On May 14, 2025, Gov. Greg Abbott (R-TX) signed Texas Senate Bill 29 (SB29) into law. This legislation introduces notable amendments to the Texas Business Organizations Code (TBOC) and is part of a broader strategy to encourage more businesses to incorporate'or re-incorporate'in Texas.
SB29 seeks to provide clarity and predictability to companies doing business under the TBOC. Among its key provisions are the codification of important corporate doctrines, such as the business judgment rule, and the creation of a mechanism allowing companies to have their directors' independence determined in advance of a transaction. The law is effective immediately and is expected to influence how public companies incorporated in Texas manage corporate transactions and fiduciary duties.
Complementing this legislative initiative, Texas also launched the new Texas Business Court on September 1, 2024. These specialized courts, staffed by judges with expertise in complex commercial matters, represent a significant step toward building a robust business law infrastructure in the state. While Texas's business courts are still in the early stages of developing their own body of precedent under the TBOC, they offer an opportunity for litigants to help shape emerging interpretations of Texas corporate law.
This initiative comes at a time when corporate governance trends are evolving across the United States. Notably, recent high-profile decisions from the Delaware Court of Chancery have stirred debate around the role of judicial oversight in corporate transactions. For example, in Tornetta v. Musk, 310 A.3d 430 (Del. Ch. 2024), the court applied heightened entire fairness scrutiny to invalidate a $56 billion compensation package approved for Elon Musk. Similarly, In re Match Group Inc. Derivative Litig., 315 A.3d 446 (Del. 2024), extended entire fairness scrutiny to transactions involving controlling shareholders. In response to criticism of such scrutiny, the Delaware General Assembly recently enacted statutory amendments that offer management-friendly safe harbors for transactions involving interested directors, officers or controlling stockholders'so long as certain cleansing mechanisms are met. These changes aim to provide greater legal certainty to Delaware corporations.
Similarly, SB29 and the creation of the Texas Business Court reflect Texas's broader initiative to offer a compelling legal environment for businesses'one that attempts to emphasize front-end...
