BUSINESS ORGANIZATIONS CODE

TITLE 1. GENERAL PROVISIONS

CHAPTER 7. LIABILITY

Sec. 7.001.  LIMITATION OF LIABILITY OF MANAGERIAL OFFICIAL.  (a)  Subsections (b) and (c) apply to:
(1)  a domestic entity other than a partnership or limited liability company;
(2)  another organization incorporated or organized under another law of this state; and
(3)  to the extent permitted by federal law, a federally chartered bank, savings and loan association, or credit union.
(b)  The certificate of formation or similar instrument of an organization to which this section applies may provide that a managerial official of the organization is not liable, or is liable only to the extent provided by the certificate of formation or similar instrument, to the organization or its owners or members for monetary damages for an act or omission by the managerial official in the managerial official's capacity as a managerial official.
(c)  Subsection (b) does not authorize the elimination or limitation of the liability of a managerial official to the extent the managerial official is found liable under applicable law for:
(1)  a breach of the managerial official's duty of loyalty, if any, to the organization or its owners or members;
(2)  an act or omission not in good faith that:
(A)  constitutes a breach of duty of the managerial official to the organization; or
(B)  involves intentional misconduct or a knowing violation of law;
(3)  a transaction from which the managerial official received an improper benefit, regardless of whether the benefit resulted from an action taken within the scope of the managerial official's duties; or
(4)  an act or omission for which the liability of a managerial official is expressly provided by an applicable statute.
(d)  The liability of a managerial official may be limited or eliminated:
(1)  in a general partnership by its partnership agreement to the same extent Subsections (b) and (c) permit the limitation or elimination of liability of a managerial official of an organization to which those subsections apply and to the additional extent permitted under Chapter 152;
(2)  in a limited partnership by its partnership agreement to the same extent Subsections (b) and (c) permit the limitation or elimination of liability of a managerial official of an organization to which those subsections apply and to the additional extent permitted under Chapter 153 and, to the extent applicable to limited partnerships, Chapter 152; and
(3)  in a limited liability company by its certificate of formation or company agreement to the same extent Subsections (b) and (c) permit the limitation or elimination of liability of a managerial official of an organization to which those subsections apply and to the additional extent permitted under Sections 101.052 and 101.401.
Acts 2003, 78th Leg., ch. 182, Sec. 1, eff. Jan. 1, 2006.
Amended by: 
Acts 2013, 83rd Leg., R.S., Ch. 9 (S.B. 847), Sec. 2, eff. September 1, 2013.
Acts 2025, 89th Leg., R.S., Ch. 199 (S.B. 2411), Sec. 16, eff. September 1, 2025.