Proposed Texas DAO Bill

Bill Overview

TX H.B. No 3768 proposes amendments to the Business Organizations Code of Texas to allow for the formation of decentralized unincorporated associations and the use of distributed ledger or blockchain technology for certain business purposes. The bill defines terms such as “digital asset,” “distributed ledger technology,” “smart contract,” and “social purposes.” It also includes provisions for registered series of limited liability companies and clarifies the definition of “writing.” The bill authorizes a fee for the formation of decentralized unincorporated associations. The Bill was submitted by Texas representative John Bucy and is intended to mirror the Unincorporated Nonprofit (UNA) Association already established in Texas.

TX H.B. No 3768

A full copy of the bill can be found below:

A BILL TO BE ENTITLED

AN ACT

relating to the formation of decentralized unincorporated

associations and the use of distributed ledger or blockchain

technology for certain business purposes; authorizing a fee.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:

SECTION 1. Section 1.002, Business Organizations Code, is

amended by adding Subdivisions (15-a), (16-a), (78-b), and (82-b)

and amending Subdivisions (78-a), (82-a), and (89) to read as

follows:

(15-a) “Digital asset” means an electronic record in

which a person has a right or interest. The term does not include an

underlying asset, unless the asset is itself an electronic record.

(16-a) “Distributed ledger technology” means a

distributed ledger protocol that:

(A) is a designated regulatory model of software

that governs the rules, operations, and communication between

intersection and connection points in a telecommunications network

and supporting infrastructure;

(B) includes the computer software or hardware,

or collections of computer software or hardware, that use or enable

a distributed ledger, including blockchain; and

ledger, which may:

(i) be public or private;

(ii) be permissioned or permissionless; and

(iii) include the use of a digital asset as

a medium of electronic exchange.

(78-a) “Record” means information that is inscribed on

a tangible medium or that is stored in an electronic or other medium

and is retrievable in a perceivable form, including information

inscribed on blockchain or distributed ledger technology.

(78-b) “Registered series” means a series of a

domestic limited liability company that is formed as a registered

series in accordance with Section 101.602.

(82-a) “Smart contract” means an event-driven

computer program that executes on distributed ledger technology

used to automate a transaction, including a transaction that:

(A) takes custody over and instructs transfer of

assets on that ledger;

(B) creates and transmits digital assets;

(D) authenticates user rights and conveys access

to software applications.

(82-b) “Social purposes” means one or more purposes of

a for-profit corporation that are specified in the corporation’s

certificate of formation and consist of promoting one or more

positive impacts on society or the environment or of minimizing one

or more adverse impacts of the corporation’s activities on society

or the environment. Those impacts may include:

(A) providing low-income or underserved

individuals or communities with beneficial products or services;

(B) promoting economic opportunity for

individuals or communities beyond the creation of jobs in the

normal course of business;

(D) improving human health;

(E) promoting the arts, sciences, or advancement

of knowledge;

(F) increasing the flow of capital to entities

with a social purpose; and

(G) conferring any particular benefit on society

or the environment.

(89) “Writing” or “written” means an expression of

words, letters, characters, numbers, symbols, figures, or other

textual information that is inscribed on a tangible medium or that

is stored in an electronic or other medium that is retrievable in a

perceivable form. Unless the context requires otherwise, the term:

(A) includes stored or transmitted electronic

data, electronic transmissions, blockchain or distributed ledger

technology, and reproductions of writings; and

(B) does not include sound or video recordings of

speech other than transcriptions that are otherwise writings.

SECTION 2. Subchapter A, Chapter 1, Business Organizations

Code, is amended by adding Section 1.010 to read as follows:

Sec. 1.010. CERTAIN PROVISIONS RELATED TO BLOCKCHAIN AND

DISTRIBUTED LEDGER TECHNOLOGY. For purposes of this code:

(1) a requirement for a person’s signature is

satisfied by the submission of a blockchain that electronically

contains the signature or verifies the intent of a person to provide

the signature;

(2) a requirement for a record to be in writing is

satisfied by the submission of a blockchain that electronically

contains the record; and

(3) a smart contract, record, or signature may not be

excluded as evidence in a proceeding solely because blockchain or

distributed ledger technology was used to create, store, or verify

the smart contract, record, or signature.

SECTION 3. Section 6.002(a), Business Organizations Code,

is amended to read as follows:

(a) Subject to this code and the governing documents of a

domestic entity, the owners, members, or governing persons of the

entity, or a committee of the owners, members, or governing

persons, may hold meetings by using a conference telephone or

similar communications equipment, or another suitable electronic

communications system, including videoconferencing technology, an

electronic data system, [or] the Internet, or any combination, if

the telephone or other equipment or system permits each person

participating in the meeting to communicate with all other persons

participating in the meeting.

SECTION 4. Section 101.052, Business Organizations Code, is

amended by adding Subsection (g) to read as follows:

(g) A company agreement may be composed of computer code and

maintained on blockchain or distributed ledger technology in full

or in part if the record of the agreement is capable of being

retained and accurately reproduced for later reference.

SECTION 5. Section 101.501(a), Business Organizations

Code, is amended to read as follows:

(a) In addition to the books and records required to be kept

under Section 3.151, a limited liability company shall keep at its

principal office in the United States, keep on an electronic data

system, or make available to a person at its principal office in the

United States not later than the fifth day after the date the person

submits a written request to examine the books and records of the

company under Section 3.152(a) or 101.502:

(1) a current list that states:

(A) the percentage or other interest in the

limited liability company owned by each member; and

(B) if one or more classes or groups of

membership interests are established in or under the certificate of

formation or company agreement, the names of the members of each

specified class or group;

(2) a copy of the company’s federal, state, and local

tax information or income tax returns for each of the six preceding

tax years;

(3) a copy of the company’s certificate of formation,

including any amendments to or restatements of the certificate of

formation;

(4) if the company agreement is in writing, a copy of

the company agreement, including any amendments to or restatements

of the company agreement;

(5) an executed copy of any powers of attorney;

(6) a copy of any document that establishes a class or

group of members of the company as provided by the company

agreement; and

(7) except as provided by Subsection (b), a written

statement of:

(A) the amount of a cash contribution and a

description and statement of the agreed value of any other

contribution made or agreed to be made by each member;

(B) the dates any additional contributions are to

be made by a member;

member to make additional contributions;

(D) any event the occurrence of which requires

the winding up of the company; and

(E) the date each member became a member of the

company.

SECTION 6. Title 6, Business Organizations Code, is amended

by adding Chapter 253 to read as follows:

CHAPTER 253. DECENTRALIZED UNINCORPORATED ASSOCIATIONS

Sec. 253.001. DEFINITIONS. In this chapter:

(1) “Administrator” means a person authorized by the

members of a decentralized unincorporated association to fulfill

administrative or operational tasks at the direction of the

members.

(2) “Decentralized unincorporated association” means

an unincorporated association:

(A) consisting of at least 500 members joined by

mutual consent under an agreement, that may be in writing or

inferred from conduct, for a common purpose, other than to operate a

business for profit except as permitted under Section 253.004;

(B) that has elected to be formed under this

chapter; and

the association’s organization and operation.

(3) “Established practices” means the practices used

by a decentralized unincorporated association without material

change during the most recent five years of the association’s

existence, or if the association has existed for less than five

years, during the association’s entire existence.

(4) “Governing principles” means all agreements and

any amendment or restatement of those agreements, including any

articles of organization, consensus formation algorithms, or

enacted governance proposals, that govern the purpose or operation

of a decentralized unincorporated association and the rights and

obligations of the association’s members and administrators,

whether contained in a record, implied from the association’s

established practices, or both.

(5) “Member” means a person that, under the governing

principles of a decentralized unincorporated association, may

participate in:

(A) the development of the policies and

activities of the association; and

(B) the selection of the association’s

administrators.

Sec. 253.002. SUPPLEMENTARY GENERAL PRINCIPLES OF LAW AND

EQUITY. (a) Principles of law and equity supplement this chapter

unless displaced by a particular provision of this chapter.

(b) This chapter may not be interpreted to repeal or modify

a statute or rule for an entity that does not elect to be formed as a

decentralized unincorporated association.

Sec. 253.003. GOVERNING LAW; TERRITORIAL APPLICATION. (a)

Except as otherwise provided by Subsection (b), the law of this

state governs any decentralized unincorporated association that is

formed or operates in this state.

(b) A decentralized unincorporated association’s governing

principles must identify the jurisdiction in which the

decentralized unincorporated association is formed.

Sec. 253.004. DISTRIBUTION PROHIBITED; COMPENSATION AND

OTHER PERMITTED PAYMENTS. (a) A decentralized unincorporated

association may carry on any business activity in which the

association may lawfully engage for profit and apply any profit

that results from the business activity in accordance with

Subsection (c).

(b) Except as provided by Subsection (c), a decentralized

unincorporated association may not pay dividends or distribute any

part of the association’s income or profit to the association’s

members or administrators.

(1) pay reasonable compensation to or reimburse

reasonable expenses incurred by the association’s members and

administrators, or to a person who is not a member or administrator,

for services rendered to the association, including for the

administration and operation of the association, including for:

(A) the provision of collateral for the

self-insurance of the association;

(B) voting; and

(2) confer benefits on the association’s members or

administrators in conformity with the association’s common

nonprofit purpose or purposes, if any;

(3) repurchase membership interests to the extent

authorized by the association’s governing principles; and

(4) make distributions of property to members on

winding up and termination to the extent provided by Section

253.027.

Sec. 253.005. LEGAL ENTITY; PERPETUAL EXISTENCE; POWERS.

(a) A decentralized unincorporated association is a legal entity

distinct from the association’s members and administrators.

(b) A decentralized unincorporated association has

perpetual duration unless the association’s governing principles

otherwise specify.

power to do all things necessary or convenient to carry on the

association’s activities or affairs.

Sec. 253.006. REAL AND PERSONAL PROPERTY; DECENTRALIZED

UNINCORPORATED ASSOCIATION AS BENEFICIARY, LEGATEE, OR DEVISEE.

(a) A decentralized unincorporated association may, in the name of

the association, acquire, hold, encumber, or transfer an estate or

interest in real or personal property.

(b) A decentralized unincorporated association may be a

beneficiary of a trust or contract, legatee, or devisee.

Sec. 253.007. STATEMENT OF AUTHORITY AS TO REAL PROPERTY.

(a) A decentralized unincorporated association shall execute and

record a statement of authority to transfer an estate or interest in

real property in the name of the association.

(b) An estate or interest in real property in the name of a

decentralized unincorporated association may be transferred by a

person so authorized in a statement of authority recorded in the

office of the county clerk in which a transfer of the property would

be recorded.

(1) the name of the decentralized unincorporated

association;

(2) the address in this state, including the street

address, if any, of the association, or if the association does not

have an address in this state, the association’s address out of

state;

(3) the name or title of the person authorized to

transfer an estate or interest in real property held in the name of

the association; and

(4) the action, procedure, or vote of the association

that authorizes the person to transfer the real property of the

association and to execute the statement of authority.

(d) A statement of authority must be executed in the same

manner as a deed. The person who executes the statement of

authority may not be the person named in the statement of authority

as authorized to transfer the estate or interest.

(e) The county clerk may collect a fee for recording the

statement of authority in the amount authorized for recording a

transfer of real property.

(f) An amendment, including a cancellation, of a statement

of authority must meet the requirements for execution and recording

of an original statement. Unless canceled earlier, a recorded

statement of authority or the most recent amendment to the

statement is canceled by operation of law on the fifth anniversary

of the date of the most recent recording.

(g) If the record title to real property is in the name of a

decentralized unincorporated association and the statement of

authority is recorded in the office of the county clerk in which a

transfer of real property would be recorded, the authority of the

person named in a statement of authority is conclusive in favor of a

transferee who gives value without notice that the person named in

the statement of authority lacks authority.

Sec. 253.008. LIABILITY. (a) Except as otherwise provided

by this chapter, the debts, obligations, and liabilities of a

decentralized unincorporated association, whether arising in

contract, tort, or otherwise, are solely the debts, obligations,

and liabilities of the association. A member or administrator of a

decentralized unincorporated association may not be obligated

personally for any debt, obligation, or liability of the

association solely by reason of being a member or acting as an

administrator of the association.

(b) Notwithstanding Subsection (a), a member or

administrator of a decentralized unincorporated association may,

under the governing principles of the association or under another

agreement, agree to be obligated personally for any or all of the

debts, obligations, and liabilities of the association.

association to observe formalities relating to the exercise of the

association’s powers or administration of the association’s

activities and affairs may not be considered a ground for imposing

liability on a member or administrator of the association for a

debt, obligation, or other liability of the association.

Sec. 253.009. CAPACITY TO ASSERT AND DEFEND; STANDING. (a)

A decentralized unincorporated association, in the association’s

name, may institute, defend, intervene, or participate in a

judicial, administrative, or other governmental proceeding or in an

arbitration, mediation, or any other form of alternative dispute

resolution.

(b) A member or administrator may assert a claim the member

or administrator has against the decentralized unincorporated

association. An association may assert a claim the association has

against a member or administrator.

Sec. 253.010. EFFECT OF JUDGMENT OR ORDER. A judgment or

order against a decentralized unincorporated association is not by

itself a judgment or order against a member or administrator of the

association.

Sec. 253.011. APPOINTMENT OF AGENT TO RECEIVE SERVICE OF

PROCESS. (a) A decentralized unincorporated association may file

in the office of the secretary of state a statement appointing an

agent authorized to receive service of process.

(b) A statement appointing an agent must contain:

(1) the name of the decentralized unincorporated

association;

(2) the address in this state, including the street

address, if any, of the decentralized unincorporated association,

or if the association does not have an address in this state, the

association’s address out of state; and

(3) the name of the person in this state authorized to

receive service of process and the person’s address, including the

street address, in this state.

acknowledged by a person authorized to manage the affairs of the

decentralized unincorporated association. The statement must also

be signed and acknowledged by the person appointed agent, who by

signing accepts the appointment. The appointed agent may resign by

filing a resignation in the office of the secretary of state and

giving notice to the decentralized unincorporated association.

(d) The secretary of state may collect a fee of $5 for filing

a statement appointing an agent to receive service of process, an

amendment, or a resignation under this section.

(e) An amendment to a statement appointing an agent to

receive service of process must meet the requirements for execution

of an original statement.

(f) If the secretary of state refuses to file a statement

appointing an agent, the secretary of state shall return it to the

decentralized unincorporated association or the association’s

representative not later than the 15th day after the date the

statement was delivered and include a brief explanation in writing

of the reason for the refusal.

Sec. 253.012. SERVICE OF PROCESS. In an action or

proceeding against a decentralized unincorporated association, a

summons and complaint or other process shall be served on:

(1) an agent authorized by appointment to receive

service of process;

(2) an appointed administrator of the association; or

(3) a member, but only if the agent or administrator

described by Subdivisions (1) and (2) cannot be served.

Sec. 253.013. CLAIM NOT ABATED BY CHANGE OF MEMBERS OR

ADMINISTRATORS. A claim for relief against a decentralized

unincorporated association does not abate merely because of a

change in the members or administrators of the association.

Sec. 253.014. VENUE. Unless provided otherwise by other

law, venue of an action against a decentralized unincorporated

association brought in this state is determined in accordance with

the law applicable to an action brought in the state in which the

association has appointed an agent for service of process under

Section 253.011.

Sec. 253.015. MEMBER NOT AN AGENT. A member of a

decentralized unincorporated association is not an agent of the

association solely by reason of being a member.

Sec. 253.016. APPROVAL BY MEMBERS. (a) Except as otherwise

provided by a decentralized unincorporated association’s governing

principles, the association must have the approval of the

association’s members, attained in accordance with its governing

principles, to:

(1) suspend, dismiss, or expel a member;

(2) select or dismiss an administrator;

(3) adopt, amend, or repeal the governing principles;

(4) sell, lease, exchange, or otherwise dispose of

all, or substantially all, of the association’s property outside

the ordinary course of the association’s activities, regardless of

the association’s goodwill;

(5) dissolve the association under Section 253.026;

(6) merge or convert the association as provided by

Section 253.028;

(7) undertake any act outside the ordinary course of

the association’s activities; or

(8) determine the policy or purpose of the

association.

(b) A decentralized unincorporated association must have

the approval of the members in accordance with its governing

principles to act or exercise a right for which the association’s

governing principles require member approval.

unincorporated association’s governing principles, membership

interest in a decentralized unincorporated association is

calculated in proportion to the person’s membership interest or

other property that confers onto the person a voting right in the

association.

Sec. 253.017. USE OF DISTRIBUTED LEDGER TECHNOLOGY. (a) A

decentralized unincorporated association may provide for the

association’s governance, in whole or in part, through distributed

ledger technology, including through a smart contract.

(b) The governing principles for a decentralized

unincorporated association may:

(1) specify whether any distributed ledger technology

used or enabled by the association is:

(A) immutable or subject to change by the

association; and

(B) fully or partially public or private,

including the extent of members’ access to information; and

(2) adopt voting procedures, which may include a smart

contract deployed to distributed ledger technology, that provides

for:

(A) proposals from administrators or members in

the decentralized unincorporated association for upgrades,

modifications, or additions to software systems or protocols;

(B) proposed changes to the decentralized

unincorporated association’s governing principles; and

the activities of the association that is within the purpose of the

association.

Sec. 253.018. CONSENSUS FORMATION ALGORITHMS AND

GOVERNANCE PROCESS. In accordance with the association’s governing

principles, a decentralized unincorporated association may:

(1) adopt a reasonable algorithmic means for

establishing consensus for:

(A) the validation of records;

(B) the establishment of requirements,

processes, and procedures for conducting operations; and

to the distributed ledger technology used by the association; and

(2) in accordance with a procedure adopted by the

association under Section 253.017, if any, and in compliance with

the requirements of law and the governing principles of the

decentralized unincorporated association:

(A) modify the consensus mechanism, including

the requirements, processes, and procedures for that mechanism; or

(B) substitute a new consensus mechanism,

including the requirements, processes, or procedures for that

mechanism.

Sec. 253.019. DUTIES OF MEMBERS. (a) A member of a

decentralized unincorporated association does not owe a fiduciary

duty to the association or to any another member of the association

solely by virtue of the person’s membership in the association.

(b) A member of a decentralized unincorporated association

shall discharge the duties and obligations under this chapter or

under the governing principles of the association and exercise the

member’s rights in a manner consistent with the contractual

obligation of good faith and fair dealing.

Sec. 253.020. ADMISSION, SUSPENSION, DISMISSAL, OR

EXPULSION OF MEMBERS. (a) A person becomes a member of a

decentralized unincorporated association in accordance with the

governing principles of the association. If there are no

applicable governing principles, a person:

(1) is considered a member on the purchase or

assumption of a right of ownership of a membership interest or other

property or instrument that confers on the person a voting right in

the association; and

(2) continues as a member of the association until the

earlier of the member’s:

(A) resignation under Section 253.021; or

(B) suspension, dismissal, or expulsion under

Subsection (b).

(b) A member may be suspended, dismissed, or expelled in

accordance with the governing principles of the decentralized

unincorporated association. If there are no applicable governing

principles, the member may be suspended, dismissed, or expelled

from an association only by a majority vote of the association’s

members.

unincorporated association provide otherwise, the suspension,

dismissal, or expulsion of a member does not relieve the member from

any obligation incurred or commitment made by the member in

connection with membership in the association before the member’s

suspension, dismissal, or expulsion.

Sec. 253.021. RESIGNATION OF MEMBER. (a) A member may

resign as a member of a decentralized unincorporated association in

accordance with the governing principles of the association. In

the absence of applicable governing principles, a member is

considered to have resigned on the voluntary or involuntary

disposal of all membership interest or other property or

instruments that confer on the person a voting right in the

association.

(b) Unless a decentralized unincorporated association’s

governing principles provide otherwise, resignation of a member

does not relieve the member from any unpaid capital contribution,

dues, an assessment, a fee, or another obligation incurred or

commitment made by the member in connection with membership in the

association before the member’s resignation.

Sec. 253.022. MEMBERSHIP INTEREST TRANSFERABLE. Except as

otherwise provided in the decentralized unincorporated

association’s governing principles, a member’s interest or a right

conferred in the association is freely transferable to another

person through conveyance of the membership interest or other

property that confers on a person a voting right in the association.

Sec. 253.023. SELECTION OF ADMINISTRATORS; RIGHTS AND

DUTIES OF ADMINISTRATORS. (a) Except as otherwise provided by this

chapter or a decentralized unincorporated association’s governing

principles, the members of an association may select the

association’s administrators in accordance with Section 253.016.

(b) An administrator may but is not required to be a member

of the association. If no administrators are selected, no member of

the association is an administrator.

required to have an administrator. There are no default

obligations of an administrator of a decentralized unincorporated

association. The rights and duties of an administrator of a

decentralized unincorporated association must be established as

part of the selection process for an administrator or

administrators of the association.

(d) An administrator of a decentralized unincorporated

association does not have the authority to act on behalf of the

association beyond the specific authority granted in the selection

process of the administrator established under Subsection (c).

(e) The governing principles of a decentralized

unincorporated association may, in a record, limit or eliminate the

liability of an administrator to the association or the

association’s members for money damages for an action taken, or for

failure to take an action, as an administrator, except liability

for:

(1) the amount of a financial benefit improperly

received by an administrator;

(2) an intentional infliction of harm on the

association or the association’s members;

(3) an intentional violation of criminal law;

(4) a breach of the duty of loyalty should one exist,

unless a full disclosure of all material facts, a specific act, or a

transaction that would otherwise violate the duty of loyalty by an

agent is authorized or ratified by approval of the disinterested

members in accordance with Section 253.016; or

(5) an improper distribution.

Sec. 253.024. RIGHTS OF MEMBERS AND ADMINISTRATORS TO

INFORMATION. (a) Except as provided by Subsection (b), on

reasonable notice, a member or administrator of a decentralized

unincorporated association is entitled to an electronic record of

any record maintained by the association regarding the

association’s activities, financial condition, or other

circumstances to the extent the information contained in the record

is material to the member’s or administrator’s rights and duties

under the association’s governing principles or this chapter.

(b) A decentralized unincorporated association is not

obligated to provide a record maintained by the association for

record requests made through distributed ledger technology,

including through a smart contract, to a member or administrator if

the member or administrator has access to the information contained

in the record in a record made available to the member or

administrator on distributed ledger technology.

reasonable restrictions on access to and use of information that

may be provided under this section, including by designating the

information confidential and imposing nondisclosure or other

safeguarding obligations on the recipient of the information.

(d) A former member or administrator may have access to

information to which the member or administrator was entitled as a

member or administrator if:

(1) the information relates to the period of time

during which the person was a member or administrator;

(2) the former member or administrator seeks the

information in good faith; and

(3) the former member or administrator satisfies the

requirements of Subsections (a), (b), and (c) with respect to the

information.

(e) A decentralized unincorporated association has no

obligation to collect and maintain a list of members or member

information, including the names or addresses of members.

Sec. 253.025. INDEMNIFICATION; ADVANCEMENT OF EXPENSES. A

decentralized unincorporated association is an enterprise, as that

term is defined by Section 8.001, for purposes of the requirements

related to indemnification and advancement of expenses under

Chapter 8.

Sec. 253.026. DISSOLUTION; CONTINUATION OF EXISTENCE. (a)

A decentralized unincorporated association may be dissolved by any

of the following methods:

(1) at a time or by a method for dissolution specified

by the governing principles of the association, if any;

(2) if the governing principles of the association do

not provide a method for dissolution, with the approval of the

members of the association in accordance with Section 253.016;

(3) if the number of members of the association is

fewer than 500 and the association is not able to use a merger or

conversion to form another valid entity under Chapter 10; or

(4) by court order to dissolve.

(b) After dissolution, a decentralized unincorporated

association continues in existence until the association’s

activities are wound up and the association is terminated under

Section 253.027.

Sec. 253.027. WINDING UP AND TERMINATION. (a) A dissolved

decentralized unincorporated association shall wind up the

association’s business. The association continues in existence

after dissolution only for the purpose of winding up under this

section.

(b) In winding up a decentralized unincorporated

association, the members:

(1) shall discharge the association’s debts,

obligations, and other liabilities, settle and close the

association’s business, and marshal and distribute any remaining

property:

(A) in a manner required by law, other than this

chapter, that requires assets of an association to be distributed

to another entity or person with similar nonprofit purposes, if

applicable to the association;

(B) in accordance with the association’s

governing principles, and in the absence of applicable governing

principles, to the current members of the association in proportion

to their membership interests; or

Paragraph (A) or (B), under the laws governing unclaimed property

for this state; and

(2) may:

(A) appoint and authorize an administrator to

wind up the association in accordance with Section 253.017;

(B) preserve the association operations and

property as a going concern for a reasonable time;

administrative actions and proceedings involving the association;

(D) transfer the association’s property;

(E) settle disputes involving the association by

mediation or arbitration;

(F) receive reasonable compensation for services

rendered to the association in winding up the association; and

(G) perform other acts necessary or appropriate

to effect the winding up.

association do not appoint an administrator to wind up the

association’s business, the members shall owe the association a

duty of care in the conduct or winding up of the association

operations to refrain from engaging in:

(1) grossly negligent or reckless conduct;

(2) wilful or intentional misconduct; or

(3) a knowing violation of the law.

Sec. 253.028. MERGERS AND CONVERSIONS. A decentralized

unincorporated association may effect a merger or conversion by

complying with the applicable provisions of Chapter 10 and the

association’s governing principles.

Sec. 253.029. UNIFORMITY OF APPLICATION AND CONSTRUCTION.

This chapter shall be applied and construed to make uniform the law

with respect to the subject of this chapter among states enacting

it.

SECTION 7. This Act takes effect September 1, 2023.

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Proposed Texas DAO Bill

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TX H.B. No 3768

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