Texas 2025 - 89th Regular

Texas Senate Bill SB29 Compare Versions

Version 1 (Old)

Version 2 (New)

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1		-	By: Hughes, et al. S.B. No. 29
2		-
3		-
	1	+	By: Hughes, Hagenbuch S.B. No. 29
	2	+	(In the Senate - Filed February 27, 2025; February 28, 2025,
	3	+	read first time and referred to Committee on State Affairs;
	4	+	March 31, 2025, reported adversely, with favorable Committee
	5	+	Substitute by the following vote: Yeas 10, Nays 0; March 31, 2025,
	6	+	sent to printer.)
	7	+	Click here to see the committee vote
	8	+	COMMITTEE SUBSTITUTE FOR S.B. No. 29 By: Hall
4	9
5	10
6	11		A BILL TO BE ENTITLED
7	12		AN ACT
8	13		relating to business entities.
9	14		BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
10	15		SECTION 1. Section 1.002(55-a), Business Organizations
11	16		Code, is amended to read as follows:
12	17		(55-a) "National securities exchange" means:
13	18		(A) an exchange registered as a national
14	19		securities exchange under Section 6, Securities Exchange Act of
15	20		1934 (15 U.S.C. Section 78f); or
16	21		(B) a stock exchange that:
17	22		(i) has its principal office in this state;
18	23		and
19	24		(ii) has received approval by the
20	25		securities commissioner under Subchapter C, Chapter 4005,
21	26		Government Code.
22	27		SECTION 2. Subchapter B, Chapter 1, Business Organizations
23	28		Code, is amended by adding Section 1.056 to read as follows:
24	29		Sec. 1.056. LAWS GOVERNING FORMATION, INTERNAL AFFAIRS, AND
25	30		GOVERNANCE OF DOMESTIC ENTITY. (a) The plain meaning of the text
26	31		of this code may not be supplanted, contravened, or modified by the
27	32		laws or judicial decisions of any other state.
28	33		(b) The managerial officials of a domestic entity, in
29	34		exercising their powers with respect to the domestic entity, may
30	35		consider the laws and judicial decisions of other states and the
31	36		practices observed by entities formed in those other states. The
32	37		failure or refusal of a managerial official to consider, or to
33	38		conform the exercise of the managerial official's powers to, the
34	39		laws, judicial decisions, or practices of another state does not
35	40		constitute or imply a breach of this code or of any duty existing
36	41		under the laws of this state.
37	42		SECTION 3. Section 2.115(b), Business Organizations Code,
38	43		is amended to read as follows:
39	44		(b) The governing documents of a domestic entity [may
40	45		require], consistent with applicable state and federal
41	46		jurisdictional requirements, may require:
42	47		(1) that any internal entity claims shall be brought
43	48		only in a court in this state; and
44	49		(2) that one or more courts in this state having
45	50		jurisdiction shall serve as the exclusive forum and venue for any
46	51		internal entity claims.
47	52		SECTION 4. Subchapter B, Chapter 2, Business Organizations
48	53		Code, is amended by adding Section 2.116 to read as follows:
49	54		Sec. 2.116. WAIVER OF TRIAL BY JURY. (a) In this section,
50	55		"internal entity claim" has the meaning assigned by Section 2.115.
51	56		(b) The governing documents of a domestic entity may contain
52	57		a waiver of the right to a jury trial concerning any internal entity
53	58		claim.
54	59		(c) In a lawsuit asserting an internal entity claim, a
55	60		waiver of the right to a jury trial contained in the governing
56	61		documents of a domestic entity is enforceable, regardless of
57	62		whether the applicable governing document is signed by the members,
58	63		owners, officers, or governing persons.
59	64		(d) A person asserting an internal entity claim is
60	65		considered to have been informed of the waiver of the right to a
61	66		jury trial contained in the governing documents and to have
62	67		knowingly waived the right in the action if the person:
63	68		(1) voted for or affirmatively ratified the governing
64	69		document containing the waiver; or
65	70		(2) acquired an equity security of the domestic entity
66	71		or any predecessor to the entity at, or continued to hold an equity
67	72		security of a domestic entity that has one or more classes of equity
68	73		securities listed on a national securities exchange after, a time
69	74		at which the waiver was included in the governing documents.
70	75		(e) Nothing in this section prevents an entity from showing
71	76		that a person asserting an internal entity claim knowingly and
72	77		informedly waived the right to a jury trial by any evidence
73	78		satisfactory to the court having jurisdiction, including by the
74	79		person's consent or acquiescence to the waiver contained in the
75	80		governing documents.
76	81		SECTION 5. Section 21.218, Business Organizations Code, is
77	82		amended by amending Subsection (b) and adding Subsections (b-2) and
78	83		(b-3) to read as follows:
79	84		(b) On written demand stating a proper purpose, a holder of
80	85		shares of a corporation for at least six months immediately
81	86		preceding the holder's demand, or a holder of at least five percent
82	87		of all of the outstanding shares of a corporation, is entitled to
83	88		examine and copy, at a reasonable time at the corporation's
84	89		principal place of business or other location approved by the
85	90		corporation and the holder, the corporation's books, records of
86	91		account, minutes, share transfer records, and other records,
87	92		whether in written or other tangible form, if the records are
88	93		[record is] reasonably related to and appropriate to examine and
89	94		copy for that proper purpose. For purposes of this subsection, the
90	95		records of the corporation shall not include e-mails, text messages
91	96		or similar electronic communications, or information from social
92	97		media accounts unless the particular e-mail, communication, or
93	98		social media information effectuates an action by the corporation.
94	99		(b-2) This subsection applies only to a corporation that has
95	100		a class or series of voting shares listed on a national securities
96	101		exchange or that has made an affirmative election to be governed by
97	102		Section 21.419. For purposes of Subsection (b), a written demand
98	103		shall not be for a proper purpose if the corporation reasonably
99	104		determines that the demand is in connection with:
100	105		(1) an active or pending derivative proceeding in the
101	106		right of the corporation under Subchapter L that is or is expected
102	107		to be instituted or maintained by the holder or the holder's
103	108		affiliate; or
104	109		(2) an active or pending civil lawsuit to which the
105	110		corporation, or its affiliate, and the holder, or the holder's
106	111		affiliate, are or are expected to be adversarial named parties.
107	112		(b-3) Subsection (b-2) does not impair any rights of:
108	113		(1) the holder or the holder's affiliate to obtain
109	114		discovery of records from the corporation in:
110	115		(A) a civil lawsuit described by Subsection
111	116		(b-2)(2); or
112	117		(B) the derivative proceeding subject to Section
113	118		21.556; or
114	119		(2) the holder to obtain a court order to compel
115	120		production of records of the corporation for examination by the
116	121		holder as provided by Subsection (c).
117	122		SECTION 6. Section 21.364, Business Organizations Code, is
118	123		amended by amending Subsections (d) and (e) and adding Subsection
119	124		(e-1) to read as follows:
120	125		(d) Unless an amendment to the certificate of formation is
121	126		undertaken by the board of directors under Section 21.155, separate
122	127		voting by a class or series of shares of a corporation is required
123	128		for approval of an amendment to the certificate of formation that
124	129		would result in:
125	130		(1) the increase or decrease of the aggregate number
126	131		of authorized shares of the class or series, except that the number
127	132		of authorized shares of any class or series may be increased or
128	133		decreased, but not below the number of shares of the class or series
129	134		then outstanding, by the affirmative vote of the holders of a
130	135		majority of the stock of the corporation entitled to vote, as
131	136		provided by:
132	137		(A) the certificate of formation; or
133	138		(B) an amendment of the certificate of formation
134	139		that:
135	140		(i) authorized the shares of the class or
136	141		series;
137	142		(ii) was adopted before the issuance of any
138	143		shares of the class or series; or
139	144		(iii) was authorized by one or more
140	145		resolutions adopted by the affirmative vote of the holders of a
141	146		majority of the shares of the class or series;
142	147		(2) the increase or decrease of the par value of the
143	148		shares of the class or series, including changing shares with par
144	149		value into shares without par value or changing shares without par
145	150		value into shares with par value;
146	151		(3) effecting an exchange, reclassification, or
147	152		cancellation of all or part of the shares of the class or series;
148	153		(4) effecting an exchange or creating a right of
149	154		exchange of all or part of the shares of another class or series
150	155		into the shares of the class or series;
151	156		(5) the change of the designations, preferences,
152	157		limitations, or relative rights of the shares of the class or
153	158		series;
154	159		(6) the change of the shares of the class or series,
155	160		with or without par value, into the same or a different number of
156	161		shares, with or without par value, of the same class or series or
157	162		another class or series;
158	163		(7) the creation of a new class or series of shares
159	164		with rights and preferences equal, prior, or superior to the shares
160	165		of the class or series;
161	166		(8) increasing the rights and preferences of a class
162	167		or series with rights and preferences equal, prior, or superior to
163	168		the shares of the class or series;
164	169		(9) increasing the rights and preferences of a class
165	170		or series with rights or preferences later or inferior to the shares
166	171		of the class or series in such a manner that the rights or
167	172		preferences will be equal, prior, or superior to the shares of the
168	173		class or series;
169	174		(10) dividing the shares of the class into series and
170	175		setting and determining the designation of the series and the
171	176		variations in the relative rights and preferences between the
172	177		shares of the series;
173	178		(11) the limitation or denial of existing preemptive
174	179		rights or cumulative voting rights of the shares of the class or
175	180		series;
176	181		(12) canceling or otherwise affecting the dividends on
177	182		the shares of the class or series that have accrued but have not
178	183		been declared; or
179	184		(13) the inclusion or deletion from the certificate of
180	185		formation of provisions required or permitted to be included in the
181	186		certificate of formation of a close corporation under Subchapter O.
182	187		(e) Except as provided by Subsection (e-1), the [The] vote
183	188		required under Subsection (d) by a class or series of shares of a
184	189		corporation is required notwithstanding that shares of that class
185	190		or series do not otherwise have a right to vote under the
186	191		certificate of formation.
187	192		(e-1) If the certificate of formation provides that any vote
188	193		required by Subsection (d) shall be as a single class and without
189	194		separate voting by class or series, then shares of a class or series
190	195		that do not otherwise have a right to vote under the certificate of
191	196		formation shall be treated as having no votes in the vote as a
192	197		single class.
193	198		SECTION 7. Section 21.365(b), Business Organizations Code,
194	199		is amended to read as follows:
195	200		(b) With respect to a matter for which the affirmative vote
196	201		of the holders of a specified portion of the shares of a class or
197	202		series is required by this code, the certificate of formation may
198	203		provide that:
199	204		(1) the affirmative vote of the holders of a specified
200	205		portion, but not less than the majority, of the shares of that class
201	206		or series is required for action of the holders of shares of that
202	207		class or series on that matter; and
203	208		(2) notwithstanding any other provision of this code,
204	209		all classes or series of stock shall only be entitled to vote as a
205	210		single class or series, and separate voting by class or series is
206	211		not required, for the purpose of approving any matter, including in
207	212		connection with any fundamental action or fundamental business
208	213		transaction.
209	214		SECTION 8. Section 21.416, Business Organizations Code, is
210	215		amended by adding Subsection (g) to read as follows:
211	216		(g) This subsection applies only to a corporation that has a
212	217		class or series of voting shares listed on a national securities
213	218		exchange or that has made an affirmative election to be governed by
214	219		Section 21.419. The board of directors may adopt resolutions that
215	220		authorize the formation of a committee of independent and
216	221		disinterested directors to review and approve transactions,
217	222		whether or not contemplated at the time of the committee's
218	223		formation or a petition under Section 21.4161, involving the
219	224		corporation or any of its subsidiaries and a controlling
220	225		shareholder, director, or officer.
221	226		SECTION 9. Subchapter I, Chapter 21, Business Organizations
222	227		Code, is amended by adding Section 21.4161 to read as follows:
223	228		Sec. 21.4161. DETERMINATION OF INDEPENDENT AND
224	229		DISINTERESTED DIRECTORS. (a) A corporation that adopts a
225	230		resolution to authorize the formation of a committee of independent
226	231		and disinterested directors under Section 21.416(g) may petition a
227	232		court having jurisdiction to hold an evidentiary hearing to
228	233		determine whether the directors appointed to the committee are
229	234		independent and disinterested with respect to any transactions
230	235		involving the corporation or any of its subsidiaries and a
231	236		controlling shareholder, director, or officer.
232	237		(b) A petition under Subsection (a) shall be filed in the
233	238		business court unless the corporation's principal place of business
234	239		in this state is located in a county not contained within an
235	240		operating division of the business court, in which case the
236	241		petition may be filed in a district court in the county in which the
237	242		corporation's principal place of business in this state is located.
238	243		(c) In the petition, the corporation shall designate legal
239	244		counsel to act on behalf of the corporation and its shareholders,
240	245		other than the controlling shareholder, director, or officer
241	246		involved in the transaction.
242	247		(d) The corporation shall give notice to the corporation's
243	248		shareholders that:
244	249		(1) a petition has been filed under this section;
245	250		(2) identifies the court in which the petition is
246	251		filed and provides the case number for the proceeding;
247	252		(3) identifies counsel designated to act on behalf of
248	253		the corporation and its shareholders, other than the controlling
249	254		shareholder, director, or officer involved in the transaction; and
250	255		(4) the shareholders, other than the controlling
251	256		shareholder, director, or officer involved in the transaction, have
252	257		the right to participate in the proceeding in person or through
253	258		counsel.
254	259		(e) If the corporation has a class of its shares listed on a
255	260		national securities exchange, the notice required by Subsection (d)
256	261		may be provided through the filing of a current report with the
257	262		United States Securities and Exchange Commission in accordance with
258	263		the requirements of the Securities Exchange Act of 1934 (15 U.S.C.
259	264		Section 78a et seq.), and any rules promulgated under that Act.
260	265		(f) Not earlier than the 10th day after the date the notice
261	266		required under Subsection (d) is given, the court shall hold a
262	267		preliminary hearing to determine the appropriate legal counsel to
263	268		represent the corporation and its shareholders, other than the
264	269		controlling shareholder, director, or officer involved in the
265	270		transaction, whether or not the same as the legal counsel
266	271		identified in the petition. Any other legal counsel representing a
267	272		shareholder, other than the controlling shareholder, director, or
268	273		officer involved in the transaction, may participate in the hearing
269	274		to:
270	275		(1) object to counsel designated by the corporation in
271	276		the petition on the ground that the designated counsel is
272	277		insufficiently independent and disinterested; or
273	278		(2) request designation by the court as the
274	279		appropriate legal counsel.
275	280		(g) After the court determines the appropriate legal
276	281		counsel under Subsection (f), the court shall promptly hold an
277	282		evidentiary hearing as to whether the directors on the committee
278	283		are independent and disinterested with respect to transactions
279	284		involving the corporation or any of its subsidiaries and a
280	285		controlling shareholder, director, or officer. The appropriate
281	286		legal counsel determined under Subsection (f) and legal counsel for
282	287		the corporation may participate in the hearing. After hearing and
283	288		reviewing the evidence presented, the court shall make its
284	289		determination as to whether the directors on the committee are
285	290		independent and disinterested.
286	291		(h) The court's determination that the directors are
287	292		independent and disinterested under Subsection (g) shall be
288	293		dispositive in the absence of facts, not presented to the court,
289	294		constituting evidence sufficient to prove that one or more of those
290	295		directors is not independent and disinterested with respect to a
291	296		particular transaction involving the corporation or any of its
292	297		subsidiaries and a controlling shareholder, director, or officer.
293	298		SECTION 10. Section 21.418, Business Organizations Code, is
294	299		amended by adding Subsection (f) to read as follows:
295	300		(f) This subsection applies only to a corporation that has a
296	301		class or series of voting shares listed on a national securities
297	302		exchange or has made an affirmative election to be governed by
298	303		Section 21.419. Regardless of whether the conditions of Subsection
299	304		(b) are satisfied, neither the corporation nor any of the
300	305		corporation's shareholders will have a cause of action against any
301	306		director or officer for breach of duty with respect to the making,
302	307		authorization, or performance of the contract or transaction
303	308		because the director or officer had the relationship or interest
304	309		described by Subsection (a) or took any of the actions authorized by
305	310		Subsection (d) unless the cause of action is permitted by Section
306	311		21.419.
307	312		SECTION 11. Subchapter I, Chapter 21, Business
308	313		Organizations Code, is amended by adding Section 21.419 to read as
309	314		follows:
310	315		Sec. 21.419. PRESUMPTIONS FOR DIRECTORS AND OFFICERS OF
311	316		CERTAIN CORPORATIONS. (a) This section applies only to a
312	317		corporation that has:
313	318		(1) a class or series of voting shares listed on a
314	319		national securities exchange; or
315	320		(2) included in its governing documents a statement
316	321		affirmatively electing to be governed by this section.
317	322		(b) In taking or declining to take any action on any matters
318	323		of a corporation's business, a director or officer is presumed to
319	324		act:
320	325		(1) in good faith;
321	326		(2) on an informed basis;
322	327		(3) in furtherance of the interests of the
323	328		corporation; and
324	329		(4) in obedience to the law and the corporation's
325	330		governing documents.
326	331		(c) Neither a corporation nor any of the corporation's
327	332		shareholders has a cause of action against a director or officer of
328	333		the corporation as a result of any act or omission in the person's
329	334		capacity as a director or officer unless:
330	335		(1) the claimant rebuts one or more of the
331	336		presumptions established by Subsection (b); and
332	337		(2) it is proven by the claimant that:
333	338		(A) the director's or officer's act or omission
334	339		constituted a breach of one or more of the person's duties as a
335	340		director or officer; and
336	341		(B) the breach involved fraud, intentional
337	342		misconduct, an ultra vires act, or a knowing violation of law.
338	343		(d) The presumptions established by this section:
339	344		(1) are in addition to any legal presumption arising
340	345		under common law or this code, in favor of any managerial official
341	346		of a corporation to which this section applies; and
342	347		(2) do not abrogate, preempt, or lessen any other
343	348		defense, presumption, immunity, or privilege under other
344	349		constitutional, statutory, case, or common law or rule provisions,
345	350		in favor of any managerial official of any domestic entity,
346	351		including any corporation to which this section does not apply.
347	352		(e) In alleging fraud, intentional misconduct, an ultra
348	353		vires act, or a knowing violation of the law under Subsection
349	354		(c)(2)(B), a party must state with particularity the circumstances
350	355		constituting the fraud, intentional misconduct, ultra vires act, or
351	356		knowing violation of law.
352	357		(f) This section does not limit the effectiveness or
353	358		applicability of a provision contained in the certificate of
354	359		formation or similar instrument of a corporation limiting monetary
355	360		liability of a governing person.
356	361		SECTION 12. Section 21.551(2), Business Organizations
357	362		Code, is amended to read as follows:
358	363		(2) "Shareholder" includes:
359	364		(A) a shareholder as defined by Section 1.002;
360	365		(B) [or] a beneficial owner whose shares are held
361	366		in a voting trust or by a nominee on the beneficial owner's behalf;
362	367		or
363	368		(C) two or more shareholders acting in concert
364	369		under an informal or formal agreement or understanding with respect
365	370		to a derivative proceeding.
366	371		SECTION 13. Section 21.552(a), Business Organizations
367	372		Code, is amended to read as follows:
368	373		(a) Subject to Subsection (b), a shareholder may not
369	374		institute or maintain a derivative proceeding unless:
370	375		(1) the shareholder:
371	376		(A) was a shareholder of the corporation at the
372	377		time of the act or omission complained of; or
373	378		(B) became a shareholder by operation of law
374	379		originating from a person that was a shareholder at the time of the
375	380		act or omission complained of; [and]
376	381		(2) the shareholder fairly and adequately represents
377	382		the interests of the corporation in enforcing the right of the
378	383		corporation; and
379	384		(3) for a corporation with common shares listed on a
380	385		national securities exchange or a corporation that has made an
381	386		affirmative election to be governed by Section 21.419 and has 500 or
382	387		more shareholders, at the time the derivative proceeding is
383	388		instituted, the shareholder beneficially owns a number of the
384	389		common shares sufficient to meet the required ownership threshold
385	390		to institute a derivative proceeding in the right of the
386	391		corporation identified in the corporation's certificate of
387	392		formation or bylaws, provided that the required ownership threshold
388	393		does not exceed three percent of the outstanding shares of the
389	394		corporation.
390	395		SECTION 14. Section 21.554, Business Organizations Code, is
391	396		amended by amending Subsection (b) and adding Subsections (c), (d),
392	397		(e), (f), (g), (h), and (i) to read as follows:
393	398		(b) The court shall appoint a panel under Subsection (a)(3)
394	399		if the court finds that the individuals recommended by the
395	400		corporation are independent and disinterested and are otherwise
396	401		qualified with respect to expertise, experience, independent
397	402		judgment, and other factors considered appropriate by the court
398	403		under the circumstances to make the determinations. An individual
399	404		appointed by the court to a panel under this section may be a
400	405		director. An individual appointed by the court to a panel under
401	406		this section may not be held liable to the corporation or the
402	407		corporation's shareholders for an action taken or omission made by
403	408		the individual in that capacity, except for an act or omission
404	409		constituting fraud or wilful misconduct.
405	410		(c) Before the corporation's determination of how to
406	411		proceed on the allegations under Subsection (a), the corporation
407	412		may petition the court having jurisdiction to make a finding as to
408	413		whether the directors identified or appointed under Subsection
409	414		(a)(1) or (2) are independent and disinterested with respect to the
410	415		allegations made in the demand.
411	416		(d) If a derivative proceeding has been instituted, a
412	417		petition under Subsection (c) shall be filed in the court in which
413	418		the proceeding was instituted. If no derivative proceeding has
414	419		been instituted, a petition under Subsection (c) shall be filed in
415	420		the business court unless the corporation's principal place of
416	421		business in this state is located in a county not contained within
417	422		an operating division of the business court, in which case the
418	423		petition may be filed in a district court in the county in which the
419	424		corporation's principal place of business in this state is located.
420	425		(e) The corporation must serve a copy of the petition on the
421	426		shareholder filing the derivative proceeding or making the demand.
422	427		(f) Unless extended for good cause, a court in which a
423	428		petition under Subsection (c) is filed must conduct an evidentiary
424	429		hearing on the petition on or before the 45th day after the date the
425	430		petition is filed.
426	431		(g) A shareholder on whom a petition is served under
427	432		Subsection (e) is entitled to be served with all notices and papers
428	433		filed in the action and to intervene in the action to challenge the
429	434		petition. Unless good cause is shown, a shareholder who is not
430	435		already a party to the action must intervene not later than the
431	436		seventh day before the date the petition is heard by the court.
432	437		(h) Unless extended for good cause, not later than the 75th
433	438		day after the date the petition is filed, the court shall sign an
434	439		order stating whether the directors are independent and
435	440		disinterested.
436	441		(i) A court's finding that the directors or individuals are
437	442		independent and disinterested under this section shall be
438	443		dispositive in the absence of discovery of facts, not presented to
439	444		the court, constituting evidence sufficient to prove that one or
440	445		more of those directors or individuals are not independent and
441	446		disinterested.
442	447		SECTION 15. Section 21.561, Business Organizations Code, is
443	448		amended by adding Subsection (c) to read as follows:
444	449		(c) For purposes of Subsection (b), a substantial benefit to
445	450		the corporation does not include additional or amended disclosures
446	451		made to the shareholders, regardless of materiality.
447	452		SECTION 16. Section 21.562(a), Business Organizations
448	453		Code, is amended to read as follows:
449	454		(a) In a derivative proceeding brought in the right of a
450	455		foreign corporation, the matters covered by this subchapter are
451	456		governed by the laws of the jurisdiction of formation of the foreign
452	457		corporation, except for Sections 21.555, 21.560, and 21.561, which
453	458		with respect to foreign corporations are procedural provisions and
454	459		do not relate to the internal affairs of the foreign corporation,
455	460		unless applying the laws of the jurisdiction of formation of the
456	461		foreign corporation requires otherwise with respect to Section
457	462		21.555.
458	463		SECTION 17. Subchapter F, Chapter 101, Business
459	464		Organizations Code, is amended by adding Section 101.256 to read as
460	465		follows:
461	466		Sec. 101.256. PRESUMPTIONS FOR GOVERNING PERSONS OF CERTAIN
462	467		LIMITED LIABILITY COMPANIES. (a) This section applies only to a
463	468		limited liability company that has:
464	469		(1) a class or series of voting membership interests
465	470		listed on a national securities exchange; or
466	471		(2) included in its company agreement a statement
467	472		affirmatively electing to be governed by this section.
468	473		(b) In taking or declining to take any action on any matters
469	474		of a limited liability company's business, a governing person or
470	475		officer, and each affiliate or associate of a governing person or
471	476		officer, is presumed to act in good faith and in compliance with:
472	477		(1) the person's or officer's duties required under
473	478		the governing documents of the limited liability company or common
474	479		law; and
475	480		(2) the governing documents of the limited liability
476	481		company.
477	482		(c) Neither a limited liability company nor any of the
478	483		company's members has a cause of action against a governing person
479	484		or officer or any affiliate or associate of a governing person or
480	485		officer of the company as a result of any act or omission in the
481	486		person's capacity as a governing person or officer of the company
482	487		unless:
483	488		(1) the claimant rebuts one or more of the
484	489		presumptions established by Subsection (b); and
485	490		(2) it is proven by the claimant that:
486	491		(A) the act or omission of the governing person
487	492		or officer or affiliate or associate of a governing person or
488	493		officer constituted a breach of one or more of the person's duties
489	494		as a governing person or officer to the extent the duty has not been
490	495		modified or eliminated through an affirmative election contained in
491	496		the governing documents as permitted by this chapter; and
492	497		(B) the breach involved fraud, intentional
493	498		misconduct, an ultra vires act, or a knowing violation of law.
494	499		(d) The presumptions established by this section:
495	500		(1) are in addition to any legal presumption arising
496	501		under common law or this code, in favor of any governing person or
497	502		officer to which this section applies; and
498	503		(2) do not abrogate, preempt, or lessen any other
499	504		defense, presumption, immunity, or privilege under other
500	505		constitutional, statutory, case, or common law or rule provisions,
501	506		in favor of any governing person or officer of any domestic entity,
502	507		including any limited liability company to which this section does
503	508		not apply.
504	509		(e) In alleging fraud, intentional misconduct, an ultra
505	510		vires act, or a knowing violation of the law under Subsection
506	511		(c)(2)(B), a party must state with particularity the circumstances
507	512		constituting the fraud, intentional misconduct, ultra vires act, or
508	513		knowing violation of law.
509	514		(f) This section does not limit the effectiveness or
510	515		applicability of a provision contained in the certificate of
511	516		formation or company agreement or similar instrument of a limited
512	517		liability company limiting monetary liability of a governing person
513	518		or officer.
514	519		SECTION 18. Section 101.401, Business Organizations Code,
515	520		is amended to read as follows:
516	521		Sec. 101.401. EXPANSION, [OR] RESTRICTION, OR ELIMINATION
517	522		OF DUTIES AND LIABILITIES. The company agreement of a limited
518	523		liability company may expand, [or] restrict, or eliminate any
519	524		duties, including fiduciary duties, and related liabilities that a
520	525		member, manager, officer, or other person has to the company or to a
521	526		member or manager of the company.
522	527		SECTION 19. Section 101.451(3), Business Organizations
523	528		Code, is amended to read as follows:
524	529		(3) "Member" includes:
525	530		(A) a person who is a member or is an assignee of
526	531		a membership interest or a person who beneficially owns a
527	532		membership interest through a voting trust or a nominee on the
528	533		person's behalf; and
529	534		(B) two or more members described by Paragraph
530	535		(A) acting in concert under an informal or formal agreement or
531	536		understanding with respect to a derivative proceeding.
532	537		SECTION 20. Section 101.452(a), Business Organizations
533	538		Code, is amended to read as follows:
534	539		(a) Subject to Subsection (b), a member may not institute or
535	540		maintain a derivative proceeding unless:
536	541		(1) the member:
537	542		(A) was a member of the limited liability company
538	543		at the time of the act or omission complained of; or
539	544		(B) became a member by operation of law
540	545		originating from a person that was a member at the time of the act or
541	546		omission complained of; [and]
542	547		(2) the member fairly and adequately represents the
543	548		interests of the limited liability company in enforcing the right
544	549		of the limited liability company; and
545	550		(3) for a limited liability company with membership
546	551		interests listed on a national securities exchange or that has made
547	552		an affirmative election to be governed by Section 101.256 and has
548	553		500 or more members, at the time the derivative proceeding is
549	554		instituted, the member beneficially owns a number of the membership
550	555		interests sufficient to meet the required ownership threshold to
551	556		institute a derivative proceeding in the right of the limited
552	557		liability company identified in the limited liability company's
553	558		certificate of formation or company agreement, provided that the
554	559		required ownership threshold does not exceed three percent of the
555	560		outstanding membership interests of the limited liability company.
556	561		SECTION 21. Section 101.461, Business Organizations Code,
557	562		is amended by adding Subsection (c) to read as follows:
558	563		(c) For purposes of Subsection (b), a substantial benefit to
559	564		the limited liability company does not include additional or
560	565		amended disclosures made to the members, regardless of materiality.
561	566		SECTION 22. Section 101.502, Business Organizations Code,
562	567		is amended by amending Subsection (a) and adding Subsections (a-1),
563	568		(a-2), and (a-3) to read as follows:
564	569		(a) Unless otherwise provided by the governing documents of
565	570		a limited liability company, a [A] member of a limited liability
566	571		company or an assignee of a membership interest in a limited
567	572		liability company, on written demand stating a proper purpose, is
568	573		entitled to examine and copy at a reasonable time at the limited
569	574		liability company's principal office identified under Section
570	575		101.501(c) or another location approved by the limited liability
571	576		company and the member or assignee, any records of the limited
572	577		liability company, whether in written or other tangible form, which
573	578		are reasonably related to and appropriate to examine and copy for
574	579		that proper purpose. For purposes of this subsection, the records
575	580		of the limited liability company shall not include e-mails, text
576	581		messages or similar electronic communications, or information from
577	582		social media accounts unless the particular e-mail, communication,
578	583		or social media information effectuates an action by the limited
579	584		liability company.
580	585		(a-1) This subsection applies only to a limited liability
581	586		company that has a class or series of voting membership interests
582	587		listed on a national securities exchange or that has made an
583	588		affirmative election to be governed by Section 101.256. For
584	589		purposes of Subsection (a), a written demand may be made only by a
585	590		member or an assignee that has held the membership interest for at
586	591		least six months immediately preceding the member's or assignee's
587	592		demand.
588	593		(a-2) This subsection applies only to a limited liability
589	594		company that has a class or series of voting membership interests
590	595		listed on a national securities exchange or that has made an
591	596		affirmative election to be governed by Section 101.256 or Section
592	597		101.401. For purposes of Subsection (a), a written demand shall not
593	598		be for a proper purpose if the limited liability company reasonably
594	599		determines that the demand is in connection with:
595	600		(1) an active or pending derivative proceeding in the
596	601		right of the limited liability company under Subchapter J that is or
597	602		is expected to be instituted or maintained by the member or assignee
598	603		or the member's or assignee's affiliate; or
599	604		(2) an active or pending civil lawsuit to which the
600	605		company, or its affiliate, and the member or assignee, or the
601	606		member's or assignee's affiliate, are or are expected to be
602	607		adversarial named parties.
603	608		(a-3) Subsection (a-2) does not impair any rights of the
604	609		member or assignee or the member's or assignee's affiliate to obtain
605	610		discovery of records from the limited liability company in:
606	611		(1) a civil lawsuit described by Subsection (a-2)(2);
607	612		or
608	613		(2) the derivative proceeding subject to Section
609	614		101.456.
610	615		SECTION 23. Section 152.002, Business Organizations Code,
611	616		is amended by adding Subsection (e) to read as follows:
612	617		(e) This subsection applies only to a limited partnership
613	618		that has a class or series of voting limited partnership interests
614	619		listed on a national securities exchange or that has included in its
615	620		governing documents a statement affirmatively electing to be
616	621		governed by this subsection. Notwithstanding Subsection (b)(2),
617	622		(3), or (4), a partnership agreement may eliminate any or all of the
618	623		duty of loyalty under Section 152.205, the duty of care under
619	624		Section 152.206, and the obligation of good faith under Section
620	625		152.204(b), to the extent the governing documents of the
621	626		partnership include a statement affirmatively electing to do so
622	627		under this subsection.
623	628		SECTION 24. Subchapter D, Chapter 153, Business
624	629		Organizations Code, is amended by adding Section 153.163 to read as
625	630		follows:
626	631		Sec. 153.163. PRESUMPTIONS FOR GENERAL PARTNERS AND
627	632		OFFICERS OF CERTAIN LIMITED PARTNERSHIPS. (a) This section
628	633		applies only to a limited partnership that has:
629	634		(1) a class or series of voting limited partnership
630	635		interests listed on a national securities exchange; or
631	636		(2) included in its governing documents a statement
632	637		affirmatively electing to be governed by this section.
633	638		(b) In taking or declining to take any action on any matters
634	639		of a limited partnership's business, any general partner of the
635	640		limited partnership, including any director, officer, member, or
636	641		other affiliate of the general partner, is presumed to act in good
637	642		faith and in compliance with:
638	643		(1) the person's duties required under this code,
639	644		common law, and the partnership agreement of the partnership; and
640	645		(2) the partnership agreement of such limited
641	646		partnership.
642	647		(c) Neither a limited partnership nor any of the limited
643	648		partnership's partners has a cause of action against a general
644	649		partner of the limited partnership, including any director,
645	650		officer, member, or other affiliate of the general partner, as a
646	651		result of any act or omission in the person's capacity as a general
647	652		partner or as an officer or director of the general partner unless:
648	653		(1) the claimant rebuts one or more of the
649	654		presumptions established by Subsection (b); and
650	655		(2) it is proven by the claimant that:
651	656		(A) the general partner's or any director,
652	657		officer, member, or other affiliate of the general partner's act or
653	658		omission constituted a breach of one or more of the person's duties
654	659		as a general partner, director, or officer to the extent the duty
655	660		has not been modified or eliminated through an affirmative election
656	661		contained in the governing documents as permitted by this chapter;
657	662		and
658	663		(B) the breach involved fraud, intentional
659	664		misconduct, an ultra vires act, or a knowing violation of law.
660	665		(d) The presumptions established by this section:
661	666		(1) are in addition to any legal presumption arising
662	667		under common law or this code, in favor of any general partner or
663	668		member or managerial official of a general partner to which this
664	669		section applies; and
665	670		(2) do not abrogate, preempt, or lessen any other
666	671		defense, presumption, immunity, or privilege under other
667	672		constitutional, statutory, case, or common law or rule provisions,
668	673		in favor of any managerial official of any domestic entity,
669	674		including any limited partnership to which this section does not
670	675		apply.
671	676		(e) In alleging fraud, intentional misconduct, an ultra
672	677		vires act, or a knowing violation of the law under Subsection
673	678		(c)(2)(B), a party must state with particularity the circumstances
674	679		constituting the fraud, intentional misconduct, ultra vires act, or
675	680		knowing violation of law.
676	681		(f) This section does not limit the effectiveness or
677	682		applicability of a provision contained in the certificate of
678	683		formation or partnership agreement or similar instrument of a
679	684		partnership limiting monetary liability of a governing person.
680	685		SECTION 25. Section 153.401(2), Business Organizations
681	686		Code, is amended to read as follows:
682	687		(2) "Limited partner" means:
683	688		(A) a person who is a limited partner or is an
684	689		assignee of a partnership interest, including the partnership
685	690		interest of a general partner; and
686	691		(B) two or more limited partners described by
687	692		Paragraph (A) acting in concert under an informal or formal
688	693		agreement or understanding with respect to a derivative proceeding.
689	694		SECTION 26. Section 153.402(a), Business Organizations
690	695		Code, is amended to read as follows:
691	696		(a) Subject to Subsection (b), a limited partner may not
692	697		institute or maintain a derivative proceeding unless:
693	698		(1) the limited partner:
694	699		(A) was a limited partner of the limited
695	700		partnership at the time of the act or omission complained of; or
696	701		(B) became a limited partner by operation of law
697	702		originating from a person that was a limited partner or general
698	703		partner at the time of the act or omission complained of; [and]
699	704		(2) the limited partner fairly and adequately
700	705		represents the interests of the limited partnership in enforcing
701	706		the right of the limited partnership; and
702	707		(3) for a limited partnership with limited partnership
703	708		interests listed on a national securities exchange or that has made
704	709		an affirmative election to be governed by Section 152.002(e) or
705	710		Section 153.163 and has 500 or more limited partners, at the time
706	711		the derivative proceeding is instituted, the partner beneficially
707	712		owns a number of limited partnership interests sufficient to meet
708	713		the required ownership threshold to institute a derivative
709	714		proceeding in the right of the limited partnership identified in
710	715		the limited partnership's certificate of formation or partnership
711	716		agreement, provided that the required ownership threshold does not
712	717		exceed three percent of the outstanding limited partnership
713	718		interests of the limited partnership.
714	719		SECTION 27. Section 153.411, Business Organizations Code,
715	720		is amended by adding Subsection (c) to read as follows:
716	721		(c) For purposes of Subsection (b), a substantial benefit to
717	722		the limited partnership does not include additional or amended
718	723		disclosures made to the limited partners, regardless of
719	724		materiality.
720	725		SECTION 28. Section 153.552, Business Organizations Code,
721	726		is amended by amending Subsection (a) and adding Subsections (a-1)
722	727		and (a-2) to read as follows:
723	728		(a) Unless otherwise provided by the governing documents of
724	729		a limited partnership, on [On] written demand stating a proper
725	730		purpose, a partner or an assignee of a partnership interest in a
726	731		limited partnership is entitled to examine and copy, at a
727	732		reasonable time at the partnership's principal office identified
728	733		under Section 153.551 or other location approved by the partnership
729	734		and the partner or assignee, any records of the partnership,
730	735		whether in written or other tangible form, which are reasonably
731	736		related to and appropriate to examine and copy for that proper
732	737		purpose. For purposes of this subsection, the records of the
733	738		limited partnership shall not include e-mails, text messages or
734	739		similar electronic communications, or information from social
735	740		media accounts unless the particular e-mail, communication, or
736	741		social media information effectuates an action by the limited
737	742		partnership.
738	743		(a-1) This subsection applies only to a limited partnership
739	744		that has a class or series of voting limited partnership interests
740	745		listed on a national securities exchange or that has made an
741	746		affirmative election to be governed by Section 152.002(e) or
742	747		153.163. For purposes of Subsection (a), a written demand:
743	748		(1) may be made only by a limited partner or an
744	749		assignee that has held the limited partnership interest for at
745	750		least six months immediately preceding the limited partner's or
746	751		assignee's demand; and
747	752		(2) shall not be for a proper purpose if the limited
748	753		partnership reasonably determines that the demand is in connection
749	754		with:
750	755		(A) an active or pending derivative proceeding in
751	756		the right of the limited partnership under Subchapter I that is or
752	757		is expected to be instituted or maintained by the limited partner or
753	758		assignee or the limited partner's or assignee's affiliate; or
754	759		(B) an active or pending civil lawsuit to which
755	760		the partnership, or its affiliate, and the limited partner or
756	761		assignee, or the limited partner's or assignee's affiliate, are or
757	762		are expected to be adversarial named parties.
758	763		(a-2) Subsection (a-1) does not impair any rights of the
759	764		limited partner or assignee or the limited partner's or assignee's
760	765		affiliate to obtain discovery of records from the limited
761	766		partnership in:
762	767		(1) a civil lawsuit described by Subsection
763	768		(a-1)(2)(B); or
764	769		(2) the derivative proceeding subject to Section
765	770		153.406.
766	771		SECTION 29. Sections 21.552(a), 21.561, 101.452(a),
767	772		101.461, 153.402(a), and 153.411, Business Organizations Code, as
768	773		amended by this Act, apply only to a derivative proceeding
769	774		instituted on or after the effective date of this Act. A derivative
770	775		proceeding instituted before the effective date of this Act is
771	776		governed by the law in effect on the date the proceeding was
772	777		instituted, and the former law is continued in effect for that
773	778		purpose.
774	779		SECTION 30. This Act takes effect immediately if it
775	780		receives a vote of two-thirds of all the members elected to each
776	781		house, as provided by Section 39, Article III, Texas Constitution.
777	782		If this Act does not receive the vote necessary for immediate
778	783		effect, this Act takes effect September 1, 2025.
	784	+	* * * * *