VERNON'S TEXAS STATUTES AND CODES ANNOTATED
                                CIVIL STATUTES
                            TITLE 32--CORPORATIONS
        CHAPTER NINE--NON-PROFIT, COOPERATIVE, RELIGIOUS AND CHARITABLE
                      1. TEXAS NON-PROFIT CORPORATION ACT
     Current through 3rd Called Sess., 72nd Leg., Ch. 4, approved 1-8-92

Art. 1396-2.02. General Powers

 A. Subject to the provisions of Sections B and C of this Article, each
corporation shall have power:
 (1) To have perpetual succession by its corporate name, unless a limited
period of duration is stated in its articles of incorporation.  Notwithstanding
the articles of incorporation, the period of duration for any corporation
incorporated before August 10, 1959, is perpetual if all fees and franchise
taxes have been paid as provided by law.
 (2) To sue and be sued, complain and defend, in its corporate name.
 (3) To have a corporate seal which may be altered at pleasure, and to use the
same by causing it, or a facsimile thereof, to be impressed on, affixed to, or
in any manner reproduced upon, instruments of any nature required to be
executed by its proper officers.
 (4) To purchase, receive, lease, or otherwise acquire, own, hold, improve,
use, or otherwise deal in and with, real or personal property, or any interest
therein, wherever situated, as the purposes of the corporation shall require,
or as shall be donated to it.
 (5) To sell, convey, mortgage, pledge, lease, exchange, transfer, and
otherwise dispose of all or any part of its property and assets.
 (6) To lend money to and otherwise assist its employees and officers, but not
its directors, if the loan or assistance may reasonably be expected to benefit,
directly or indirectly, the corporation providing the assistance.  Loans made
to officers must be:
 (a) made for the purpose of financing the principal residence of the officer;
or
 (b) made during the first year of that officer's employment, in which case the
original principal amount may not exceed 100 percent of the officer's annual
salary;  or
 (c) made in any subsequent year, in which case the original principal amount
may not exceed 50 percent of the officer's annual salary.
 (7) To purchase, receive, subscribe for, or otherwise acquire, own, hold,
vote, use, employ, mortgage, lend, pledge, sell or otherwise dispose of, and
otherwise use and deal in and with, shares or other interests in, or
obligations of, other domestic or foreign corporations, whether for profit or
not for profit, associations, partnerships, or individuals, or direct or
indirect obligations of the United States or of any other government, state,
territory, government district, or municipality, or of any instrumentality
thereof.
 (8) To make contracts and incur liabilities, borrow money at such rates of
interest as the corporation may determine, issue its notes, bonds, and other
obligations, and secure any of its obligations by mortgage or pledge of all or
any of its property, franchises, and income.
 (9) To lend money for its corporate purposes, invest and reinvest its funds,
and take and hold real and personal property as security for the payment of
funds so loaned or invested.
 (10) To conduct its affairs, carry on its operations, and have officers and
exercise the powers granted by this Act in any state, territory, district, or
possession of the United States, or any foreign country.
 (11) To elect or appoint officers and agents of the corporation for such
period of time as the corporation may determine and define their duties and fix
their compensation.
 (12) To make and alter by-laws, not inconsistent with its articles of
incorporation or with the laws of this State, for the administration and
regulation of the affairs of the corporation.
 (13) To make donations for the public welfare or for charitable, scientific,
or educational purposes and in time of war to make donations in aid of war
activities.
 (14) To cease its corporate activities and terminate its existence by
voluntary dissolution.
 (15) Whether included in the foregoing or not, to have and exercise all powers
necessary or appropriate to effect any or all of the purposes for which the
corporation is organized.
 (16) Any religious, charitable, educational, or eleemosynary institution
organized under the laws of this State may acquire, own, hold, mortgage, and
dispose of and invest its funds in real and personal property for the use and
benefit and under the discretion of, and in trust for any convention,

Art. 1396-2.04. Corporate Name

 A. The corporate name shall conform to the following requirements:
 (1) It shall not contain any word or phrase which indicates or implies that it
is organized for any purpose other than one or more of the purposes contained
in its articles of incorporation.
 (2) It shall not be the same as, or deceptively similar to, the name of any
domestic corporation, whether for profit or not for profit, existing under the
laws of this State, or the name of any foreign corporation, whether for profit
or not for profit, authorized to transact business or conduct affairs in this
State, or a name the exclusive right to which is, at the time, reserved in the
manner provided by the Texas Business Corporation Act, or the name of a
corporation which has in effect a registration of its corporate name as
provided in the Texas Business Corporation Act;  provided that a name may be
similar if written consent is obtained from the existing corporation having the
name deemed to be similar, or the person, or corporation, for whom the name
deemed to be similar is reserved or registered in the office of the Secretary
of State.
 (3) It shall not contain the word "lottery."

 Art. 1396-2.05. Registered Office and Registered Agent

 A. Each corporation shall have and continuously maintain in this State:
 (1) A registered office which may be, but need not be, the same as its
principal office.
 (2) A registered agent, which agent may be an individual resident in this
State whose business office is identical with such registered office, or a
domestic corporation, whether for profit or not for profit, or a foreign
corporation, whether for profit or not for profit, authorized to transact
business or to conduct its affairs in this State which has a principal or
business office identical with such registered office.
 B. On or before the 15th day of November, 1961, each not for profit
corporation organized under the laws of this State prior to the effective date
of this Act shall designate its registered office and appoint its registered
agent by filing in the office of the Secretary of State a statement setting
forth:
 (1) The name of the corporation.
 (2) The street address of its registered office.
 (3) The name of its registered agent.
 (4) The street address of its registered agent.
 (5) That the street address of its registered office and the street address of
its registered agent are the same.
 (6) That such designation and appointment were authorized by resolution duly
adopted by its board of directors or, if the management of the corporation is
vested in its members pursuant to Article 2.14C of this Act, [FN1MV] by the
members.
 C. The statement required by this Article shall be executed by the corporation
by its president or a vice-president, and verified by him.  The original and a
copy of the statement shall be delivered to the Secretary of State.  If the
Secretary of State finds that such statement conforms to the provisions of this
Act, he shall, when all fees have been paid as prescribed by law:
 (1) Endorse on the original and the copy the word "Filed" and the month, day,
and year of the filing thereof.
 (2) File the original in his office.
 (3) Deliver the copy to the corporation or its representative.
 D. Upon such filing the designation of the registered office and the
appointment of the registered agent shall become effective.

Art. 1396-2.09. By-Laws

 A. The initial by-laws of a corporation shall be adopted by its board of
directors or, if the management of the corporation is vested in its members
pursuant to Article 2.14C of this Act, [FN1MV] by the members.  The power to
alter, amend, or repeal the by-laws or to adopt new by-laws shall be vested in
the members, if any, but such power may be delegated by the members to the
board of directors.  In the event the corporation has no members, the power to
alter, amend, or repeal the by-laws or to adopt new by-laws shall be vested in
the board of directors.  The by-laws may contain any provisions for the
regulation and management of the affairs of a corporation not inconsistent with
law or with the articles of incorporation.

Art. 1396-2.14. Board of Directors or Trustees

 A. The affairs of a corporation shall be managed by a board of directors, or
trustees.  Directors or trustees need not be residents of this State or members
of the corporation unless the articles of incorporation or the by-laws so
require.  The articles of incorporation or the by-laws may prescribe other
qualifications for directors or trustees.
 B. Boards of directors or trustees of religious, charitable, educational, or
eleemosynary institutions may be affiliated with, elected and controlled by a
convention, conference or association organized under the laws of this State or
another state, whether incorporated or unincorporated, whose membership is
composed of representatives, delegates, or messengers from any church or other
religious association.
 C. The articles of incorporation of a church may vest the management of the
affairs of the corporation in its members.  If the church has a board of
directors or similar body, it may limit the authority of such board to whatever
extent as may be set forth in the articles of incorporation or by-laws.  A
church organized and operating under a congregational system and incorporated
prior to the effective date of this Act shall be deemed to have vested the
management of the affairs of the corporation in its members in the absence of
an express provision to the contrary in the articles of incorporation or the
by-laws.
 D. In the case of a corporation which is a church, the Board may be designated
by any name appropriate to the customs, usages, or tenets of the church.
 E. The board of directors or trustees of a non-profit corporation may be
elected (in whole or in part) by another non-profit corporation or
corporations, domestic or foreign, if (1) the articles of incorporation or the
bylaws of the former corporation so provide, and (2) the former has no members
with voting rights.

Art. 1396-2.15. Number, Election, Classification, and Removal of Directors

 A. The number of directors of a corporation shall be not less than three (3).
Subject to such limitation, the number of directors shall be fixed by, or in
the manner provided in, the articles of incorporation or the by-laws, except as
to the number constituting the initial board of directors, which number shall
be fixed by the articles of incorporation.  The number of directors may be
increased or decreased from time to time by amendment to, or in the manner
provided in, the articles of incorporation or the by-laws, but no decrease
shall have the effect of shortening the term of any incumbent director.  In the
absence of a by-law or a provision of the articles of incorporation fixing the
number of directors or providing for the manner in which the number of
directors shall be fixed, the number of directors shall be the same as the
number constituting the initial board of directors as fixed by the articles of
incorporation.
 B. The directors constituting the initial board of directors shall be named in
the articles of incorporation and shall hold office until the first annual
election of directors or for such other period as may be specified in the
articles of incorporation or the by-laws. Thereafter, directors shall be
elected or appointed in the manner and for the terms provided in the articles
of incorporation or the by-laws.  In the absence of a provision in the articles
of incorporation or the by-laws fixing the term of office, a director shall
hold office until the next annual election of directors and until his successor
shall have been elected or appointed and qualified.
 C. Directors may be divided into classes and the terms of office of the
several classes need not be uniform.  Unless removed in accordance with the
provisions of the articles of incorporation or the by-laws, each director shall
hold office for the term for which he is elected or appointed and until his
successor shall have been elected or appointed and qualified.
 D. A director may be removed from office pursuant to any procedure therefor
provided in the articles of incorporation or by-laws.

Art. 1396-2.16. Vacancies

 A. Unless otherwise provided in the articles of incorporation or the by-laws,
any vacancy occurring in the board of directors shall be filled by the
affirmative vote of a majority of the remaining directors though less than a
quorum of the board of directors.  A director elected to fill a vacancy shall
be elected for the unexpired term of his predecessor in office.
 B. Any directorship to be filled by reason of an increase in the number of
directors shall be filled by election at an annual meeting or at a special
meeting of members called for that purpose.  If a corporation has no members,
or no members having the right to vote thereon, such directorship shall be
filled as provided in the articles of incorporation or the by-laws.

Art. 1396-2.17. Quorum and Voting Directors

 A. A quorum for the transaction of business by the board of directors shall be
whichever is less:
 (1) A majority of the number of directors fixed by the bylaws, or in the
absence of a bylaw fixing the number of directors, a majority of the number of
directors stated in the articles of incorporation, or
 (2) Any number, not less than three, fixed as a quorum by the articles of
incorporation or the bylaws.
 B. Directors present by proxy may not be counted toward a quorum.
 C. The act of the majority of the directors present in person or by proxy at a
meeting at which a quorum is present shall be the act of the board of
directors, unless the act of a greater number is required by the articles of
incorporation or the bylaws.
 D. A director may vote in person or (if the articles of incorporation or the
bylaws so provide) by proxy executed in writing by the director.  No proxy
shall be valid after three months from the date of its execution.  Each proxy
shall be revocable unless expressly provided therein to be irrevocable, and
unless otherwise made irrevocable by law.

Art. 1396-2.18. Committees

 A. If the articles of incorporation or the bylaws so provide, the board of
directors, by resolution adopted by a majority of the directors in office, may
designate one or more committees, which, to the extent provided in such
resolution, in the articles of incorporation, or in the bylaws, shall have and
exercise the authority of the board of directors in the management of the
corporation.  Each such committee shall consist of two or more persons, a
majority of whom are directors;  the remainder, if the articles of
incorporation or the bylaws so provide, need not be directors.  The designation
of such committees and the delegation thereto of authority shall not operate to
relieve the board of directors, or any individual director, of any
responsibility imposed upon it or him by law.  Any non-director who becomes a
member of any such committee shall have the same responsibility with respect to
such committee as a director who is a member thereof.
 B. Other committees not having and exercising the authority of the board of
directors in the management of the corporation may be designated and appointed
by a resolution adopted by a majority of the directors at a meeting at which a
quorum is present, or by the president thereunto authorized by a like
resolution of the board of directors or by the articles of incorporation or by
the by-laws.  Membership on such committees may, but need not be, limited to
directors.

Art. 1396-2.19. Place and Notice of Directors' Meetings

 A. Meetings of the board of directors, regular or special, may be held either
within or without this State.
 B. Regular meetings of the board of directors may be held with or without
notice as prescribed in the by-laws.  Special meetings of the board of
directors shall be held upon such notice as is prescribed in the by-laws.
Attendance of a director at a meeting shall constitute a waiver of notice of
such meeting, except where a director attends a meeting for the express purpose
of objecting to the transaction of any business on the ground that the meeting
is not lawfully called or convened.  Neither the business to be transacted at,
nor the purpose of, any regular or special meeting of the board of directors
need be specified in the notice or waiver of notice of such meeting, unless
required by the by-laws.

Art. 1396-2.20. Officers

 A. The officers of a corporation shall consist of a president, one or more
vice-presidents, a secretary, a treasurer, and such other officers and
assistant officers as may be deemed necessary, each of whom shall be elected or
appointed at such time and in such manner and for such terms not exceeding
three (3) years as may be prescribed in the articles of incorporation or the
by-laws.  In the absence of any such provisions, all officers shall be elected
or appointed annually by the board of directors, or, if the management of the
corporation is vested in its members pursuant to Article 2.14C of this Act,
[FN1MV] by the members.  Any two or more offices may be held by the same
person, except the offices of president and secretary.  A committee duly
designated may perform the functions of any officer and the functions of any
two or more officers may be performed by a single committee, including the
functions of both president and secretary.
 B. The articles of incorporation or the by-laws may provide that any one or
more officers of the corporation shall be ex-officio members of the board of
directors.
 C. The officers of a corporation may be designated by such other or additional
titles as may be provided in the articles of incorporation or the by-laws.
 D. In the case of a corporation which is a church, it shall not be necessary
that there be officers as provided herein, but such duties and responsibilities
may be vested in the board of trustees or other designated body in any manner
provided for in the articles of incorporation or the by-laws.

Art. 1396-2.21. Removal of Officers

 A. Any officer elected or appointed may be removed by the persons authorized
to elect or appoint such officer whenever in their judgment the best interests
of the corporation will be served thereby.  The removal of an officer shall be
without prejudice to the contract rights, if any, of the officer so removed.
Election or appointment of an officer or agent shall not of itself create
contract rights.

Art. 1396-2.23A. Financial Records and Annual Reports

 A. A corporation shall maintain current true and accurate financial records
with full and correct entries made with respect to all financial transactions
of the corporation, including all income and expenditures, in accordance with
generally accepted accounting practices.
 B. Based on these records, the board of directors or trustees shall annually
prepare or approve a report of the financial activity of the corporation for
the preceding year.  The report must conform to accounting standards as
promulgated by the American Institute of Certified Public Accountants and must
include a statement of support, revenue, and expenses and changes in fund
balances, a statement of functional expenses, and balance sheets for all funds.
 C. All records, books, and annual reports of the financial activity of the
corporation shall be kept at the registered office or principal office of the
corporation in this state for at least three years after the closing of each
fiscal year and shall be available to the public for inspection and copying
there during normal business hours.  The corporation may charge for the
reasonable expense of preparing a copy of a record or report.
 D. A corporation that fails to maintain financial records, prepare an annual
report, or make a financial record or annual report available to the public in
the manner prescribed by this article is guilty of a Class B misdemeanor.
 E. This article does not apply to:
 (1) a corporation that solicits funds only from its members;
 (2) a corporation which does not intend to solicit and receive and does not
actually raise or receive contributions from sources other than its own
membership in excess of $10,000 during a fiscal year;
 (3) a proprietary school that has received a certificate of approval from the
State Commissioner of Education, a public institution of higher education and
foundations chartered for the benefit of such institutions or any component
part thereof, a private institution of higher education with a certificate of
authority to grant a degree issued by the Coordinating Board, Texas College and
University System, or an elementary or secondary school;
 (4) religious institutions which shall be limited to churches, ecclesiastical
or denominational organizations, or other established physical places for
worship at which religious services are the primary activity and such
activities are regularly conducted;
 (5) a trade association or professional society whose income is principally
derived from membership dues and assessments, sales, or services;
 (6) any insurer licensed and regulated by the State Board of Insurance;
 (7) an organization whose charitable activities relate to public concern in
the conservation and protection of wildlife, fisheries, and allied natural
resources;
 (8) an alumni association of a public or private institution of higher
education in this state, provided that such association is recognized and
acknowledged by the institution as its official alumni association.

Art. 1396-3.01. Incorporators

 A. Any natural person of the age of eighteen (18) years or more without regard
to the person's place of residence or domicile may act as an incorporator of a
corporation by signing the articles of incorporation for such corporation and
delivering the original and a copy of the articles of incorporation to the
Secretary of State.
 B. Any religious society, charitable, benevolent, literary, or social
association, or church may incorporate under this Act with the consent of a
majority of its members, who shall authorize the incorporators to execute the
articles of incorporation.

Art. 1396-3.02. Articles of Incorporation

 A. The articles of incorporation shall set forth:
 (1) The name of the corporation.
 (2) A statement that the corporation is a non-profit corporation.
 (3) The period of duration, which may be perpetual.
 (4) The purpose or purposes for which the corporation is organized.
 (5) If the corporation is to have no members, a statement to that effect.
 (6) If the corporation is a church and the management of its affairs is to be
vested in its members pursuant to Article 2.14C of this Act, [FN1MV] a
statement to that effect.
 (7) Any provision, not inconsistent with law, including any provision which
under this Act is required or permitted to be set forth in the bylaws, which
the incorporators elect to set forth in the articles of incorporation for the
regulation of the internal affairs of the corporation.
 (8) The street address of its initial registered office and the name of its
initial registered agent at such street address.
 (9) The number of directors or trustees constituting the initial board of
directors or trustees, and the names and addresses of the persons who are to
serve as the initial directors or trustees.  A church vesting management of its
affairs in its members pursuant to Article 2.14C of this Act may, in lieu of
providing for a board of directors or trustees, set forth in the articles of
incorporation the officers or other body designated pursuant to Article 2.20D
of this Act.
 (10) The name and street address of each incorporator.
 B. Provided that charters or articles of incorporation of corporations
existing on the effective date of this Act which do not contain one or more of
the requirements listed in the foregoing Section need not be amended for the
purpose of meeting such requirements.  Any subsequent amendment or restatement
of the articles of incorporation of such corporation shall include such
requirements, except that it shall not be necessary, in such amended or
restated articles, to include the information required in Subsections (8), (9),
and (10) of Section A.
 C. It shall not be necessary to set forth in the articles of incorporation any
of the corporate powers enumerated in this Act.
 D. Unless the articles of incorporation provide that a change in the number of
directors or trustees shall be made only by amendment to the articles of
incorporation, a change in the number of directors or trustees made by
amendment to the by-laws shall be controlling.  In all other cases, whenever a
provision of the articles of incorporation is inconsistent with a by-law, the
provision of the articles of incorporation shall be controlling.

Art. 1396-3.03. Filing of Articles of Incorporation

 A. The original and a copy of the articles of incorporation shall be 
delivered to the Secretary of State.  If the Secretary of State finds that 
the articles of incorporation conform to law, he shall, when all fees have 
been paid as required by law:
 (1) Endorse on the original and the copy the word "Filed", and the month, 
day, and year of the filing thereof.
 (2) File the original in his office.
 (3) Issue a certificate of incorporation to which he shall affix the copy.
 B. The certificate of incorporation, together with the copy of the articles 
of incorporation affixed thereto by the Secretary of State shall be delivered
to the incorporators or their representatives.

Art. 1396-3.05. Organization Meeting

 A. After the issuance of the certificate of incorporation, an organization
meeting of the board of directors named in the articles of incorporation shall
be held, either within or without this State, at the call of a majority of the
incorporators, for the purpose of adopting by-laws, electing officers, and for
such other purposes as may come before the meeting.  The incorporators calling
the meeting shall give at least three (3) days' notice thereof by mail to each
director named in the articles of incorporation, which notice shall state the
time and place of the meeting.
 B. A first meeting of the members may be held at the call of the directors, or
a majority of them, upon at least three (3) days' notice, for such purposes as
shall be stated in the notice of the meeting.
 C. If the management of a church is vested in its members pursuant to Article
2.14C of this Act, [FN1MV] the organization meeting shall be held by the
members upon the call of a majority of the incorporators.  The incorporators
calling the meeting shall (a) give at least three (3) days' notice by mail to
each member stating the time and place of the meeting, or shall (b) make an
oral announcement of the time and place of meeting at a regularly scheduled
worship service prior to such meeting, or shall (c) give such notice of the
meeting as may be provided for in the articles of incorporation.

Art. 1396-9.10. Action Without a Meeting by Members, Directors or Committees

 A. Any action required by this Act to be taken at a meeting of the members or
directors of a corporation, or any action which may be taken at a meeting of
the members or directors or of any committee, may be taken without a meeting if
a consent in writing, setting forth the action to be taken, shall be signed by
all the members entitled to vote with respect to the subject matter thereof, or
all of the directors, or all of the members of the committee, as the case may
be.
 B. Such consent shall have the same force and effect as a unanimous vote, and
may be stated as such in any articles or document filed with the Secretary of
State under this Act.

Art. 1396-9.11. Telephone Meetings

 Subject to the provisions required or permitted by this Act for notice of
meetings, unless otherwise restricted by the articles of incorporation or
bylaws, members of a corporation, members of the board of directors of a
corporation, or members of any committee designated by such board may
participate in and hold a meeting of such members, board, or committee by means
of conference telephone or similar communications equipment by means of which
all persons participating in the meeting can hear each other, and participation
in a meeting pursuant to this Article shall constitute presence in person at
such meeting, except where a person participates in the meeting for the express
purpose of objecting to the transaction of any business on the ground that the
meeting is not lawfully called or convened.