Texas Senate Bill SB1568

Texas 2011 - 82nd Regular

• Introduced: 3/11/11
• Out of Senate Committee: 4/13/11
• Voted on by Senate: 4/18/11
• Refer: 3/23/11
• Out of House Committee: 5/2/11
• Report Pass: 4/13/11
• Voted on by House: 5/5/11
• Engrossed: 4/18/11
• Governor Action: 5/19/11
• Refer: 4/26/11
• Report Pass: 4/28/11
• Enrolled: 5/6/11
• Passed: 5/19/11

Caption

Relating to shareholder standing after a merger.

Impact

The implementation of SB1568 would significantly impact state laws concerning corporate governance, particularly with respect to derivative suits. By safeguarding shareholder rights post-merger, the bill aims to prevent corporations from circumventing shareholder accountability through strategic mergers. This is expected to bolster shareholder confidence and potentially mitigate any adverse effects resulting from hostile takeovers or poorly advised mergers that could jeopardize their interests.

Summary

SB1568 aims to clarify the standing of shareholders to bring derivative proceedings after a corporation undergoes a merger. Specifically, the bill amends Section 21.552 of the Texas Business Organizations Code to ensure that shareholders retain their right to sue on behalf of the corporation even after the corporation has merged, addressing concerns that post-merger conditions could strip shareholders of their ability to act on behalf of their corporation. This change seeks to enhance shareholder protections during corporate transitions, promoting accountability and transparency in corporate governance.

Contention

While proponents of SB1568 likely see it as a necessary reform to boost shareholder rights and corporate accountability, there may be opposition from corporate entities that view such amendments as burdensome. Critics might argue that the bill introduces complexities into the merger process and could deter businesses from pursuing beneficial mergers if they are apprehensive about potential derivative suits from disgruntled shareholders. As such, the balance between protecting shareholder interests and fostering a conducive environment for corporate growth is at the center of the discussion surrounding this bill.