§ 121.002.Corporate Acknowledgments

A conflict of interest rule, and it is drawn narrowly on purpose.

An employee of a corporation is not disqualified because of that employment from taking an acknowledgment or proof of an instrument in which the corporation has an interest.

That settles a question that would otherwise disrupt ordinary business. Title companies, banks and lenders keep notaries on staff, and every instrument they handle is one their employer has an interest in. Disqualifying them would mean sending customers elsewhere to sign.

Employment alone is treated as too remote a stake to matter. A salaried notary gains nothing from the transaction whether it closes or not.

Ownership is treated differently, and subsection (b) sets a two-part test. An officer who is a shareholder is disqualified only if the corporation has 1,000 or fewer shareholders and the officer owns more than one-tenth of one percent of the issued and outstanding stock.

Both conditions must hold. An officer of a widely held company is never disqualified under this section, however large their holding, and an officer of a small company holding a trivial fraction is not either.

The thresholds mark where a stake becomes real. In a closely held corporation an officer with more than a tenth of one percent has an interest in the deal; in a public company the same fraction is nothing.

Note the two subsections address different people. The first protects an employee; the second reaches an officer who is also a shareholder, which is a different role and a different kind of interest.