News Summary
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.
Exciting Changes for Texas Businesses Amid New Legislation in Austin
Texas is seeing significant changes in its business landscape following the signing of Senate Bill 29 (SB 29) by Governor Greg Abbott on May 14, 2025. This legislation aims to improve corporate governance and stimulate entrepreneurial opportunities throughout the state. With the legislative approval received on May 7, 2025, the bill is now effective immediately, ushering in a new era for businesses in Texas.
What’s in Store for Texas Companies?
SB 29 modifies various components of the Texas Business Organizations Code (TBOC) with the goal of making Texas a more appealing location for business operations. The legislation introduces multiple changes poised to transform the corporate framework across the region.
A key highlight of SB 29 is the formal adoption of the Business Judgment Rule. This provision provides protection to corporate directors from personal liability for decisions made in good faith and with reasonable care. Essentially, directors focused on the company’s best interests can make strategic choices without the looming threat of personal repercussions. This shift allows business leaders to prioritize effective management rather than being preoccupied with personal liability concerns.
Why Texas?
The implications of this legislation are far-reaching. Publicly traded companies and any corporations opting to adopt the rule will experience significant advantages. This law fosters an environment conducive to confidence and growth. The reforms aimed at reducing litigation risks for corporate executives and ensuring consistent application of Texas law in internal governance disputes are set to position Texas as a leading innovator in legal and business matters.
Your Lawsuit is Where?
Individuals looking to file lawsuits against public companies will find the process evolving under SB 29. Future legal actions involving public companies or disputes exceeding $5 million will now be directed to the newly established Texas Business Court. This specialized court will handle these specific cases, ensuring fairness and clarity in corporate litigation.
Changes That Help Corporations
The bill introduces important adjustments in the interactions between corporations and their shareholders. Notably, limited partnerships can choose to eliminate their obligations of loyalty, care, and good faith, should their partnership agreements allow for such changes. This flexibility may enable many companies to operate with increased efficiency.
On the shareholder front, SB 29 imposes stringent restrictions on what is viewed as abusive litigation practices. Individuals or groups holding less than 3% of a corporation’s stock will now face limitations on initiating derivative lawsuits against public companies or those with more than 500 shareholders. Additionally, if plaintiffs’ counsel only manages to obtain updated disclosures for shareholders, they will not be entitled to recover attorney’s fees.
Accessing Company Records Just Got Trickier
Furthermore, the bill enhances restrictions on shareholders seeking access to company records. Requests for emails and internal communications are now limited to matters directly related to corporate actions, reinforcing a corporation’s right to privacy.
A Bright Future for Texas Businesses
The changes introduced by SB 29 extend further: corporations can now designate Texas courts as the sole venue for internal governance claims and incorporate jury waiver provisions within their governing documents. These amendments are paving the way for a more business-friendly environment, encouraging growth and resilience in Texas’s economy.
Ongoing support from the legislature indicates that additional initiatives to broaden the jurisdiction of the Texas Business Court may be forthcoming. This proactive approach to enacting favorable business laws suggests Texas may soon emerge as the prime destination for businesses aiming to establish themselves in favorable conditions.
With these developments, whether existing corporations are looking to refine their operations or aspiring business owners are considering starting new ventures, the outlook for business in the Lone Star State has never been brighter.
Deeper Dive: News & Info About This Topic
- Nasdaq: Supports Texas Senate Bill 29
- Foley: Passage of Senate Bill 29
- KVUE: Texas Governor Abbott Signs Bills
- National Law Review: Texas Governor Signs New Business-Friendly Law
- GuruFocus: Nasdaq Applauds Signing of Senate Bill 29
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.
