Texas Senate Bill SB1056

Texas 2025 - 89th Regular

• Filed: 2/3/25

Caption

Relating to a presumption of good faith for directors and officers of certain domestic corporations.

Impact

The implication of this bill is substantial, as it shields directors and officers from personal liability as long as their actions are presumed to be in good faith, informed, and aligned with the corporation's interests. This could lead to a more favorable operating environment for corporate leaders, encouraging them to make decisions without the constant fear of personal repercussions unless they breach specific fiduciary duties. By outlining distinct criteria for personal liability, SB1056 seeks to promote fair practices within corporate governance.

Summary

SB1056 introduces a presumption of good faith for directors and officers of certain domestic corporations in Texas. This presumption applies specifically to corporations that are formed under Texas law, have equity securities registered under the Securities Exchange Act of 1934, and are actively listed on a national securities exchange. The bill aims to provide clarity in corporate governance by establishing a legal standard that enhances protections for directors and officers acting in the interests of their corporation.

Contention

One of the notable points of contention surrounding SB1056 could arise from concerns regarding accountability. Critics may argue that providing such broad protections could inadvertently shield directors and officers from necessary scrutiny and responsibility for their actions. Specific provisions in the bill require a party alleging misconduct to state with particularity the circumstances surrounding their claims, which could be viewed as both a protection for corporate leaders and a potential barrier for shareholders or other stakeholders seeking recourse in cases of genuine misconduct.

Texas Constitutional Statutes Affected

Business Organizations Code

• Chapter 21. For-profit Corporations
  • Section: New Section

Government Code

• Chapter 4005. Exemptions
  • Section: New Section