News Summary
Texas Governor Greg Abbott has signed Senate Bill 29 into law, amending the Texas Business Organizations Code to enhance legal protections and reduce litigation risks for businesses. Key features include the introduction of the Business Judgment Rule, limitations on shareholder litigation, and the establishment of the Texas Business Court to address larger corporate disputes. The legislation aims to position Texas as a favorable hub for business operations, providing clearer governance structures and increased legal certainty. These reforms are expected to attract corporations seeking a business-friendly environment.
Big Changes in Texas Business Laws: Governor Abbott Signs Senate Bill 29
Texas Governor Greg Abbott has signed Senate Bill 29 into law, marking a crucial shift in the state’s business regulations. The bill, which passed through the Texas Legislature on May 7, 2025, is designed to make Texas a more competitive environment for businesses looking to establish and operate within the state.
Overview of Senate Bill 29
Senate Bill 29 amends various provisions of the Texas Business Organizations Code (TBOC). The primary goals of the legislation include enhancing legal certainty for businesses, decreasing litigation risks for corporate officers, and ensuring that Texas law applies to internal disputes among corporations operating in the state.
New Protections for Corporate Leaders
A significant highlight of the bill is the implementation of the Business Judgment Rule. This new provision offers legal protection to corporate directors, shielding them from personal liability provided they act in good faith and prioritize the interests of the corporation. This safeguard extends beyond publicly traded companies to all corporations that opt to utilize it, reinforcing responsible corporate governance.
Establishment of the Texas Business Court
The legislation also introduces the Texas Business Court, which will handle legal disputes for larger corporations, particularly those involving public companies or controversies valued at more than $5 million. This dedicated court aims to create a more efficient pathway for resolving business-related conflicts, ultimately making the legal process less intimidating for involved parties.
Regulations on Shareholder Litigation
Senate Bill 29 places limits on shareholder litigation by stipulating that only those holding more than 3% of corporate stock can initiate derivative lawsuits against public companies. This restriction is expected to reduce baseless lawsuits and minimize potential litigation abuse. Additionally, the legislation prevents plaintiffs’ attorneys from recovering fees in derivative cases that yield minimal enhancements in shareholder transparency.
Changes for Partnerships
The bill also offers new flexibility to limited partnerships by allowing them to eliminate obligations of loyalty, care, and good faith within their partnership agreements. This change can facilitate diverse operational strategies for partners and foster a more dynamic business environment.
Enhancements for Internal Governance
Among the additional provisions, the bill allows corporations to establish committees of independent directors to govern transactions involving insiders. This initiative aims to add an extra layer of security for businesses and will also fall under the jurisdiction of the Texas Business Court, further emphasizing the law’s commitment to clarity in corporate governance.
Future Legislative Measures
Looking ahead, Texas lawmakers are preparing to introduce further legislation that will expand the reach of the Texas Business Court. The intent is to build on the foundational reforms established by Senate Bill 29, enhancing Texas’ appeal as a business-friendly state, particularly in comparison to historically dominant jurisdictions like Delaware.
Conclusion on Senate Bill 29’s Impact
The passage of Senate Bill 29 has the potential to significantly reshape corporate operations in Texas, particularly for public companies. By focusing on streamlined resolutions, diminishing risks of litigation, and boosting legal protections for corporate leaders, Texas is positioning itself to attract more businesses and establish itself as a key player in the corporate landscape.
Deeper Dive: News & Info About This Topic
- Foley: Newly Filed Legislation Positions Texas as Leading State for Incorporations
- Norton Rose Fulbright: Senate Bill 29 on Track to Further Texas Push as Business Hub
- National Law Review: Texas Governor Signs New Business-Friendly Governance Law
- Business Insider: Texas Bills Are Big Wins for Business and Activist Investors
- Wikipedia: Texas Business Organizations Code
Author: STAFF HERE AUSTIN WRITER
The AUSTIN STAFF WRITER represents the experienced team at HEREAustinTX.com, your go-to source for actionable local news and information in Austin, Travis County, and beyond. Specializing in "news you can use," we cover essential topics like product reviews for personal and business needs, local business directories, politics, real estate trends, neighborhood insights, and state news affecting the area—with deep expertise drawn from years of dedicated reporting and strong community input, including local press releases and business updates. We deliver top reporting on high-value events such as SXSW, Austin City Limits Music Festival, Formula 1 United States Grand Prix, and the Austin Film Festival. Our coverage extends to key organizations like the Greater Austin Chamber of Commerce and Visit Austin, plus leading businesses in technology, automotive, and retail that power the local economy such as Dell Technologies, Tesla, and Apple. As part of the broader HERE network, including HERECollegeStation.com, HEREDallas.com, HEREHouston.com, and HERESanAntonio.com, we provide comprehensive, credible insights into Texas's dynamic landscape.
