HB4518 - Relating to the formation of decentralized unincorporated nonprofit associations and the use of distributed ledger or blockchain technology for certain business purposes; authorizing fees.

      By: Cook H.B. No. 4518       A BILL TO BE ENTITLED   AN ACT   relating to the formation of decentralized unincorporated   nonprofit associations and the use of distributed ledger or   blockchain technology for certain business purposes; authorizing   fees.          BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:          SECTION 1.  Title 6, Business Organizations Code, is amended   by adding Chapter 253 to read as follows:   CHAPTER 253. DECENTRALIZED UNINCORPORATED NONPROFIT ASSOCIATIONS           Sec. 253.001.  DEFINITIONS. In this chapter:                 (1)     "Administrator" means a member authorized by vote   of the membership to fulfill administrative or operational tasks.                 (2)     "Decentralized unincorporated nonprofit   association" means an unincorporated association:                       (A)     consisting of at least 100 members joined by   mutual consent under an agreement, that may be in writing or   inferred from conduct, for a common nonprofit purpose;                       (B)     that has elected to be formed under this   chapter; and                       (C)     that is not formed under any other law   governing the association's organization and operation.                 (3)     "Distributed ledger technology" means a software   protocol that:                       (A)     governs the rules, operations, and   communication between intersection and connection points in a   telecommunications network and supporting infrastructure;                       (B)     includes the computer software or hardware or   collections of computer software or hardware that use or enable a   distributed ledger, including blockchain; and                       (C)     uses a distributed, shared, and replicated   ledger, which may:                             (i)  be public or private;                             (ii)  be permissioned or permissionless; and                             (iii)     include the use of a digital asset as   a medium of electronic exchange.                 (4)     "Established practices" means the practices used   by a decentralized unincorporated nonprofit association without   material change during:                       (A)     the most recent five years of the   association's existence; or                       (B)     the association's entire existence, if the   association has existed for less than five years.                 (5)     "Governing principles" means all agreements and   any amendment or restatement of those agreements, including any   association agreements, consensus formation algorithms, or enacted   governance proposals, that govern the purpose or operation of a   decentralized unincorporated nonprofit association and the rights   and obligations of the association's members and administrators,   whether contained in a record, implied from the association's   established practices, or both.                 (6)     "Member" means a person that, under the governing   principles of a decentralized unincorporated nonprofit   association, may participate in:                       (A)     the development of the policies and   activities of the association; and                       (B)     the selection of the association's   administrators.                 (7)     "Membership interest" means a member's voting   right in a decentralized unincorporated nonprofit association as   determined by the association's governing principles.                 (8)     "Record" means information that is inscribed on a   tangible medium or that is stored in an electronic or other medium   and is retrievable in a perceivable form, including information   inscribed on blockchain or distributed ledger technology.                 (9)     "Smart contract" means a computational process   that executes on distributed ledger technology used to automate a   transaction, including a transaction that:                       (A)     takes custody over and instructs transfer of   assets on that ledger;                       (B)  creates and transmits digital assets;                       (C)  synchronizes information; or                       (D)     authenticates user rights and conveys access   to software applications.           Sec.   253.0015.     APPLICABILITY OF CODE TO ASSOCIATIONS.     Except as provided by Sections 253.024(e) and 253.025, the only   provisions of this code that apply to or govern a decentralized   unincorporated nonprofit association are:                 (1)  this chapter;                 (2)  Chapters 1, 2, 4, and 10; and                 (3)     if a decentralized unincorporated nonprofit   association designates an agent for service of process, Subchapter   E, Chapter 5.           Sec.   253.002.     SUPPLEMENTARY GENERAL PRINCIPLES OF LAW AND   EQUITY. (a) Principles of law and equity supplement this chapter   unless displaced by a particular provision of this chapter.           (b)     This chapter may not be interpreted to repeal or modify   a statute or rule for an entity that does not elect to be formed as a   decentralized unincorporated nonprofit association.           Sec.   253.003.     GOVERNING LAW; TERRITORIAL APPLICATION. (a)   The law of this state governs any decentralized unincorporated   nonprofit association that is formed in this state.           (b)     A decentralized unincorporated nonprofit association's   governing principles must identify the jurisdiction in which the   decentralized unincorporated nonprofit association is formed.           Sec.   253.004.     DISTRIBUTION TO MEMBERS PROHIBITED;   COMPENSATION AND OTHER PERMITTED PAYMENTS. (a) A decentralized   unincorporated nonprofit association may carry on any business   activity in which the association may lawfully engage and apply any   profit that results from the business activity toward the   association's common nonprofit purpose in accordance with   Subsection (c).           (b)     Except as provided by Subsection (c), a decentralized   unincorporated nonprofit association may not pay dividends or   distribute any part of the association's income or profit to the   association's members or administrators.           (c)     A decentralized unincorporated nonprofit association   may:                 (1)     pay reasonable compensation or reimburse   reasonable expenses to the association's members, administrators,   or persons outside the association for services rendered to or for   the benefit of the association, including for the administration   and operation of the association, including for:                       (A)     the provision of collateral for the   self-insurance of the association;                       (B)  voting; and                       (C)  participation;                 (2)     confer benefits on the association's members or   administrators in conformity with the association's common   nonprofit purpose or purposes;                 (3)     repurchase membership interests to the extent   authorized by the association's governing principles; and                 (4)     make distributions of property to members on   winding up and termination to the extent provided by Section   253.027.           Sec.   253.005.     LEGAL ENTITY; PERPETUAL EXISTENCE. (a) A   decentralized unincorporated nonprofit association is a legal   entity distinct from the association's members and administrators.           (b)     A decentralized unincorporated nonprofit association   has perpetual duration unless the association's governing   principles otherwise specify.           Sec.   253.006.     REAL AND PERSONAL PROPERTY; DECENTRALIZED   UNINCORPORATED NONPROFIT ASSOCIATION AS BENEFICIARY, LEGATEE, OR   DEVISEE. (a) A decentralized unincorporated nonprofit association   may, in the name of the association, acquire, hold, encumber, or   transfer an estate or interest in real or personal property.           (b)     A decentralized unincorporated nonprofit association   may be a beneficiary of a trust or contract, legatee, or devisee.           Sec.   253.007.     STATEMENT OF AUTHORITY AS TO REAL PROPERTY.   (a) A decentralized unincorporated nonprofit association shall   execute and record a statement of authority to transfer an estate or   interest in real property in the name of the association.           (b)     An estate or interest in real property in the name of a   decentralized unincorporated nonprofit association may be   transferred by a person authorized in a statement of authority   recorded in the office of the county clerk in which a transfer of   the property would be recorded.           (c)  A statement of authority must contain:                 (1)     the legal description and address in this state,   including the street address, if any, of the real property;                 (2)     the name of the decentralized unincorporated   nonprofit association;                 (3)     the address in this state, including the street   address, if any, of the association, or, if the association does not   have an address in this state, the association's address out of   state;                 (4)     the name or title of the person authorized to   transfer an estate or interest in real property held in the name of   the association; and                 (5)     the action, procedure, or vote of the association   that authorizes the person to transfer the real property of the   association and to execute the statement of authority.           (d) &# [Text truncated for display. 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