News Summary
Texas has recently enacted Senate Bill 29, which brings significant changes to corporate governance in the state. Supported by Nasdaq, the legislation seeks to enhance predictability and flexibility in corporate decision-making, making Texas a strong contender in business. Key features include modifications to fiduciary duties in LLCs, the establishment of independent director committees, and a new ownership threshold for shareholders in derivative suits. This progressive legislation is aimed at fostering economic growth and attracting businesses to Texas.
Texas Enhances Corporate Governance with Senate Bill 29
On May 14, 2025, Texas Governor Greg Abbott officially signed Senate Bill 29 (SB 29) into law, a legislative move supported by Nasdaq that aims to enhance corporate governance and position Texas as a competitive business jurisdiction. This bill introduces significant changes to the state’s corporate law landscape, designed to attract businesses and create new job opportunities within the state.
Key Provisions of SB 29
One of the most critical components of SB 29 is the codification of the Business Judgment Rule, which facilitates greater predictability in corporate governance litigation. This legal principle protects board members’ decisions, granting them the freedom to make business choices without the fear of personal liability as long as those decisions are made in good faith and with reasonable care.
SB 29 also allows for the modification and potential elimination of fiduciary duties within Limited Liability Companies (LLCs) and limited partnerships. Furthermore, it promotes the establishment of independent director committees specifically tasked with reviewing transactions that may present a conflict of interest, thus enhancing transparency and accountability in corporate dealings.
Another significant change introduced by the legislation is the imposition of a 3% ownership threshold for shareholders who wish to bring derivative suits against public companies, which aims to reduce frivolous litigation. Additionally, the bill restricts shareholder access to electronic communications as part of requests regarding corporate books and records, thus curbing potential abuse of corporate governance procedures.
Nasdaq’s Growing Presence in Texas
Nasdaq’s endorsement of SB 29 comes alongside its recent establishment of a regional headquarters in Dallas, where it aims to augment its presence in Texas. The company reported generating over $750 million in revenues within the state and currently partners with over 800 local clients. The new Dallas office is expected to serve as a hub for clients operating in the Southeastern region of the United States.
By supporting SB 29, Nasdaq aims to foster a more favorable business climate in Texas, promoting the state as a competitor to Delaware, which is traditionally seen as the leading jurisdiction for corporate law and registration.
Broader Legislative Context
The passage of SB 29 aligns with other legislative efforts in Texas that focus on deregulation and tax exemptions for stock exchanges. Local leaders and policymakers have emphasized the importance of such innovative economic policies in driving growth and maintaining the state’s competitive edge in the business sector.
Senator Bryan Hughes, the bill’s author, characterized SB 29 as groundbreaking, highlighting its potential to catalyze economic expansion in Texas. Nasdaq’s Executive Vice Chairman commended local leaders for their proactive approach to enhancing the business environment, suggesting that SB 29 could set a new standard in corporate governance.
Conclusion
Texas’s adoption of Senate Bill 29 marks a significant step towards establishing a more robust regulatory framework that not only protects corporate executives but also encourages business innovation and growth. With the support of major players like Nasdaq, Texas continues to solidify its position as a preferred destination for corporate operations and a fertile ground for new enterprises and job creators.
Deeper Dive: News & Info About This Topic
- Foley: Passage of Senate Bill 29 Positions Texas as a Leading State for Incorporations
- Nasdaq: Nasdaq Supports Texas Senate Bill 29
- Norton Rose Fulbright: Senate Bill 29 on Track to Further Texas Push as Business Hub
- The Globe and Mail: Nasdaq Applauds Signing of Senate Bill 29
- Google Search: Texas Senate Bill 29
