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
Robert B. Allen v. Devon Energy Holdings, L.L.C., 367 S.W.3d 355 (Tex. App.—Houston [1st Dist.] 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, No. 03-25-00746-CV (Tex. App.—Austin Jan. 8, 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, No. 03-25-00746-CV (Tex. App.—Austin Jan. 22, 2026).
· cites it 3× “See Tex. Bus. Orgs. Code §§ 101.463 (defining closely held LLC); 153.”
Wes Gilbreath, Jr. v. Lisa R. Gilbreath Horan, No. 01-17-00316-CV (Tex. App.—Houston [1st Dist.] July 15, 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., No. 1:19-cv-01045, 2020 WL 1698826 (W.D. Tex. Apr. 8, 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…”
Celina Hellmund v. Gabriel Castello, No. 14-19-00689-CV (Tex. App.—Houston [14th Dist.] Aug. 18, 2020).
“See Tex. Bus. Orgs. Code § 101.463(c). Allegra specially excepted to Hellmund’s right to bring a derivative action.”
Texas REIT, LLC v. Mokaram-Latif West Loop, No. 14-22-00014-CV (Tex. App.—Houston [14th Dist.] Dec. 6, 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, No. 04-22-00219-CV (Tex. App.—San Antonio Feb. 15, 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…”
Tex. Bus. Orgs. Code § 101.463(a): 2 cases
Robert B. Allen v. Devon Energy Holdings, L.L.C., 367 S.W.3d 355 (Tex. App.—Houston [1st Dist.] 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.”
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, No. 03-25-00746-CV (Tex. App.—Austin Jan. 8, 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, No. 03-25-00746-CV (Tex. App.—Austin Jan. 22, 2026).
“See Tex. Bus. Orgs. Code §§ 101.463 (defining closely held LLC); 153.”
Tex. Bus. Orgs. Code § 101.463(c): 9 cases
Celina Hellmund v. Gabriel Castello, No. 14-19-00689-CV (Tex. App.—Houston [14th Dist.] Aug. 18, 2020).
“See Tex. Bus. Orgs. Code § 101.463(c). Allegra specially excepted to Hellmund’s right to bring a derivative action.”
Wes Gilbreath, Jr. v. Lisa R. Gilbreath Horan, No. 01-17-00316-CV (Tex. App.—Houston [1st Dist.] July 15, 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.”
Gill v. Grewal, No. 4:14-cv-02502, 2020 WL 3171360 (S.D. Tex. June 15, 2020).
Tex. Bus. Orgs. Code § 101.463(c)(1): 1 case
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