During the week of May 19, 2025, the Texas Legislature approved amendments to the Texas Business Organizations Code through Senate Bills 1057 and 2411. These changes, set to take effect on September 1, 2025, introduce new thresholds for shareholder proposals and expand protections for corporate officers.
Senate Bill 1057 allows certain corporations to impose higher requirements for shareholder proposals. Specifically, it targets “nationally listed corporations,” defined as those with equity securities registered under Section 12(b) of the Securities Exchange Act of 1934 and listed on a national securities exchange. Corporations do not need to be incorporated in Texas to benefit from this provision. To submit a proposal requiring shareholder approval under these new rules, shareholders must hold shares worth at least $1 million or represent at least 3% of voting shares.
The legislation also mandates that any corporation adopting these provisions must amend its governing documents and notify shareholders accordingly. Proposals submitted by shareholders must meet specific ownership duration requirements and solicit a majority of voting power.
Senate Bill 2411 introduces exculpation for officers against monetary damages for acts performed in their official capacity unless involving breaches of loyalty or intentional misconduct. This bill aligns officer protections with those already available to directors under existing laws.
Additionally, SB 2411 streamlines processes related to mergers and major business transactions by allowing entities’ governing authorities more flexibility in approving corporate documents and appointing representatives with exclusive authority over post-transaction rights.
These legislative updates are part of an ongoing effort by Texas lawmakers to enhance the state’s appeal as a business-friendly jurisdiction while balancing stakeholder interests.
Texas businesses are encouraged to review organizational documents and compliance policies in light of these developments. Gibson Dunn’s legal team remains available for consultations regarding these changes.
“Texas entities and publicly traded companies in Texas should review their board training presentations and organizational documents,” stated Gibson Dunn’s lawyers Hillary Holmes, Gerry Spedale, Julia Lapitskaya, Ronald Mueller, and Jason Ferrari in their prepared update.
For further information or assistance regarding these legislative updates, contact Gibson Dunn’s lawyers specializing in Securities Regulation & Corporate Governance.
