News Summary

Governor Greg Abbott has signed House Bill 40 into law, which brings significant changes to Texas business law, especially in commercial litigation. This bill lowers the amount-in-controversy threshold, expands the Business Court’s jurisdiction, and enhances clarity in legal proceedings for Texas businesses. With these improvements, more cases can be processed efficiently, making Texas a competitive venue for business disputes and signaling a commitment to fostering a better environment for both small and large enterprises.

Fresh Changes in Texas Business Law: Governor Abbott Signs House Bill 40!

Well, it’s certainly an exciting time for businesses in the Lone Star State! On June 20, 2025, Governor Greg Abbott put pen to paper and signed House Bill 40 into law. This new legislation is poised to shake things up in the world of commercial litigation, and it’s all about making life a little easier for Texas businesses. The bill is set to go into effect on September 1, 2025, so let’s dive into what this all means.

What’s Changing?

First off, House Bill 40 amends and enhances the statutes that govern the Texas Business Court—yep, that’s right, there’s an entire court dedicated to business matters! The aim here is to not only expand the Business Court’s jurisdiction but also clarify how it interacts with district courts. This is huge, as it helps streamline the legal process for businesses navigating complicated confrontations.

One of the most notable changes? The amount-in-controversy threshold has been reduced from $10 million to $5 million. This means that more cases can now qualify for the Business Court’s jurisdiction, making it accessible to a wider swath of businesses, especially those that may not have that multi-million dollar price tag hanging over their heads. Smaller businesses stand to benefit significantly from this move.

More Flexibility with Cases

Another major point is the lowering of the threshold for a case to be classified as a “qualified transaction”. This change, also dropping from $10 million to $5 million, expands access to even more disputes, which can now be handled by the Business Court. And if you think that’s a game-changer, hold on to your hats— the bill also addresses case removal procedures when parties can’t come to an agreement. This added flexibility can save everyone a lot of headaches down the road.

Catching Up with the Competition

What does it all mean in the grand scheme of things? The Texas legislature has decided to make the state a competitive player against places like Delaware and New York, where business courts are already seen as a model for efficiency and effectiveness. By enhancing accessibility and streamlining processes, Texas is becoming a more appealing venue for businesses to set up shop and resolve disputes.

New Areas of Jurisdiction

intellectual property and trade secrets claims can now be addressed under the Business Court’s jurisdiction. This is a big deal, as these areas are vital to many businesses and often lead to complex legal entanglements. With the new legislation, companies won’t have to navigate a labyrinth of courts—they can tackle issues right where it counts.

The Big Picture

House Bill 40 isn’t just about small changes here and there; it reflects a broader response to stakeholders’ and businesses’ needs for greater clarity and functionality when it comes to the Texas legal landscape. Amid ongoing national discussions regarding the costs of litigation and the efficiency of corporate governance, this law demonstrates Texas’s commitment to creating an environment that’s better suited for business.

By addressing the need for a more predictable and efficient process for resolving complex commercial disputes, Texas is truly setting itself up as a top contender for business incorporation, showing that they mean business—pun intended!

So, whether you are an established corporation or a small business trying to make your mark, there’s a lot to be hopeful about with these changes on the horizon. And with Texas paving the way, the future looks bright for entrepreneurs across the state.

Governor Abbott Signs House Bill 40 to Reform Texas Business Law