Tex. Business Organizations Code § 21.308
This is the official text of Tex. Business Organizations Code § 21.308, part of Texas’s Business Organizations Code — governs the formation and operation of corporations, LLCs, and partnerships.
Not legal advice. This page reproduces the official text of a government statute for reference only. Laws change, and how a statute applies depends on your specific facts. For advice about your situation, consult a licensed attorney in your state.
§ 21.308. PRIORITY OF DISTRIBUTIONS.
Official statutory text
(a) Except as provided by Subsection (b) or (c), a corporation's indebtedness that arises as a result of the declaration of a distribution and a corporation's indebtedness issued in a distribution are at parity with the corporation's indebtedness to its general, unsecured creditors.
(b) The indebtedness described by Subsection (a) shall be subordinated to the extent required by an agreement binding on the corporation on the date the indebtedness arises or if agreed to by the person to whom the indebtedness is owed or, with respect to indebtedness issued in a distribution, as provided by the corporation.
(c) The indebtedness described by Subsection (a) shall be secured to the extent required by an agreement binding on the corporation.
(b) The indebtedness described by Subsection (a) shall be subordinated to the extent required by an agreement binding on the corporation on the date the indebtedness arises or if agreed to by the person to whom the indebtedness is owed or, with respect to indebtedness issued in a distribution, as provided by the corporation.
(c) The indebtedness described by Subsection (a) shall be secured to the extent required by an agreement binding on the corporation.
Status: in_force · Read it on the official government site
Dealing with a business matter in Texas?
See all Texas Business lawyers
About this page: Statute text is reproduced from official government publishers via the
Open US Law dataset
(Vaquill AI, snapshot v2026.08, CC BY 4.0). Primary legislative text like this is public domain under the government-edicts doctrine
(Georgia v. Public.Resource.Org, 2020). We link every section back to its official source so you can verify it independently.