Senate Bill 29 (SB 29)
Texas legislation effective May 14, 2025 that reworked the Business Organizations Code's governance and shareholder litigation rules. It created statutory presumptions protecting directors and officers, allowed jury trial waivers in governing documents, let a corporation set a derivative standing threshold of up to three percent, and narrowed books and records inspection. Several of its changes reach only exchange-listed entities or corporations that opt in.
Senate Bill 29 amended the governance and shareholder litigation provisions of the Business Organizations Code. It passed the 89th Legislature in 2025 and took effect immediately on May 14, 2025, having received the two-thirds vote of each house required for immediate effect. It is carried at Acts 2025, 89th Leg., R.S., ch. 21, and it touched roughly two dozen sections of the Business Organizations Code.
What it actually does
Four changes carry most of the weight. First, new Section 21.419 establishes statutory presumptions that a director or officer acted in good faith, on an informed basis, in furtherance of the corporation's interests, and in obedience to the law and the corporation's governing documents. To reach a director or officer, a claimant must rebut one of those presumptions and then prove both a breach of duty and that the breach involved fraud, intentional misconduct, an ultra vires act, or a knowing violation of law. Subsection (f) requires those allegations to be pleaded with particularity. Parallel provisions sit at Section 101.256 for limited liability companies and Section 153.163 for limited partnerships.
Second, new Section 2.116 permits governing documents to contain a waiver of the right to a jury trial for internal entity claims, and makes that waiver enforceable whether or not the document was signed by the members, owners, officers or governing persons. A person is deemed to have knowingly waived by voting for or ratifying the document, or by acquiring equity, or by continuing to hold equity of an exchange-listed entity after the waiver was in place.
Third, amended Section 21.552(a)(3) lets a corporation fix a minimum ownership threshold for derivative standing in its certificate of formation or bylaws, capped at three percent of outstanding shares. Section 21.551(2) allows shareholders acting in concert to aggregate their holdings to meet it.
Fourth, amended Section 21.218 removes emails, text messages and similar electronic communications from the records subject to shareholder inspection unless they effectuate an action by the corporation. For listed and opted-in corporations, subsection (b-2) also lets the corporation treat a demand tied to a pending or expected derivative suit, or to a lawsuit in which the corporation and the holder are adverse, as lacking a proper purpose. Subsection (b-3) preserves the holder's discovery rights in that litigation and the right to seek a court order under subsection (c).
Who it applies to
This is where secondhand summaries go wrong. Section 21.419 does not apply to every Texas corporation. It reaches only a corporation with a class or series of voting shares listed on a national securities exchange, or a corporation that has put a statement in its governing documents affirmatively electing to be governed by the section. The entity analogues are narrower still. Section 101.256 applies only to an LLC with listed voting membership interests, and Section 152.006(a) limits Section 153.163 to a partnership with listed interests. Neither section applies to a private company automatically. Each lets a private LLC or partnership adopt a provision in its company agreement or partnership agreement that duplicates the section's effect.
The derivative threshold has a second gate. It applies to a corporation with common shares listed on a national securities exchange, or one that elected into Section 21.419 and has 500 or more shareholders. And three percent is a ceiling, not a default. A corporation that never amends its certificate of formation or bylaws to adopt a threshold has no threshold at all.
What it did not change
SB 29 did not create the Texas exclusive forum provision. That authority arrived in 2021 through Section 2.115, which already let governing documents require internal entity claims to be brought only in a Texas court. SB 29 amended subsection (b) to add express authority to name one or more Texas courts as the exclusive forum and venue for those claims.
It also did not codify a business judgment rule for closely held Texas companies. A family corporation gets nothing from Section 21.419 unless it opts in, and an unlisted LLC gets the Section 101.256 presumptions only by writing equivalent terms into its company agreement. For those entities the older common law and the interested transaction safe harbor in Section 21.418 still do the work.