The board meeting nobody prepared for.

Under the Texas Business Organizations Code, directors and managers owe the entity a duty of care — acting in good faith, with the care a person in a like position would reasonably exercise, in a manner they reasonably believe to be in the entity's best interests — and a duty of loyalty — putting the entity's interests above personal interests. Common loyalty violations: approving a contract in which a director has an undisclosed personal financial interest; using confidential information for personal gain; and diverting a business opportunity that belonged to the company. The business judgment rule protects directors from liability for honest mistakes in good-faith decisions, but it does not protect bad-faith decisions, gross negligence, or loyalty violations.

Yes. Texas law recognizes claims by minority owners against majority owners who engage in oppressive conduct — substantially defeating the reasonable expectations of the minority owner. The Texas BOC provides statutory remedies including involuntary dissolution and court-supervised buyouts. The most common forms of oppression: freezing the minority out of distributions while paying the majority above-market compensation; excluding the minority from management participation; failing to provide required financial information; and using the entity's resources to benefit the majority at the expense of the entity. The operating agreement is the primary document defining what the minority owner's reasonable expectations were — a well-drafted agreement is the most defensible protection.

The business judgment rule is a legal presumption that protects directors and officers from personal liability for decisions made in good faith, with reasonable care and investigation, in the honest belief the decision was in the company's best interests. Courts generally won't second-guess good-faith business decisions even if they turned out to be wrong. What it doesn't protect: bad faith, gross negligence, decisions that benefit the director personally (loyalty violations), and decisions outside the director's authority. The practical implication: document the information the board considered, the deliberation process, and the rationale for major decisions. A well-documented board process is the business judgment rule made visible.

Texas LLCs are not required by statute to hold regular meetings or keep minutes in the way corporations are. But the absence of any governance documentation is a significant practical problem: without records, there is no evidence to produce when a co-owner says "the board never approved that," no basis for the business judgment rule protection, and no documentation that third parties — banks, acquirers, investors — will ask for in due diligence. Texas law allows written consents in lieu of meetings. Major decisions should be documented, even if the documentation is simple. A company that has never documented a governance decision has no record to produce when it matters.

A 50/50 deadlock without a resolution mechanism is one of the most expensive governance failures a business can experience. Either member can petition a court for involuntary dissolution if the deadlock is harmful to the business. Courts are reluctant to dissolve operating businesses, but the threat is real and creates pressure. Resolution mechanisms that can be drafted into governance documents at formation: a tiebreaker designating one party's vote as controlling for specified decision categories; a buy-sell provision triggered by deadlock (the "shotgun" clause — either party can name a price, the other must buy or sell at that price); mandatory mediation for specified disputes; and a tiebreaking board member or manager. These provisions are cheap to draft at formation and expensive to negotiate after the deadlock has begun.

An unsolicited offer activates the board's fiduciary duties — directors must evaluate it in good faith, with adequate information, in the interests of the company and its owners. The proper process: convene the board formally with counsel present; evaluate the offer against the board's understanding of value and strategic alternatives; determine whether to engage or decline, and document the rationale. Review governance documents for consent requirements — investor protective provisions may require approval before engaging or declining. Respond through counsel with appropriate confidentiality protections. The most common mistake: the CEO responds informally before the board has met, making representations about the company's willingness to engage without authorization.

A conflict exists when a director has a personal financial interest in a transaction the board is considering. Texas law provides a safe harbor: the conflicted director must disclose the conflict fully; the transaction must be approved by disinterested directors after adequate deliberation; and the terms must be fair to the company. What the safe harbor requires is disclosure, disinterested approval, and fairness — all documented. What most boards do: informal disclosure, perfunctory approval, no documentation. The difference between those two approaches is the difference between an insulated transaction and an expensive lawsuit.

Meeting minutes or written consents documenting major decisions and the information considered; conflict of interest disclosures and disinterested approval processes; financial statements and board materials regularly reviewed; resolutions authorizing significant transactions; and documentation of independent legal and financial advice received. The practical standard: for any significant decision, can you reconstruct — from the documentation — what information the board had, what process they followed, and what rationale they articulated? If yes, the business judgment rule likely applies. If the only record is "we talked about it and decided," the protection is much thinner.