ALLOCATIONS TO MEMBERS AND DISTRIBUTIONS FROM TEXAS LIMITED LIABILITY COMPANIES

 

§ 101.201. ALLOCATION OF PROFITS AND LOSSES.

The profits and losses of a limited liability company shall be allocated to each member of the company on the basis of the agreed value of the contributions made by each member, as stated in the company's records required under § 101.501.

§ 101.202. DISTRIBUTION IN KIND.

A member of a limited liability company is entitled to receive or demand a distribution from the company only in the form of cash, regardless of the form of the member's contribution to the company.

§ 101.203. SHARING OF DISTRIBUTIONS.

Distributions of cash and other assets of a limited liability company shall be made to each member of the company according to the agreed value of the member's contribution to the company as stated in the company's records required under §§ 3.151 and 101.501.

§ 101.204. INTERIM DISTRIBUTIONS.

A member of a limited liability company, before the winding up of the company, is not entitled to receive and may not demand a distribution from the company until the company's governing authority declares a distribution to:

(1) each member of the company; or

(2) a class or group of members that includes the member.

§ 101.205. DISTRIBUTION ON WITHDRAWAL.

A member of a limited liability company who validly exercises the member's right to withdraw from the company granted under the company agreement is entitled to receive, within a reasonable time after the date of withdrawal, the fair value of the member's interest in the company as determined as of the date of withdrawal.

§ 101.206. PROHIBITED DISTRIBUTION; DUTY TO RETURN.

(a) Unless the distribution is made in compliance with Chapter 11, a limited liability company may not make a distribution to a member of the company if, immediately after making the distribution, the company's total liabilities, other than liabilities described by Subsection (b), exceed the fair value of the company's total assets.

(b) For purposes of Subsection (a), the liabilities of a limited liability company do not include:

(1) a liability related to the member's membership interest; or

(2) except as provided by Subsection (c), a liability for which the recourse of creditors is limited to specified property of the company.

(c) For purposes of Subsection (a), the assets of a limited liability company include the fair value of property subject to a liability for which recourse of creditors is limited to specified property of the company only if the fair value of that property exceeds the liability.

(d) A member of a limited liability company who receives a distribution from the company in violation of this § is not required to return the distribution to the company unless the member had knowledge of the violation.

(e) This § may not be construed to affect the obligation of a member of a limited liability company to return a distribution to the company under the company agreement or other state or federal law.

(f) For purposes of this section, "distribution" does not include an amount constituting reasonable compensation for present or past services or a reasonable payment made in the ordinary course of business under a bona fide retirement plan or other benefits program.

§ 101.207. CREDITOR STATUS WITH RESPECT TO DISTRIBUTION.

Subject to §§ 11.053 and 101.206, when a member of a limited liability company is entitled to receive a distribution from the company, the member, with respect to the distribution, has the same status as a creditor of the company and is entitled to any remedy available to a creditor of the company.

§ 101.208. RECORD DATE.

A company agreement may establish or provide for the establishment of a record date with respect to allocations and distributions.

Contact Information

Mailing Address

Chowins Law Firm, PLLC
1011 Surrey Lane #200
Flower Mound, TX 75022

Telephone

(469) 630-2550

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