Texas Business Court Changes
The Texas House of Representatives has passed House Bill 40, a significant legislative change for businesses in Texas. The bill expands the jurisdiction of the Texas Business Court, lowers the amount-in-controversy requirement from $10 million to $5 million, and welcomes new types of cases including intellectual property matters. Additionally, the Business Court can now handle arbitration matters. As Texas positions itself as a competitive alternative to Delaware for corporate governance, businesses are encouraged to adapt to these new legal frameworks starting September 2025.
In the bustling heart of Texas, a wave of optimism is washing over the business community as the Texas House of Representatives has made a pivotal decision. On May 13, 2025, they passed House Bill 40 with a decisive vote of 99–40, and the excitement didn’t stop there! Governor Abbott wasted no time in signing this bill, which will officially become law starting September 1, 2025. So, what does this mean for Texas businesses? Let’s break it down!
One of the biggest highlights of House Bill 40 is the expansion of the jurisdictional and operational framework of the Texas Business Court. Previously, the Business Court had its hands somewhat tied, primarily dealing with cases involving governance and securities, but the new legislation opens the doors for much more. This means that complex business litigation can be tackled right here in Texas, making it an increasingly attractive place for corporate litigation.
One of the most talked-about changes is the reduction of the amount-in-controversy requirement from $10 million to $5 million. This is a massive shift that significantly lowers the threshold for companies to seek relief through the Business Court. Now, litigants can aggregate claims from joined parties to meet this newly established bar, making it easier for smaller companies to jump into the fray.
In addition to lower financial barriers, the Business Court is now stepping into new territory. Previously, matters involving intellectual property and trade secrets were outside its jurisdiction. However, with this new bill, the court can now handle these types of cases, providing an essential venue for businesses facing these modern challenges.
Another exciting aspect of House Bill 40 is that it clearly defines the Business Court’s authority over arbitration matters. This means it can enforce arbitration agreements, appoint arbitrators, and review arbitral awards. This is an essential clarification that will make the litigation process smoother for corporate entities navigating the often complicated intricacies of arbitration.
In recent years, Delaware has been considered the gold standard for corporate governance, but its popularity may be waning. The Texas legislature noticed growing scrutiny aimed at Delaware’s Chancery Court, especially from institutional investors unhappy with perceived shortcomings. Reports of hefty fee multipliers for plaintiffs’ attorneys in Delaware have added fuel to this fire, paving the way for Texas to emerge as a fantastic alternative for companies looking for a more manageable litigation process.
With these changes in place, it’s crucial for corporate parties to revisit their governance documents. They need to ensure they are in compliance with the new laws and can fully benefit from the opportunities presented by the expanded Business Court. Companies can now feel a renewed sense of hope and excitement as they plot their legal strategies moving forward.
House Bill 40 is not just an isolated piece of legislation—it follows on the heels of Senate Bill 29, which also revamped the Business Court’s jurisdiction over corporate governance matters. With such significant shifts happening, the Texas business landscape looks poised for a new era of litigation strategy that promotes efficiency and fairness.
So, there you have it! This is a thrilling time to be a business owner in Texas, with more accessibility and fairness at your fingertips. As we gear up for September 2025, the anticipation builds and the future looks brighter than ever for the Lone Star State!
News Summary McAllen residents should be aware that the cost for overnight passport delivery services…
News Summary In a remarkable achievement, Texas has been proclaimed the top state for job…
News Summary Wingman Kitchens, a commissary kitchen concept, is expanding from Austin to major cities…
News Summary The New York Stock Exchange is set to launch NYSE Texas, an entirely…
News Summary Texas has been awarded the title of Best Business Climate for the third…
News Summary Texas has been recognized as the Best Business Climate in the Nation for…