Texas State Law on Nonprofit Corporations

A nonprofit corporation in Texas is prohibited from distributing dividends to its members.

Title 2, Chapter 22 of Texas' Business Organizations Code regulates nonprofit corporations operating in the state. Chapter 22 establishes rules regarding dividends, benefits, bylaws, annual meetings and many other aspects of nonprofit organizations.

Dividends, Benefits and Distributions

Dividends may not be distributed to a nonprofit corporation's members, directors, or officers, pursuant to Section 22.053 of the Texas Business Organizations Code. Section 22.054 regulates compensation, benefits and distributions provided to corporate members, directors, and officers of nonprofit corporations in Texas.

Bylaws

Nonprofit corporate bylaws in Texas must be consistent with applicable laws and the corporation's certificate of formation, pursuant to Section 22.102(b). Members may also prohibit the board of directors of a nonprofit corporation from repealing specific bylaws, according to Section 22.102(c)(3).

Annual Meeting

A nonprofit corporation in Texas is required to hold an annual meeting for its members, according to Section 22.153(a). However, if more than one regular member meeting is provided for in its bylaws, an annual meeting is not required, pursuant to Section 22.153(b).

References

• Texas Constitution and Statutes: Business Organizations Code Chapter 22. Nonprofit Corporations