AUSTIN – The Texas Legislature has passed Senate Bill 29 – legislation that seeks to unseat Delaware as the hub for corporate law.
On Feb. 27, Texas Senators Bryan Hughes, Brent Hagenbuch, Kelly Hancock and Charles Schwertner introduced SB 29, which relates to the formation, governance, and internal management of domestic entities.
A priority for Lt. Gov. Dan Patrick, SB 29 introduces a series of corporate reforms that seek to make Texas the preferred destination for corporate relocation and reincorporation by codifying the business judgment rule and allowing corporations to establish a minimum ownership threshold before a shareholder or group of shareholders can pursue a derivative claim.
Texans for Lawsuit Reform, along with the Texas Stock Exchange and Alliance for Corporate Excellence, praised the bill’s passage, releasing a statement that says SB 29 “puts the world on notice that Texas is open for business.”
“Notably, SB 29 will establish Texas as a meaningful alternative to legal incorporation in Delaware, whose law has ceased to be predictable and clear in light of growing activism by the Delaware courts and legal community,” the statement reads.
“This vital legislation will further solidify Texas as the nation’s leader in business and economic development – and will draw even more companies to Texas, empowering them to create jobs and continue the Texas Miracle.
SB 29 passed both chambers with overwhelming support and now heads to Gov. Greg Abbott's desk for signature.