News Summary
Texas has recently enacted Senate Bill 29, which brings significant changes to corporate governance in the state. Supported by Nasdaq, the legislation seeks to enhance predictability and flexibility in corporate decision-making, making Texas a strong contender in business. Key features include modifications to fiduciary duties in LLCs, the establishment of independent director committees, and a new ownership threshold for shareholders in derivative suits. This progressive legislation is aimed at fostering economic growth and attracting businesses to Texas.
Texas has recently taken significant steps to enhance its corporate governance framework, following the signing of Senate Bill 29 (SB 29) into law by Governor Greg Abbott on May 14, 2025. This new legislation has garnered support from Nasdaq, which sees the bill as a vital move to promote Texas as a competitive business jurisdiction.
SB 29 represents a critical development in corporate governance as it codifies the Business Judgment Rule. This legal standard allows corporate directors to make business decisions without the fear of personal liability, encouraging sound and entrepreneurial decision-making. Furthermore, the enactment of this rule aims to provide predictability in corporate governance litigation, which is expected to foster a more stable environment for businesses operating in Texas.
Nasdaq’s Executive Vice Chairman has praised the legislation as a milestone for corporate governance in the state. The company has been increasing its footprint in Texas, following the opening of a new regional headquarters in Dallas, which serves as a comprehensive hub for clients in the Southeastern region of the United States. Nasdaq generates over $750 million in revenues from its operations in Texas and partners with more than 800 local clients.
SB 29 is designed not only to fortify corporate governance but also to attract businesses and job creators to Texas. The legislation provides clear governance principles that could entice organizations seeking a friendly business environment. One of the key provisions allows for the modification and elimination of fiduciary duties within Limited Liability Companies (LLCs) and limited partnerships. This flexibility seeks to reduce regulatory burdens that new and existing businesses face.
Additionally, the bill encourages the establishment of independent director committees, specifically aimed at reviewing conflicted transactions. Another significant aspect of SB 29 introduces a 3% ownership threshold for shareholders wishing to bring derivative suits against public companies, aiming to limit frivolous lawsuits that could hinder corporate operations.
Furthermore, SB 29 tightens regulations around shareholder access to electronic communications as part of books and records requests. This move is designed to bolster corporate privacy and ensure that businesses can operate more freely without excessive intrusion from outside parties.
The passage of SB 29 coincides with the broader trend of deregulation and economic incentivization in Texas. Alongside the corporate governance bill, the State Legislature has also implemented measures aimed at business deregulation and providing tax exemptions for stock exchanges. Collectively, these legislative actions are intended to position Texas as a competitive alternative to Delaware, historically the go-to state for corporate law and registration. Lawmakers have expressed confidence that such initiatives will drive economic growth in the state.
Senator Bryan Hughes, the author of SB 29, characterized the bill as groundbreaking, indicating that it is essential for the ongoing economic development of Texas. The legislature’s commitment to fostering an innovative economic framework is evident in the recent legislative efforts aimed at simplifying various business processes and enhancing Texas’s appeal to entrepreneurs and investors alike.
As Nasdaq aligns its mission of promoting accessible capital markets with the objectives of SB 29, the collaborative efforts between the state and businesses are expected to yield significant benefits. The bill serves as a decisive step towards transforming Texas into a more attractive location for major corporations and startups with ambitions for growth.
As corporate laws continue to evolve, Texas is making headlines for championing an environment where businesses can thrive, ensuring that the state remains competitive on the national and global stage.
Deeper Dive: News & Info About This Topic
- Foley: Passage of Senate Bill 29 Positions Texas as a Leading State for Incorporations
- Nasdaq: Nasdaq Supports Texas Senate Bill 29
- Norton Rose Fulbright: Senate Bill 29 on Track to Further Texas Push as Business Hub
- The Globe and Mail: Nasdaq Applauds Signing of Senate Bill 29
- Google Search: Texas Senate Bill 29
