News Summary
Texas has enacted two significant laws, Senate Bills 29 and 1057, aimed at enhancing the state’s business-friendly environment. These reforms provide legal protections for corporate directors, streamline shareholder lawsuits, and introduce minimum ownership requirements for shareholders proposing changes. As Texas positions itself as an attractive destination for corporations, business leaders express optimism about potential job creation and economic growth.
AUSTIN, TEXAS – Governor Greg Abbott recently signed two significant pieces of legislation aimed at enhancing Texas’s reputation as a business-friendly state. Senate Bill 29 (S.B. 29), enacted on May 14, 2025, and Senate Bill 1057 (S.B. 1057), passed on May 19, 2025, both make critical amendments to the Texas Business Organizations Code (TBOC) to encourage corporations to establish and grow in Texas.
S.B. 29 introduces a new section, 21.419, which codifies the business judgment rule. This provision boosts legal protections for corporate directors and officers, shielding them from shareholder lawsuits unless claimants can prove wrongdoing. The law applies automatically to public corporations, while private firms can opt in via their governing documents.
Under the new provisions of S.B. 29, directors and officers are presumed to act in good faith and in the best interests of the corporation, significantly altering the liability landscape. In addition, the legislation reformulates rules regarding conflict of interest transactions, empowering boards to create independent committees for approval.
A notable change introduced in S.B. 29 is the establishment of a minimum ownership threshold, permitting companies to set a requirement of up to 3% of outstanding shares for shareholders wishing to initiate derivative lawsuits. Furthermore, shareholders may face restrictions regarding demands for corporate records if such requests are connected to ongoing derivative proceedings.
The law also specifies that communications such as emails, texts, and messages on social media will not be subject to records demands unless they result in formal corporate actions. It clarifies that any additional disclosures made to shareholders will not constitute grounds for reimbursement of litigation costs, thereby limiting potential legal disputes.
Moreover, companies can now waive the right to a jury trial for internal disputes and designate Texas courts as the exclusive venue for these cases. S.B. 29 also simplifies corporate governance by eliminating separate class and series voting requirements that previously complicated voting structures.
In addition to S.B. 29, S.B. 1057 allows public companies with connections to Texas to implement minimum ownership standards for shareholders pursuing proposals. This serves the dual purpose of protecting corporate interests while also encouraging active engagement from shareholders.
The introduction of these legislative changes is designed to promote the formation of new corporate entities within Texas and attract existing companies from more traditional corporate environments, like Delaware. Proponents of the bills highlight them as part of a broader strategy to cement Texas’s status as an attractive location for businesses and investment opportunities.
Governor Abbott has characterized Texas as the “reigning and undisputed champion for doing business,” highlighting a persistent push within the state government to foster corporate growth and attract new investments. Business leaders have expressed optimism about the laws, forecasting potential for increased job creation and additional capital inflow into the state.
As these changes take effect, legislative representatives and business authorities will be closely monitoring their impact on Texas’s economy and corporate landscape. By lowering the barriers for corporate operations and reducing potential litigation risks, Texas aims to solidify its competitive edge in the national and global markets.
Deeper Dive: News & Info About This Topic
- Semafor: Texas Business Law Overhaul
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- Encyclopedia Britannica: Law
- KVUE: Texas Governor Signs Business Bills
