Texas Corporate Law Changes Challenge Delaware’s Dominance
What You Need To Know The Texas Legislature has adopted Senate Bill No. 29 (SB 29) and Senate Bill No. 1057 (SB 1057), which provide for significant amendments to the Texas Business Organizations Code and are intended to make Texas the preferred state for incorporation. The amendments reflected in SB 29 would, among other things, […]
Posted by David Bell, Dean Kristy, and Ran Ben-Tzur, Fenwick & West LLP, on Wednesday, May 21, 2025
Editor's Note:
David Bell, Dean Kristy, and Ran Ben-Tzu are Partners at Fenwick & West LLP. This post is based on a Fenwick memorandum by Mr. Bell, Mr. Kristy, Mr. Ben-Tzur, and Wendy Grasso, and is part of the Delaware law series; links to other posts in the series are available here.
What You Need To Know
- The Texas Legislature has adopted Senate Bill No. 29 (SB 29) and Senate Bill No. 1057 (SB 1057), which provide for significant amendments to the Texas Business Organizations Code and are intended to make Texas the preferred state for incorporation.
- The amendments reflected in SB 29 would, among other things, codify the business judgment rule and the specific requirements for rebutting the business judgment rule presumption, allow corporations to impose a minimum beneficial ownership requirement on shareholders desiring to bring a derivative action against a corporation, allow corporations to waive jury trials in their governance documents, and restrict books and records requests.
- The amendments were adopted by a supermajority in both chambers of the Texas legislature and will become effective immediately upon the Governor’s signature.
- The amendments reflected in SB 1057 would permit certain Texas-based corporations to impose stock ownership requirements on shareholders seeking to submit proposals to the corporation. This bill has also been sent to the governor for signature and if approved will become effective September 1, 2025.
Delaware has long been the jurisdiction of choice for corporations, but certain recent controversial judicial decisions have resulted in a number of high-profile companies reincorporating (or considering reincorporation) into other states—and new legislation out of Texas aims to get a piece of the action.
