Texas Codes

Tex. Bus. Orgs. Code § 21.701 (2026)

Definitions

✓ current as of May 2026

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Sec. 21.701. DEFINITIONS. In this subchapter and Subchapter P:

(1) "Close corporation" means a domestic corporation formed under this subchapter or governed by this subchapter because of Section 21.705, 21.706, or 21.707.

(2) "Close corporation provision" means a provision in the certificate of formation of a close corporation or in a shareholders' agreement of a close corporation.

(3) "Ordinary corporation" means a domestic corporation that is not a close corporation.

(4) "Shareholders' agreement" means a written agreement regulating an aspect of the business and affairs of or the relationship among the shareholders of a close corporation that has been executed under this subchapter.

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

Amended by:

Acts 2011, 82nd Leg., R.S., Ch. 139 (S.B. 748), Sec. 32, eff. September 1, 2011.

Acts 2019, 86th Leg., R.S., Ch. 665 (S.B. 1971), Sec. 9, eff. September 1, 2019.

Notes of Decisions

Cited in 1 case (1 in the last 5 years), 2021–2021 · leading case: Novedea Sys., Inc v. Colaberry, Inc (E.D. Tex. 2021).

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Novedea Sys., Inc v. Colaberry, Inc (E.D. Tex. 2021). “And under Texas law, the shareholder must first demand that the corporation take action before bringing suit, stating with 1 This general rule can be modified by the shareholders, see TEX. BUS. ORGS. CODE §§ 21.701 & 21.714, but there is no evidence of such a modification here.”

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