A significant announcement from a leading cryptocurrency exchange regarding its relocation from Delaware to Texas has stirred excitement among publicly traded digital asset firms. This strategic move comes in response to an invitation from Texas Governor Greg Abbott to establish operations in what he refers to as “Y’all Street.” Additionally, recent legislative efforts in Texas aim to update the Texas Business Organizations Code (TBOC) to enhance the state’s appeal for incorporation. This article provides an overview of key legal changes affecting business entities in Texas that emerged from the latest legislative session.
### Establishment of the Texas Business Court
Launched in 2024, the Texas Business Court is a specialized trial court designed to handle complex commercial disputes statewide. Below is a summary of the most notable changes from the 2025 legislative session that impact the Texas Business Court:
The threshold for the amount in controversy has been reduced from $10 million to $5 million for lawsuits related to “qualified transactions” and specific violations of the Finance Code or the Business & Commerce Code, among other claims. The definition of a “qualified transaction” has been broadened to encompass a series of related transactions. Furthermore, the amount in controversy for jurisdictional purposes in the Business Court is now defined as “the total amount of all joined parties’ claims.”
It has been clarified that, once the amount in controversy requirement is met, the Business Court can exercise jurisdiction over any case “arising out of a business, commercial, or investment contract or transaction,” rather than just those cases where the parties mutually agreed to the Business Court’s jurisdiction in the contract or in a subsequent agreement.
The court’s jurisdiction now includes (1) cases involving the Texas Uniform Trade Secrets Act, Chapter 134A, Civil Practice and Remedies Code, and (2) cases related to the ownership, use, licensing, lease, installation, or performance of intellectual property, which encompasses software, data security, pharmaceuticals, and trade secrets.
Additionally, the Business Court has concurrent jurisdiction with district courts over actions concerning the enforcement of arbitration agreements, the appointment of arbitrators, and the review of arbitral awards, as long as the claims involved fall within the Business Court’s jurisdiction and meet the amount in controversy requirement.
The language regarding supplemental jurisdiction has been aligned with federal standards, allowing the Business Court to exercise supplemental jurisdiction over related claims, provided all parties and the Business Court judge agree to this exercise. Consumer transaction claims involving Texas residents that stem from violations of federal or state law are excluded from the Business Court’s jurisdiction.
The Texas Supreme Court has been instructed to create procedures aimed at ensuring the swift and efficient resolution of business court jurisdiction upon the filing of an action. This includes provisions for determining jurisdiction based on pleadings or summary proceedings, establishing specific timeframes for raising issues, and allowing for expedited appeals.
Entities will now have the option to designate a venue located in a Business Court operating division for actions related to governance, internal affairs, or breaches of duty by an owner or managerial official.
### Recent Amendments to Entity Governance
The Texas legislature has also enacted various provisions impacting corporate governance within the state, including:
Domestic Texas entities may now include a waiver of jury trials for internal claims in their governing documents. They can also designate an exclusive court forum for such claims. Rights for shareholders to inspect records are significantly restricted for publicly traded corporations if the requesting shareholder is involved in ongoing litigation against the corporation.
A new procedure has been introduced to facilitate advance court determinations regarding the independence of directors in shareholder derivative actions or transactions presenting conflicts of interest. Furthermore, officers and directors of a Texas corporation with shares listed on national exchanges, or those opting to follow these new provisions, will benefit from a presumption of acting in good faith and in accordance with the corporation’s interests—this serves to reinforce the so-called “business judgment rule.”
Similar provisions have been introduced for limited liability companies and partnerships. Publicly traded Texas corporations, or those with over 500 shareholders, can now set a minimum ownership threshold for initiating shareholder derivative actions, capped at three percent of outstanding shares. Attorney fees awarded to plaintiffs for settlements in derivative proceedings based solely on amended disclosures will no longer be permitted.
The amendments clarify that Texas limited partnerships or LLCs may eliminate the duties of their members and managers within governing documents. Additionally, Texas corporations can restrict shareholder proposals.
### Additional Legislative Changes
Key amendments also specify that references to “district court” within the Texas Business Organizations Code (TBOC) include concurrent jurisdiction granted to the new Texas Business Court. The legislation now allows notification of actions to nonconsenting owners through publicly accessible electronic resources.
Texas corporations, along with other entities governed by TBOC Sec. 7.001(a)–(c), can incorporate provisions that protect officers from monetary liability for breaches of duty of care. For-profit and nonprofit Texas corporations are permitted to retroactively ratify transactions that were previously ineffective due to failure to file necessary documents with the Texas Secretary of State.
Moreover, the board of directors of a for-profit corporation can amend the company’s certificate of formation regarding stock splits without shareholder consent, as long as specific conditions are satisfied. The governing authority is also empowered to approve documents in their substantially final form and subsequently ratify them retroactively before filing with the Secretary of State.
Lastly, owners of domestic entities involved in mergers or interest exchanges now have the right to appoint representatives to advocate for them in enforcing merger plans.
### Expansion of Texas-Based Stock Exchanges
Recently, three distinct stock exchanges have announced their new or expanded operations within Texas, reflecting the state’s growing significance in the financial landscape.
