Two new laws passed in Texas—SB 29 and SB 1057—are making it harder for shareholders to hold corporate leadership accountable. Depending on your perspective, that’s either overdue protection or a concerning step away from corporate transparency.
SB 29 codifies and strengthens the “business judgment rule,” protecting directors and officers from personal liability for decisions made in good faith—even if those decisions turn out to be poor in hindsight. While this rule already existed in court precedent, codifying it into law means fewer loopholes for lawsuits.
Meanwhile, SB 1057 raises the bar for shareholder resolutions. Now, only those with a 3% stake or $1 million in holdings can propose changes—and even then, only with support from two-thirds of shareholders. This significantly limits activist shareholders or minority owners from influencing boardroom decisions.
For founders and executives, this means more room to act strategically without fear of constant interference or litigation. But for investors or employee-stockholders, it means less influence.
This is a good time to revisit your corporate documents. Does your shareholder agreement reflect the new reality? Do your bylaws balance director protection with reasonable accountability?
Texas continues to lean pro-business. At CJMA, we help companies maintain that advantage without overlooking the legal guardrails.