REAL ESTATE INVESTMENT TRUSTS - SHAREHOLDERS' MEETINGS; VOTING AND QUORUM

TEXAS BUSINESS ORGANIZATIONS CODE

§ 200.251. ANNUAL MEETING.

(a) An annual meeting of the shareholders of a real estate investment trust shall be held at a time that is stated in or set in accordance with the bylaws of the real estate investment trust.

(b) If the annual meeting is not held at the designated time, a shareholder may make a written request to an officer or trust manager of the real estate investment trust that the meeting be held within a reasonable time. The request calling for the meeting must be made by:

(1) certified or registered mail, return receipt requested; or

(2) other means specified in the real estate investment trust's governing documents.

(b-1) If the annual meeting is not called before the 61st day after the date the written request calling for a meeting is made under Subsection (b), any shareholder may bring suit at law or in equity to compel the meeting to be held.

(c) Each shareholder has a justifiable interest sufficient to enable the shareholder to institute and prosecute a legal proceeding described by this section.

(d) The failure to hold an annual meeting at the designated time does not result in the winding up or termination of the real estate investment trust.

§ 200.252. SPECIAL MEETINGS.

A special meeting of the shareholders of a real estate investment trust may be called by:

(1) a trust manager, an officer of the real estate investment trust, or any other person authorized to call special meetings by the certificate of formation or bylaws of the real estate investment trust; or

(2) the holders of at least 10 percent of all of the shares of the real estate investment trust entitled to vote at the proposed special meeting unless a greater or lesser percentage of shares is specified in the certificate of formation, not to exceed 50 percent of the shares entitled to vote.

§ 200.253. NOTICE OF MEETING.

(a) Written notice of a meeting in accordance with § 6.051 shall be given to each shareholder entitled to vote at the meeting not later than the 10th day and not earlier than the 60th day before the date of the meeting. Notice shall be given in person or by mail by or at the direction of a trust manager, officer, or other person calling the meeting.

(b) The notice of a special meeting must contain a statement regarding the purpose or purposes of the meeting.

§ 200.254. CLOSING OF SHARE TRANSFER RECORDS.

Share transfer records that are closed in accordance with § 6.101 for the purpose of determining which shareholders are entitled to receive notice of a meeting of shareholders shall remain closed for at least 10 days immediately preceding the date of the meeting.

§ 200.255. RECORD DATE FOR WRITTEN CONSENT TO ACTION.

The record date provided in accordance with § 6.102(a) may not be more than 10 days after the date on which the trust managers adopt the resolution setting the record date.

§ 200.256. RECORD DATE FOR PURPOSE OTHER THAN WRITTEN CONSENT TO ACTION.

The record date provided by the trust managers in accordance with § 6.101 must be at least 10 days before the date on which the particular action requiring the determination of shareholders is to be taken.

§ 200.257. QUORUM.

(a) Subject to Subsection (b), the holders of the majority of the shares entitled to vote at a meeting of the shareholders of a real estate investment trust that are present or represented by proxy at the meeting are a quorum for the consideration of a matter to be presented at that meeting.

(b) The certificate of formation of a real estate investment trust may provide that a quorum is present only if:

(1) the holders of a specified portion of the shares that is greater than the majority of the shares entitled to vote are represented at the meeting in person or by proxy; or

(2) the holders of a specified portion of the shares that is less than the majority but not less than one-third of the shares entitled to vote are represented at the meeting in person or by proxy.

(c) Unless provided by the certificate of formation or bylaws of the real estate investment trust, after a quorum is present at a meeting of shareholders, the shareholders may conduct business properly brought before the meeting until the meeting is adjourned. The subsequent withdrawal from the meeting of a shareholder or the refusal of a shareholder present at or represented by proxy at the meeting to vote does not negate the presence of a quorum at the meeting.

(d) Unless provided by the certificate of formation or bylaws, the shareholders of the real estate investment trust at a meeting at which a quorum is not present may adjourn the meeting until the time and to the place as may be determined by a vote of the holders of the majority of the shares who are present or represented by proxy at the meeting.

§ 200.258. VOTING IN ELECTION OF TRUST MANAGERS.

(a) Subject to Subsection (b), trust managers of a real estate investment trust shall be elected by two-thirds of the votes cast by the holders of shares entitled to vote in the election of trust managers at a meeting of shareholders at which a quorum is present.

(b) The certificate of formation or bylaws of a real estate investment trust may provide that a trust manager of the real estate investment trust shall be elected only if the trust manager receives:

(1) the vote of the holders of a specified portion, but not less than the majority, of the shares entitled to vote in the election of trust managers;

(2) the vote of the holders of a specified portion, but not less than the majority, of the shares entitled to vote in the election of trust managers and represented in person or by proxy at a meeting of shareholders at which a quorum is present; or

(3) the vote of the holders of a specified portion, but not less than the majority, of the votes cast by the holders of shares entitled to vote in the election of trust managers at a meeting of shareholders at which a quorum is present.

(c) Subject to § 200.259, at each election of trust managers of a real estate investment trust, each shareholder entitled to vote at the election is entitled to vote, in person or by proxy, the number of shares owned by the shareholder for as many candidates as there are trust managers to be elected and for whose election the shareholder is entitled to vote.

§ 200.259. CUMULATIVE VOTING IN ELECTION OF TRUST MANAGERS.

(a) Cumulative voting is allowed only if specifically authorized by the certificate of formation of a real estate investment trust.

(b) Cumulative voting occurs when a shareholder:

(1) gives one candidate as many votes as the total of the number of the trust managers to be elected multiplied by the shareholder's shares; or

(2) distributes the votes among one or more candidates using the same principle.

(c) If cumulative voting is specifically authorized by the certificate of formation, a shareholder who intends to cumulate votes must give written notice of that intention to the trust managers on or before the day preceding the date of the election at which the shareholder intends to cumulate votes.

§ 200.260. VOTING ON MATTERS OTHER THAN ELECTION OF TRUST MANAGERS.

(a) Subject to Subsection (b), with respect to a matter other than the election of trust managers or a matter for which the affirmative vote of the holders of a specified portion of the shares entitled to vote is required by this code, the affirmative vote of the holders of the majority of the shares entitled to vote on, and who voted for, against, or expressly abstained with respect to, the matter at a shareholders' meeting of a real estate investment trust at which a quorum is present is the act of the shareholders.

(b) With respect to a matter other than the election of trust managers or a matter for which the affirmative vote of the holders of a specified portion of the shares entitled to vote is required by this code, the certificate of formation or bylaws of a real estate investment trust may provide that the act of the shareholders of the real estate investment trust is:

(1) the affirmative vote of the holders of a specified portion, but not less than the majority, of the shares entitled to vote on that matter;

(2) the affirmative vote of the holders of a specified portion, but not less than the majority, of the shares entitled to vote on that matter and represented in person or by proxy at a shareholders' meeting at which a quorum is present;

(3) the affirmative vote of the holders of a specified portion, but not less than the majority, of the shares entitled to vote on, and who voted for or against, the matter at a shareholders' meeting at which a quorum is present; or

(4) the affirmative vote of the holders of a specified portion, but not less than the majority, of the shares entitled to vote on, and who voted for, against, or expressly abstained with respect to, the matter at a shareholders' meeting at which a quorum is present.

§ 200.261. VOTE REQUIRED TO APPROVE FUNDAMENTAL ACTION.

(a) In this section, a "fundamental action" means:

(1) an amendment of a certificate of formation, including an amendment required for cancellation of an event requiring winding up in accordance with § 11.152(b);

(2) a voluntary winding up under Chapter 11;

(3) a revocation of a voluntary decision to wind up under § 11.151;

(4) a cancellation of an event requiring winding up under § 11.152(a); or

(5) a reinstatement under § 11.202.

(b) Except as otherwise provided by this code or the certificate of formation or bylaws of a real estate investment trust in accordance with § 200.260, the vote required for approval of a fundamental action by the shareholders is the affirmative vote of the holders of at least two-thirds of the outstanding shares entitled to vote on the fundamental action.

(c) If a class or series of shares is entitled to vote as a class or series on a fundamental action, the vote required for approval of the action by the shareholders is the affirmative vote of the holders of at least two-thirds of the outstanding shares in each class or series of shares entitled to vote on the action as a class and at least two-thirds of the outstanding shares otherwise entitled to vote on the action. Shares entitled to vote as a class or series shall be entitled to vote only as a class or series unless otherwise entitled to vote on each matter generally or otherwise provided by the certificate of formation.

(d) Unless an amendment to the certificate of formation is undertaken by the trust managers under § 200.103, separate voting by a class or series of shares of a real estate investment trust is required for approval of an amendment to the certificate of formation that would result in:

(1) the increase or decrease of the aggregate number of authorized shares of the class or series;

(2) the increase or decrease of the par value of the shares of the class, including changing shares with par value into shares without par value or changing shares without par value into shares with par value;

(3) effecting an exchange, reclassification, or cancellation of all or part of the shares of the class or series;

(4) effecting an exchange or creating a right of exchange of all or part of the shares of another class or series into the shares of the class or series;

(5) the change of the designations, preferences, limitations, or relative rights of the shares of the class or series;

(6) the change of the shares of the class or series, with or without par value, into the same or a different number of shares, with or without par value, of the same class or series or another class or series;

(7) the creation of a new class or series of shares with rights and preferences equal, prior, or superior to the shares of the class or series;

(8) increasing the rights and preferences of a class or series with rights and preferences equal, prior, or superior to the shares of the class or series;

(9) increasing the rights and preferences of a class or series with rights or preferences later or inferior to the shares of the class or series in such a manner that the rights or preferences will be equal, prior, or superior to the shares of the class or series;

(10) dividing the shares of the class into series and setting and determining the designation of the series and the variations in the relative rights and preferences between the shares of the series;

(11) the limitation or denial of existing preemptive rights or cumulative voting rights of the shares of the class or series; or

(12) canceling or otherwise affecting the dividends on the shares of the class or series that have accrued but have not been declared.

(e) Unless otherwise provided by the certificate of formation, if the holders of the outstanding shares of a class that is divided into series are entitled to vote as a class on a proposed amendment that would affect equally all series of the class, other than a series in which no shares are outstanding or a series that is not affected by the amendment, the holders of the separate series are not entitled to separate class votes.

(f) Unless otherwise provided by the certificate of formation, a proposed amendment to the certificate of formation that would solely effect changes in the designations, preferences, limitations, or relative rights, including voting rights, of one or more series of shares of the real estate investment trust that have been established under the authority granted to the trust managers in the certificate of formation in accordance with § 200.103 does not require the approval of the holders of the outstanding shares of a class or series other than the affected series if, after giving effect to the amendment:

(1) the preferences, limitations, or relative rights of the affected series may be set and determined by the trust managers with respect to the establishment of a new series of shares under the authority granted to the trust managers in the certificate of formation in accordance with § 200.103; or

(2) any new series established as a result of a reclassification of the affected series are within the preferences, limitations, and relative rights that are described by Subdivision (1).

§ 200.262. CHANGES IN VOTE REQUIRED FOR CERTAIN MATTERS.

(a) With respect to a matter for which the affirmative vote of the holders of a specified portion of the shares entitled to vote is required by this code, the certificate of formation of a real estate investment trust may provide that the affirmative vote of the holders of a specified portion, but not less than the majority, of the shares entitled to vote on that matter is required for shareholder action on that matter.

(b) With respect to a matter for which the affirmative vote of the holders of a specified portion of the shares of a class or series is required by this code, the certificate of formation may provide that the affirmative vote of the holders of a specified portion, but not less than the majority, of the shares of that class or series is required for action of the holders of shares of that class or series on that matter.

(c) If a provision of the certificate of formation provides that the affirmative vote of the holders of a specified portion that is greater than the majority of the shares entitled to vote on a matter is required for shareholder action on that matter, the provision may not be amended, directly or indirectly, without the same affirmative vote unless otherwise provided by the certificate of formation.

(d) If a provision of the certificate of formation provides that the affirmative vote of the holders of a specified portion that is greater than the majority of the shares of a class or series is required for shareholder action on a matter, the provision may not be amended, directly or indirectly, without the same affirmative vote unless otherwise provided by the certificate of formation.

§ 200.263. NUMBER OF VOTES PER SHARE.

(a) Except as provided by the certificate of formation of a real estate investment trust or this title or Title 1, each outstanding share, regardless of class, is entitled to one vote on each matter submitted to a vote at a shareholders' meeting.

(b) If the certificate of formation provides for more or less than one vote per share on a matter for all of the outstanding shares or for the shares of a class or series, each reference in this code or in the certificate of formation or bylaws, unless expressly stated otherwise, to a specified portion of the shares with respect to that matter refers to the portion of the votes entitled to be cast with respect to those shares under the certificate of formation.

§ 200.264. VOTING IN PERSON OR BY PROXY.

(a) A shareholder may vote in person or by proxy executed in writing by the shareholder.

(b) A telegram, telex, cablegram, or other form of electronic transmission, including telephonic transmission, by the shareholder, or a photographic, photostatic, facsimile, or similar reproduction of a writing executed by the shareholder, is considered an execution in writing for purposes of this section. Any electronic transmission must contain or be accompanied by information from which it can be determined that the transmission was authorized by the shareholder.

§ 200.265. TERM OF PROXY.

A proxy is not valid after 11 months after the date the proxy is executed unless otherwise provided by the proxy.

§ 200.266. REVOCABILITY OF PROXY.

(a) In this section, a "proxy coupled with an interest" includes the appointment as proxy of:

(1) a pledgee;

(2) a person who purchased or agreed to purchase the shares subject to the proxy;

(3) a person who owns or holds an option to purchase the shares subject to the proxy;

(4) a creditor of the real estate investment trust who extended the real estate investment trust credit under terms requiring the appointment;

(5) an employee of the real estate investment trust whose employment contract requires the appointment; or

(6) a party to a voting agreement created under § 6.252.

(b) A proxy is revocable unless:

(1) the proxy form conspicuously states that the proxy is irrevocable; and

(2) the proxy is coupled with an interest.

§ 200.267. ENFORCEABILITY OF PROXY.

(a) An irrevocable proxy is specifically enforceable against the holder of shares or any successor or transferee of the holder if:

(1) the proxy is noted conspicuously on the certificate representing the shares subject to the proxy; or

(2) in the case of uncertificated shares, notation of the proxy is contained in the notice sent under § 3.205 with respect to the shares subject to the proxy.

(b) An irrevocable proxy that is otherwise enforceable is ineffective against a transferee for value without actual knowledge of the existence of the irrevocable proxy at the time of the transfer or against a subsequent transferee, regardless of whether the transfer is for value, unless:

(1) the proxy is noted conspicuously on the certificate representing the shares subject to the proxy; or

(2) in the case of uncertificated shares, notation of the proxy is contained in the notice sent under § 3.205 with respect to the shares subject to the proxy.

(c) An irrevocable proxy shall be specifically enforceable against a person who is not a transferee for value from the time the person acquires actual knowledge of the existence of the irrevocable proxy.

§ 200.268. PROCEDURES IN BYLAWS RELATING TO PROXIES.

A real estate investment trust may establish in the bylaws of the real estate investment trust procedures consistent with this code for determining the validity of proxies and determining whether shares held of record by a bank, broker, or other nominee are represented at a meeting of shareholders. The procedures may incorporate rules of and determinations made by a self-regulatory organization regulating that bank, broker, or other nominee.

 

Contact Information

Mailing Address

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

Telephone

(469) 630-2550

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