Texas Business Court Weighs Transfer and Approval Provisions for Texas LLC Membership Units

Short summary

The Texas Business Court ruled that drag-along provisions in LLC agreements requiring only simple board approval override additional approval requirements when the company agreement doesn't explicitly layer them together. The decision denies minority members' veto rights over unit transfers unless specifically granted contractually. Drafters must use explicit language when requiring multiple approval levels to avoid future litigation.

• •Court enforced plain language: drag-along transfers require only board majority approval
• •Minority members lack veto rights without explicit contractual language
• •Drafters must explicitly layer approval requirements or courts will interpret them narrowly

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