Relating to examination of the records of filing entities and foreign filing entities by the attorney general; creating a criminal offense.

89(R) SB 2340 - Engrossed version - Bill Text

By: Schwertner, Kolkhorst

S.B. No. 2340

A BILL TO BE ENTITLED

AN ACT

relating to examination of the records of filing entities and

foreign filing entities by the attorney general; creating a

criminal offense.

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

SECTION 1. Section 12.153, Business Organizations Code, is

amended to read as follows:

Sec. 12.153. AUTHORITY TO EXAMINE MANAGEMENT OF ENTITY.

(a)
The attorney general may investigate the organization,

conduct, and management of a filing entity or foreign filing entity

and determine if the entity has been or is engaged in acts or

conduct in violation of:

(1) its governing documents; or

(2) any law of this state.

(b)

The investigation authority under Subsection (a)

includes the authority to:

(1)

require the filing entity or foreign filing entity

to file, on a form prescribed by the attorney general, a statement

or report in writing, under oath or otherwise, as to all the facts

and circumstances the attorney general considers necessary with

regard to the investigation; and

(2)

examine under oath any person in connection with

the investigation.

SECTION 2. Section 12.155, Business Organizations Code, is

amended to read as follows:

Sec. 12.155. FORFEITURE OF BUSINESS PRIVILEGES.
(a)

Except as provided by Subsection (b), a
[
A
] foreign filing entity or

a filing entity that fails or refuses to permit the attorney general

to examine or make copies of a record, without regard to whether the

record is located in this or another state, forfeits the right of

the entity to do business in this state, and the entity's

registration or certificate of formation shall be revoked or

terminated.

(b)

A foreign filing entity or a filing entity that fails or

refuses to comply with Subsection (a) does not forfeit the right of

the entity to do business in this state, and the entity's

registration or certificate of formation is not subject to

revocation or termination, if the entity timely files a petition

under Section 12.157 and the court finds:

(1)

the entity has a good faith reason for refusing to

permit the attorney general to examine or make copies of specified

records under Subsection (a); and

(2) the petition is not filed for purpose of delay.

SECTION 3. Subchapter B, Chapter 12, Business Organizations

Code, is amended by adding Section 12.1561 to read as follows:

Sec.

12.1561.

CRIMINAL PENALTY. (a)

A person commits an

offense if, with intent to avoid, evade, or prevent compliance

wholly or partly with this subchapter, the person:

(1) removes, conceals, or withholds a record;

(2) destroys, mutilates, or alters a record; or

(3) falsifies a record.

(b)

An offense under this section is a misdemeanor

punishable by:

(1) a fine not to exceed $5,000;

(2)

confinement in jail for a term not to exceed one

year; or

(3) both such fine and confinement.

SECTION 4. Subchapter B, Chapter 12, Business Organizations

Code, is amended by adding Section 12.157 to read as follows:

Sec.

12.157.

PETITION. (a)

A filing entity or foreign

filing entity may file a petition to extend the return date for

production of a record requested in writing under Section 12.152 or

to modify or set aside a written request made under that section.

The petition must state good cause and must be filed:

(1) in a district court in:

(A) Travis County; or

(B)

any county in this state in which the

petitioner does business or maintains its principal office; and

(2) not later than the earlier of:

(A)

the return date specified in the request to

examine made under Section 12.152; or

(B) the 20th day after the date of service.

(b)

A person on whom a demand is served under this

subchapter shall comply with the terms of the demand unless

otherwise provided by court order.

(c)

When a petition is filed in the district court of an

appropriate county under this section, the court shall have

jurisdiction to hear and determine the matter presented and to

enter any order required to carry into effect the provisions of this

subchapter.

SECTION 5. Section 12.156, Business Organizations Code, is

repealed.

SECTION 6. The repeal by this Act of Section 12.156,

Business Organizations Code, does not apply to an offense committed

under that section before the effective date of the repeal. An

offense committed before the effective date of the repeal is

governed by that section as it existed on the date the offense was

committed, and the former law is continued in effect for that

purpose. For purposes of this section, an offense was committed

before the effective date of the repeal if any element of the

offense occurred before that date.

SECTION 7. This Act takes effect immediately if it receives

a vote of two-thirds of all the members elected to each house, as

provided by Section 39, Article III, Texas Constitution. If this

Act does not receive the vote necessary for immediate effect, this

Act takes effect September 1, 2025.