31 March 2025
About Senate Bill No. 29
On February 27, 2025, Texas lawmakers introduced Senate Bill No. 29. This was created as a step towards making Texas an attractive state for businesses to incorporate. Texas is already an appealing state known for its business-friendly environment, low taxes, strong economy, and minimal regulatory hurdles. That being said, this bill aims to refine the Texas Business Organizations Code, which provides clearer guidelines on how courts evaluate corporate decision-making.
Senate Bill No. 29 introduces several major updates to Texas corporate law. Two of the most significant updates are the formal recognition of the business judgement rule and the establishment of ownership thresholds for derivative lawsuits. These reforms aim to provide businesses with more legal protections and clarity in corporate decision-making.
The business judgment rule is a legal principle that protects corporate directors from personal liability for decisions made in good faith and in the company’s best interest. The bill also shifts the burden of proof onto plaintiffs in fiduciary duty lawsuits, which reduces the risk of directors facing legal action over technical disputes.
Senate Bill No. 29 also introduces minimum ownership requirements for derivative lawsuits. These changes can prevent frivolous shareholder lawsuits by requiring minimum ownership levels before filing.
Senate Bill No. 29 includes additional measures that streamline corporate legal processes and reinforce Texas’s independent business law framework. Companies can designate the Texas Business Court, or another Texas court, as the venue for internal legal matters. Corporations can choose to waive jury trials for internal disputes, and Texas corporate laws should not be interpreted based on ruling from other states. In an attempt to prevent administrative delays, businesses correcting rejected filings can retain their original filing date. Finally, emails will not be considered corporate records, and record requests cannot be used as a substitute for formal legal discovery.
This bill introduces major legal reforms that could impact governance and litigation risks for Texas incorporated public companies. By strengthening legal protections for business leaders, streamlining dispute resolution, and giving companies more control over litigation, Texas is reinforcing its appeal as a top choice for incorporation.
At Begum Pelaez-Prada Business Law, we help companies navigate these changes, ensure compliance, advise governance structures, and mitigate legal risks. Our dedicated team is here to protect your business interests and position you for success in Texas’s evolving legal landscape. Reach out to learn more.
