REAL ESTATE INVESTMENT TRUSTS - TRUST MANAGERS

TEXAS BUSINESS ORGANIZATIONS CODE

§ 200.301. MANAGEMENT BY TRUST MANAGERS.

The control, operation, disposition, investment, and management of the trust estate and the powers necessary or appropriate to effect any purpose for which a real estate investment trust is organized are vested in one or more trust managers.

§ 200.302. DESIGNATION OF TRUST MANAGERS.

(a) The certificate of formation of a real estate investment trust must contain the name of each trust manager.

(b) A successor trust manager must be selected in accordance with the certificate of formation. The selection of a successor trust manager is considered an amendment to the certificate of formation of a real estate investment trust.

§ 200.303. TRUST MANAGER ELIGIBILITY REQUIREMENTS.

A trust manager of a real estate investment trust must be an individual. Unless the certificate of formation or bylaws of a real estate investment trust provide otherwise, a person is not required to be a resident of this state or a shareholder of the real estate investment trust to serve as a trust manager. The certificate of formation or bylaws may prescribe other qualifications for trust managers.

§ 200.304. NUMBER OF TRUST MANAGERS.

(a) The certificate of formation or bylaws of the real estate investment trust shall set the number of trust managers or provide for the manner of determining the number of trust managers, except that the certificate of formation shall set the number constituting the initial trust managers.

(b) The number of trust managers may be increased or decreased by amendment to, or as provided by, the certificate of formation or bylaws. A decrease in the number of trust managers may not shorten the term of an incumbent trust manager.

§ 200.305. COMPENSATION.

A trust manager or officer of a real estate investment trust is entitled to receive compensation set by or in the manner provided by the certificate of formation or bylaws of the real estate investment trust. If the certificate of formation or bylaws do not provide for compensation to trust managers and officers, the trust managers of the real estate investment trust must determine the compensation by vote at a meeting or by written consent.

§ 200.306. TERM OF TRUST MANAGER.

(a) Except as provided by the certificate of formation or bylaws of a real estate investment trust, a trust manager of the real estate investment trust serves until the trust manager's successor is elected.

(b) A trust manager may succeed himself or herself in office.

(c) If a successor trust manager is not elected, the trust manager in office continues to serve as trust manager until the trust manager's successor is elected.

§ 200.307. STAGGERED TERMS OF TRUST MANAGERS.

(a) A governing document of a real estate investment trust may provide that all or some of the board of trust managers may be divided into two or three classes. Each class must include the same or a similar number of trust managers as each other class.

(b) The terms of office of trust managers constituting the first class expire on the election of successors at the first annual meeting of shareholders after the election of those trust managers. The terms of office of trust managers constituting the second class expire on the election of successors at the second annual meeting of shareholders after election of those trust managers. The terms of office of trust managers constituting the third class, if any, expire on the election of successors at the third annual meeting of shareholders after election of those trust managers.

(c) If a governing document of the real estate investment trust provides for the classification of trust managers, an annual election for trust managers as a whole is not necessary. At each annual meeting held after the classification of trust managers, an election shall be held to elect the number of trust managers equal to the number of trust managers in the class the term of which expires on the date of the meeting, and those trust managers serve until:

(1) the second succeeding annual meeting if there are two classes; or

(2) the third succeeding annual meeting if there are three classes.

(d) Unless provided by the certificate of formation or a bylaw adopted by shareholders, staggered terms for trust managers do not take effect until the next annual meeting of shareholders at which trust managers are elected. Staggered terms for trust managers may not be effected if any shareholder has the right to cumulate votes for the election of trust managers and the number of trust managers is fewer than nine trust managers.

§ 200.308. VACANCY.

(a) Except as provided by Subsection (b), a vacancy occurring in the office of a trust manager of a real estate investment trust may be filled by the affirmative vote of the majority of the remaining trust managers, even if the majority of trust managers constitutes less than a quorum of the trust managers.

(b) The certificate of formation or bylaws of the real estate investment trust may provide an alternative procedure for filling a vacancy occurring in the office of a trust manager, including filling vacancies by simple majority or super majority votes of the shareholders.

(c) The term of a trust manager elected to fill a vacancy occurring in the office of a trust manager is the unexpired term of the trust manager's predecessor in office and until the trust manager's successor is elected and has qualified.

§ 200.309. NOTICE OF MEETING.

(a) Regular meetings of the trust managers of a real estate investment trust may be held with or without notice as prescribed by the real estate investment trust's bylaws.

(b) Special meetings of the trust managers shall be held with notice as prescribed by the bylaws.

(c) A notice of a board meeting is not required to specify the business to be transacted at the meeting or the purpose of the meeting, unless required by the bylaws.

§ 200.310. QUORUM.

A quorum of the board of trust managers of a real estate investment trust is the majority of the number of trust managers unless the certificate of formation or bylaws require a greater number.

§ 200.311. COMMITTEES OF TRUST MANAGERS.

(a) If authorized by the certificate of formation or bylaws, the trust managers of a real estate investment trust, by resolution adopted by a majority of the trust managers, may designate:

(1) committees composed of one or more trust managers; or

(2) trust managers as alternate committee members to replace absent or disqualified committee members at a committee meeting, subject to any limitations imposed by the trust managers.

(b) To the extent provided by the resolution designating a committee or the certificate of formation or bylaws and subject to Subsection (c), the committee has the authority of the trust managers.

(c) A committee of the trust managers may not:

(1) amend the certificate of formation, except to classify or reclassify shares in accordance with § 200.103 if authorized by the resolution designating the committee, certificate of formation, or bylaws;

(2) propose a reduction of stated capital of the real estate investment trust;

(3) approve a plan of merger or share exchange of the real estate investment trust;

(4) recommend to shareholders the sale, lease, or exchange of all or substantially all of the property and assets of the real estate investment trust not made in the usual and regular course of its business;

(5) recommend to the shareholders a voluntary winding up and termination or a revocation of the real estate investment trust;

(6) amend, alter, or repeal the bylaws or adopt new bylaws;

(7) fill vacancies in the offices of the trust managers;

(8) fill vacancies in or designate alternate members of a committee of the trust managers;

(9) fill a vacancy to be filled because of an increase in the number of trust managers;

(10) elect or remove officers of the real estate investment trust or members or alternate members of a committee of the trust managers;

(11) set the compensation of the members or alternate members of a committee of the trust managers; or

(12) alter or repeal a resolution of the trust managers that states that it may not be amended or repealed.

(d) A committee of the trust managers may authorize a distribution or the issuance of shares if authorized by the resolution designating the committee or by the certificate of formation or bylaws.

(e) The designation of and delegation of authority to a committee of the trust managers does not relieve a trust manager of responsibility imposed by law.

§ 200.312. LIABILITY OF TRUST MANAGERS.

(a) A trust manager of a real estate investment trust who votes for or assents to a distribution of assets made by the real estate investment trust to its shareholders during the liquidation of the real estate investment trust without the payment and discharge of or the making of adequate provision for the payment of all of the known debts, liabilities, and other obligations of the real estate investment trust is jointly and severally liable to the real estate investment trust for the value of the distributed assets to the extent the debts, liabilities, and other obligations are not paid and discharged.

(b) A trust manager of a real estate investment trust who votes for or assents to the making of a loan to another trust manager or officer of the real estate investment trust or to the making of a loan secured by shares of the real estate investment trust is jointly and severally liable to the real estate investment trust for the loan amount until the loan is repaid.

(c) A trust manager is not jointly and severally liable under Subsection (a) if, in determining the amount available for the distribution, the trust manager, acting in good faith and with ordinary care:

(1) relied on information, opinions, reports, or statements in accordance with § 3.102; or

(2) considered the assets of the real estate investment trust to be valued at least at book value.

§ 200.313. STATUTE OF LIMITATIONS ON CERTAIN ACTION AGAINST TRUST MANAGERS.

An action may not be brought against a trust manager of a real estate investment trust under § 200.312 after the second anniversary of the date the alleged act giving rise to the liability occurred.

§ 200.314. IMMUNITY FROM LIABILITY FOR PERFORMANCE OF DUTY.

A trust manager of a real estate investment trust may not be held liable to the real estate investment trust for an act, omission, loss, damage, or expense arising from the performance of the trust manager's duties under the trust, except for liability arising from the wilful misfeasance, wilful malfeasance, or gross negligence of the trust manager.

§ 200.315. RIGHT OF CONTRIBUTION.

A trust manager who is liable for a claim asserted under § 200.312 is entitled to receive contribution from each of the other trust managers who are liable with respect to that claim in an amount appropriate to achieve equity.

§ 200.316. OFFICERS.

(a) An officer of a real estate investment trust designated by the trust managers under § 3.103 may exercise all of the powers of a trust manager relating to the business and affairs of the real estate investment trust, unless action by the trust managers is specified by this code or another applicable law.

(b) A designation of or delegation of authority to an officer of a real estate investment trust described by this § does not relieve a trust manager of responsibility imposed by law.

§ 200.317. CONTRACTS OR TRANSACTIONS INVOLVING INTERESTED TRUST MANAGERS AND OFFICERS.

(a) This § applies to a contract or transaction between a real estate investment trust and:

(1) one or more trust managers or officers, or one or more affiliates or associates of one or more directors or officers, of the trust; or

(2) an entity or other organization in which one or more trust managers or officers, or one or more affiliates or associates of one or more directors or officers, of the trust:

(A) is a managerial official; or

(B) has a financial interest.

(b) An otherwise valid and enforceable contract or transaction described by Subsection (a) is valid and enforceable, and is not void or voidable, notwithstanding any relationship or interest described by Subsection (a), if any one of the following conditions is satisfied:

(1) the material facts as to the relationship or interest described by Subsection (a) and as to the contract or transaction are disclosed to or known by:

(A) the trust managers or a committee of the trust managers, and the trust managers or committee of the trust managers in good faith authorize the contract or transaction by the approval of the majority of disinterested trust managers or committee members, regardless of whether the disinterested trust managers or committee members constitute a quorum; or

(B) the shareholders entitled to vote on the authorization of the contract or transaction, and the contract or transaction is specifically approved in good faith by a vote of the shareholders; or

(2) the contract or transaction is fair to the real estate investment trust when the contract or transaction is authorized, approved, or ratified by the trust managers, a committee of the trust managers, or the shareholders.

(c) Common or interested trust managers may be included in determining the presence of a quorum at a meeting of the trust managers, or a committee of the trust managers, that authorizes the contract or transaction.

(d) A person who has the relationship or interest described by Subsection (a) may:

(1) be present at or participate in and, if the person is a trust manager or committee member, may vote at a meeting of the trust managers, or of a committee of the trust managers, that authorizes the contract or transaction; or

(2) sign, in the person's capacity as a trust manager or committee member, a unanimous written consent of the trust managers or committee members to authorize the contract or transaction.

(e) If at least one of the conditions of Subsection (b) is satisfied, neither the trust nor any of the trust's shareholders will have a cause of action against any of the persons described by Subsection (a) for breach of duty with respect to the making, authorization, or performance of the contract or transaction because the person had the relationship or interest described by Subsection (a) or took any of the actions authorized by Subsection (d).

 

Contact Information

Mailing Address

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

Telephone

(469) 630-2550

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