Texas law regulates the formation and management of limited liability companies, or LLCs, registered in Texas. All LLCs that wish to conduct significant business operations in Texas must file a certificate of formation with the Texas Secretary of State, which becomes a public record. However, changes to the ownership structure of an LLC, including the addition of an owner, do not require an amendment to the certificate of formation. However, if the day-to-day management of your company is vested in its owners and the new owner will be exercising management authority, you must reflect this in the company’s public information report made to the Texas Comptroller of Public Accounts.
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Conduct a vote authorizing the addition of a new owner. If your company has an operating agreement that addresses the procedure for adding new owners, follow the provisions set forth in the operating agreement. If your company does not have an operating agreement, the default provision specified by the Texas Business Organizations Code requires the unanimous consent of all existing owners. If your company has an operating agreement, amend the agreement after the vote is conducted to reflect the addition of a new owner.
Do nothing if your company has non-owners conducting day-to-day management of your company or if the new owner will not have management authority. Unlike most states, Texas does not require an amendment to the certificate of formation to reflect a change in the ownership structure of your LLC.
Note the ownership change on a public information report when filing your company’s annual Texas franchise tax if the new owner has management authority over your company. The Texas Comptroller of Public Accounts allows businesses to file their yearly business franchise returns electronically (see Resources). If not filing electronically, you must use the Public Information Report form (see Resources). On the Public Information Report form, provide your company’s taxpayer number, name and address. Do not blacken the circle indicating there are no changes in your company’s structure. Under section A, provide the name, title and mailing address of all company owners including the new owners.
File the public information report. If filing online, follow the on-screen directions for submission and payment. If filing by mail, the mailing address for filing for a franchise tax is State Comptroller, P.O. Box 149348, Austin TX 78714-9348. The filing fee depends on the size, assets and income of your company during a year. There is no specific filing fee for reflecting a change in your company’s public information report.