Texas Business Landscape
Texas Governor Greg Abbott has signed a significant new law, Senate Bill 29, which enhances corporate governance and entrepreneurial opportunities in the state. The legislation introduces the Business Judgment Rule, protecting corporate directors from personal liability while making good faith decisions. This move aims to solidify Texas as a business-friendly environment, with new measures to reduce litigation risks and manage internal governance disputes. The adjustments are designed to maintain privacy for companies and streamline shareholder interactions, marking a notable shift in Texas’ corporate landscape.
On a sunny day in Austin, just recently on May 14, 2025, Texas Governor Greg Abbott made waves in the business world by signing Senate Bill 29 (SB 29). This new law has been hailed as a significant step forward in enhancing corporate governance and entrepreneurial opportunities in the Lone Star State. The Texas Legislature gave the green light to this bill on May 7, 2025, making it effective immediately.
SB 29 amends various parts of the Texas Business Organizations Code (TBOC), aiming to position Texas as a more attractive place for starting and running a business. The legislation is set to bring about numerous changes that can potentially reshape the corporate landscape across the state.
One of the standout features of this bill is the formal recognition of the Business Judgment Rule. This brilliant addition seeks to safeguard corporate directors from personal liability for decisions made in good faith and with reasonable care. In simple words, if they’re acting in the company’s best interests, they won’t be quaking in their boots about facing personal repercussions. This new measure allows those making key decisions to concentrate on what really matters—running their businesses—without the constant worry about personal liabilities hanging over their heads.
The implications of this new law are massive. Public companies listed on a national exchange, along with any corporation that chooses to embrace the rule, will benefit greatly. It’s all about fostering an atmosphere that inspires confidence. With ambitious reforms to reduce litigation risks for corporate leaders and ensure Texas law is applied consistently in internal governance disputes, the state is positioning itself as an innovative legal hub.
The bill also introduces some meaningful tweaks to how corporations interact with shareholders. Notably, limited partnerships can now entirely eliminate duties of loyalty, care, and good faith—provided their partnership agreements say so. This flexibility might give many companies the breathing room they need to operate more effectively.
On the shareholder side, SB 29 takes a firm stand against what many consider abusive litigation practices. For instance, individuals or groups who hold less than 3% of corporate stock will now face strict limits on initiating derivative proceedings against public companies or companies with more than 500 shareholders. Plus, if plaintiffs’ counsel only manages to secure amended disclosures to shareholders, they can’t recover attorney’s fees, no matter how they spin it.
Furthermore, the bill restricts how shareholders can request company books and records. Access to emails and internal communications is now limited unless it specifically pertains to a corporate action. This bodes well for companies wanting to maintain some level of privacy.
The latest legislative changes don’t stop there: corporations can now choose Texas courts as the exclusive venue for internal governance claims and even incorporate jury waiver provisions into their governing documents. All these alterations are laying the groundwork for a business-friendly environment that allows for more growth and resilience.
Support from the state legislature continues to grow, with additional measures to further expand the Texas Business Court’s jurisdiction expected to come along in due course. This ongoing enthusiasm for creating favorable business laws could mean that Texas becomes the go-to state for businesses looking to make their mark.
So, whether you’re already a corporation in Texas or thinking about starting a new venture, it seems the future is looking brighter than ever in the Lone Star State!
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