Tex. Business Organizations Code § 21.561
This is the official text of Tex. Business Organizations Code § 21.561, part of Texas’s Business Organizations Code — governs the formation and operation of corporations, LLCs, and partnerships.
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§ 21.561. PAYMENT OF EXPENSES.
Official statutory text
(a) In this section, "expenses" means reasonable expenses incurred by a party in a derivative proceeding, including:
(1) attorney's fees;
(2) costs in pursuing an investigation of the matter that was the subject of the derivative proceeding; or
(3) expenses for which the corporation may be required to indemnify another person.
(b) On termination of a derivative proceeding, the court may order:
(1) the corporation to pay expenses the plaintiff incurred in the proceeding if the court finds the proceeding has resulted in a substantial benefit to the corporation;
(2) the plaintiff to pay expenses the corporation or other defendant incurred in investigating and defending the proceeding if the court finds the proceeding has been instituted or maintained without reasonable cause or for an improper purpose; or
(3) a party to pay expenses incurred by another party relating to the filing of a pleading, motion, or other paper if the court finds the pleading, motion, or other paper:
(A) was not well grounded in fact after reasonable inquiry;
(B) was not warranted by existing law or a good faith argument for the application, extension, modification, or reversal of existing law; or
(C) was interposed for an improper purpose, such as to harass, cause unnecessary delay, or cause a needless increase in the cost of litigation.
(c) For purposes of Subsection (b), a substantial benefit to the corporation does not include additional or amended disclosures made to the shareholders, regardless of materiality.
(c) For purposes of Subsection (b)(1), substantial benefit to the corporation does not include additional or amended disclosures made to the shareholders, regardless of materiality.
(1) attorney's fees;
(2) costs in pursuing an investigation of the matter that was the subject of the derivative proceeding; or
(3) expenses for which the corporation may be required to indemnify another person.
(b) On termination of a derivative proceeding, the court may order:
(1) the corporation to pay expenses the plaintiff incurred in the proceeding if the court finds the proceeding has resulted in a substantial benefit to the corporation;
(2) the plaintiff to pay expenses the corporation or other defendant incurred in investigating and defending the proceeding if the court finds the proceeding has been instituted or maintained without reasonable cause or for an improper purpose; or
(3) a party to pay expenses incurred by another party relating to the filing of a pleading, motion, or other paper if the court finds the pleading, motion, or other paper:
(A) was not well grounded in fact after reasonable inquiry;
(B) was not warranted by existing law or a good faith argument for the application, extension, modification, or reversal of existing law; or
(C) was interposed for an improper purpose, such as to harass, cause unnecessary delay, or cause a needless increase in the cost of litigation.
(c) For purposes of Subsection (b), a substantial benefit to the corporation does not include additional or amended disclosures made to the shareholders, regardless of materiality.
(c) For purposes of Subsection (b)(1), substantial benefit to the corporation does not include additional or amended disclosures made to the shareholders, regardless of materiality.
Status: in_force · Read it on the official government site
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