Dev., LLC; Guadalupe 306, LP; Guadalupe 306 GP, LLC; Oxbow Land Partners, LLC; Hideout on the Horseshoe, LLC; Whitewater Sports, LLC; & TBOTG Dev., Inc. v. the State of Texas (2026). · cites it 3× “See Tex. Bus. Orgs. Code §§ 101.463 (defining closely held LLC); 153.”
Wes Gilbreath, Jr., Stacey Gilbreath Powell, Elliot Gilbreath, & Mark Ritter SignAd, Ltd., SignAd GP, LLC, Ben Nevis West, Ltd., Culcreuch West, LLC, Big Signs & Leasing 1, Ltd., Big Signs & Leasing 2, Ltd., Big Signs & Leasing 3, Ltd. El Al v. Lisa R. Gilbreath Horan, Individually & as Tr. of the Lisa Gilbreath Horan 2001 Irrevocable Trust (Tex. App. 2022). · cites it 2× “15 We sustain the Individual and Company Appellants’ challenge to Lisa’s standing, reverse the trial court’s judgment with respect to Lisa’s derivative claim filed on behalf of SignAd GP, LLC, and render judgment dismissing the claim for lack of subject matter jurisdiction.”
Recruiting Force, LLC v. Mainthia Tech., Inc. (W.D. Tex. 2020). · cites it 2× “The Court is persuaded by the weight of this case law and finds that the invocation of TEX. BUS. ORG. CODE § 101.463 by Recruit Veterans does not require the Court to treat Recruit Veterans’ derivative claims as direct, and does not require the Court to treat RVMTI as a nominal…”
In Re Bradfield Heiser, on His Own Behalf & as Derivative on Behalf of Bradfield Ventures Prop. Grp., LLC, & Bradfield Ventures, LLC, on Its Own Behalf & as Derivative on Behalf of Ellis BV Investors, LLC, Cirque Park SF Land Purchase GP LLC, & Bowen @ Cirque Land Purchase GP LLC v. the State of Texas (Tex. App. 2025). · cites it 2× “at 60; see Tex. Bus. Orgs. Code § 101.463(c) (“[I]f justice requires: a derivative proceeding brought by a member of a closely held limited liability company may be treated by a court as a direct action brought by the member for the member’s own benefit.”
Tho Q. Pham v. Jason Bryan Carrier, Stephen Bradley Womack, Michael Chadwick Pickelsimer AKA Michael Chadwick Womack, HMP Partners Mgmt. Inc. & Carmack Props., LLC (Tex. App. 2017). “See TEX. BUS. ORGS. CODE ANN. § 101.463 (West 2015).”
Celina Hellmund v. Gabriel Castello (Tex. App. 2020). “See Tex. Bus. Orgs. Code § 101.463(c). Allegra specially excepted to Hellmund’s right to bring a derivative action.”
Texas REIT, LLC, Ali Choudhri, Dalio Holdings I, LLC & Dalio Holdings II, LLC v. Mokaram-Latif West Loop, Ltd. & Ali Mokaram (Tex. App. 2022). “” Tex. Bus. Orgs. Code § 101.463 (“a recovery in a direct or derivative proceeding by a member may be paid directly to the plaintiff or to the limited liability company if necessary to protect the interests of creditors or other members of the limited liability company.”
in the Est. of Rene Huron (Tex. App. 2023). “TEX. BUS. ORGS. CODE § 101.463 (allowing member of closely held LLC to bring derivative suit free of statutory standing, demand, and mandatory- dismissal requirements; affording courts discretion to treat such suits as direct actions brought by member for member’s own benefit…”
Show all 16 citing cases →
— Tex. Bus. Orgs. Code § 101.463(a) — 2 cases
Robert B. Allen v. Devon Energy Holdings, L.L.C. F/K/A Chief Holdings, L.L.C, & Trevor D. Rees-Jones, 367 S.W.3d 355 (Tex. App. 2012). “Compare Tex. Bus. Orgs.Code Ann. § 101.463(a) (defining closely-held LLC as LLC with fewer than 35 members that has no membership interests listed on national securities exchange or regularly quoted in over-the-counter market), with id.”
Robert B. Allen v. Devon Energy Holdings, L.L.C. F/K/A Chief Holdings, L.L.C, & Trevor D. Rees-Jones (Tex. App. 2014).
— Tex. Bus. Orgs. Code § 101.463(b) — 2 cases
In Re Kona Coast Venture, LTD; Kona Coast, LLC; William Korioth; WTK Dev., LLC; Guadalupe 306, LP; Guadalupe 306 GP, LLC; Oxbow Land Partners, LLC; Hideout on the Horseshoe, LLC; Whitewater Sports, LLC; & TBOTG Dev., Inc. v. the State of Texas (2026). “13 See Tex. Bus. Orgs. Code §§ 101.463 (defining closely held LLC); 153.”
In Re Kona Coast Venture, LTD; Kona Coast, LLC; William Korioth; WTK Dev., LLC; Guadalupe 306, LP; Guadalupe 306 GP, LLC; Oxbow Land Partners, LLC; Hideout on the Horseshoe, LLC; Whitewater Sports, LLC; & TBOTG Dev., Inc. v. the State of Texas (2026). “See Tex. Bus. Orgs. Code §§ 101.463 (defining closely held LLC); 153.”
— Tex. Bus. Orgs. Code § 101.463(c) — 9 cases
In re Lonestar Logo & Signs, LLC, 552 S.W.3d 342 (Tex. App. 2018). “See Tex. Bus. Orgs. Code § 101.463. See id. § 101.”
Celina Hellmund v. Gabriel Castello (Tex. App. 2020). “See Tex. Bus. Orgs. Code § 101.463(c). Allegra specially excepted to Hellmund’s right to bring a derivative action.”
Wes Gilbreath, Jr., Stacey Gilbreath Powell, Elliot Gilbreath, & Mark Ritter SignAd, Ltd., SignAd GP, LLC, Ben Nevis West, Ltd., Culcreuch West, LLC, Big Signs & Leasing 1, Ltd., Big Signs & Leasing 2, Ltd., Big Signs & Leasing 3, Ltd. El Al v. Lisa R. Gilbreath Horan, Individually & as Tr. of the Lisa Gilbreath Horan 2001 Irrevocable Trust (Tex. App. 2022). “15 We sustain the Individual and Company Appellants’ challenge to Lisa’s standing, reverse the trial court’s judgment with respect to Lisa’s derivative claim filed on behalf of SignAd GP, LLC, and render judgment dismissing the claim for lack of subject matter jurisdiction.”
Wes Gilbreath, Jr., Stacey Gilbreath Powell, Elliot Gilbreath, & Mark Ritter SignAd, Ltd., SignAd GP, LLC, Ben Nevis West, Ltd., Culcreuch West, LLC, Big Signs & Leasing 1, Ltd., Big Signs & Leasing 2, Ltd., Big Signs & Leasing 3, Ltd. El Al v. Lisa R. Gilbreath Horan, Individually & as Tr. of the Lisa Gilbreath Horan 2001 Irrevocable Trust (Tex. App. 2023).
Gill v. Grewal (S.D. Tex. 2020).
— Tex. Bus. Orgs. Code § 101.463(c)(1) — 1 case
In Re Bradfield Heiser, on His Own Behalf & as Derivative on Behalf of Bradfield Ventures Prop. Grp., LLC, & Bradfield Ventures, LLC, on Its Own Behalf & as Derivative on Behalf of Ellis BV Investors, LLC, Cirque Park SF Land Purchase GP LLC, & Bowen @ Cirque Land Purchase GP LLC v. the State of Texas (Tex. App. 2025). “at 60; see Tex. Bus. Orgs. Code § 101.463(c) (“[I]f justice requires: a derivative proceeding brought by a member of a closely held limited liability company may be treated by a court as a direct action brought by the member for the member’s own benefit.”
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