Proposed Texas DAO Bill

Texas DAO

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

                               (C)  uses a distributed, shared, and replicated

            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;

                               (C)  synchronizes information; or

                               (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;

                               (C)  preserving the environment;

                               (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;

                               (C)  any event the occurrence of which requires a

            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

                               (C)  is not formed under any other law governing

            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.

                   (c)  A decentralized unincorporated association may:

                         (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

                               (C)  participation;

                         (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.

                   (c)  A decentralized unincorporated association has the

            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.

                   (c)  A statement of authority must contain:

                         (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.

                   (c)  The failure of a decentralized unincorporated

            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.

                   (c)  A statement appointing an agent must be signed and

            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.

                   (c)  Unless otherwise provided for in a decentralized

            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

                               (C)  any other matter of governance or relating to

            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

                               (C)  making organizational decisions with respect

            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.

                   (c)  Unless the governing principles of a decentralized

            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.

                   (c)  A decentralized unincorporated association is not

            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.

                   (c)  A decentralized unincorporated association may impose

            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

                               (C)  if property cannot be distributed under

            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;

                               (C)  prosecute and defend civil, criminal, or

            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.

                   (c)  If the members of a decentralized unincorporated

            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.

Legal Disclaimer

The information provided in this article is for general informational purposes only and should not be construed as legal or tax advice. The content presented is not intended to be a substitute for professional legal, tax, or financial advice, nor should it be relied upon as such. Readers are encouraged to consult with their own attorney, CPA, and tax advisors to obtain specific guidance and advice tailored to their individual circumstances. No responsibility is assumed for any inaccuracies or errors in the information contained herein, and John Montague and Montague Law expressly disclaim any liability for any actions taken or not taken based on the information provided in this article.

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