Austin, Texas — The 2025 Texas legislative session has ushered in significant changes to corporate governance laws, resulting in a slew of amendments that will affect corporations across the state, including bank holding companies and various subsidiaries. Many of these modifications to the Texas Business Organizations Code (TBOC) took effect immediately, while others are set to be implemented on September 1, 2025.

Three pivotal bills recently passed by lawmakers—the Senate Bill 29, Senate Bill 1057, and Senate Bill 2411—represent the most critical modifications to the state’s corporate law landscape. As a result, Texas entities could find it necessary to update their governing documents, including certificates of formation and bylaws, to ensure compliance and to take advantage of the new provisions. This is especially relevant for bank holding companies and national banks that have opted to abide by Texas law.

Senate Bill 29, described as a landmark reform, provides important protections for officers and directors of Texas corporations. Upon signing into law by Governor Greg Abbott, the bill established a presumption that these officials acted in good faith and within the law, provided they make decisions in line with the corporation’s best interests. This provision, encapsulated in a new section of the TBOC, effectively codifies the “business judgment rule,” shielding directors and officers from liability unless proven otherwise in cases involving fraud or intentional misconduct.

Entities who consider adopting Section 21.419 of the TBOC are advised to deliberate thoroughly. Amending governing documents may offer critical protections to corporate officials but could also raise questions about the ramifications of insulating officers from potential negligence.

Additionally, the new provisions permit Texas corporations to waive jury trials for internal claims. While entities can now include such waivers in their governing documents, concerns persist regarding the enforceability of such clauses in light of the Texas Constitution’s guarantees related to jury trials.

Another key provision allows entities to designate an exclusive forum for internal claims, with many banks already having such measures in their bylaws. The recent amendment specifically enables the Texas Business Court to be the designated venue for these claims, encouraging affected entities to review and amend their bylaws accordingly.

Senate Bill 1057, set to become effective on September 1, 2025, introduces restrictions on shareholder proposals for publicly traded corporations. To submit a proposal, a shareholder or group must hold either at least $1 million worth of shares or 3% of the voting shares for a minimum of six months. Notably, the amendment does not place restrictions on director nominations, allowing a more robust process for board participation.

Corporations opting into these new provisions must inform shareholders and include relevant information in proxy statements, but shareholder approval for the amendments is not mandated. This side-steps the need for broader consent while enabling companies to streamline their governance processes.

Senate Bill 2411 will also take effect in September 2025, bringing additional changes to corporate governance with a focus on aligning Texas laws more closely with updates in the Model Business Corporation Act. This bill permits companies to protect their officers from monetary liabilities under certain conditions, a shift that boards of directors will need to evaluate carefully.

The new amendments necessitate a thoughtful approach by Texas entities, especially financial institutions, as they navigate these legislative changes. Boards must weigh the benefits of new governance provisions against potential risks, ensuring compliance while safeguarding shareholder interests.

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