Texas has long been among the most business-friendly states in the nation. It has attracted companies by offering, among other things, low taxes (including no corporate or personal income tax), a pro-business regulatory environment, and its location at the crossroads of transnational commerce and business. Texas has a diversified economy that ranges from agriculture, health care, aerospace and advanced manufacturing to banking, finance, energy and information technology. Texas also provides significant protection to shareholders from liability for corporate obligations by being one of the most difficult states in which to “pierce the corporate veil.” One in 10 public companies is based in Texas, including fifty Fortune 500 companies. Texas’s $2.7 trillion economy is the eighth largest in the world.
Recent legal and business developments in Texas in the form of amendments to its corporate law and the establishment of a specialized business court and an in-state stock exchange promise to further enhance Texas’s reputation as a business-friendly state and augment its status as a significant locus for corporate business and finance on par with states like Delaware and New York.
Texas Corporate Law Amendments
In May 2025, Texas amended its Business Organizations Code (“TBOC”) to further motivate businesses to incorporate in the state.
Importantly, the recent TBOC amendments make the common law “business judgment rule” statutory in Texas by providing that, in taking or declining to take any action on matters of a domestic corporation, the corporation’s officers and directors are presumed to act in good faith, on an informed basis, in furtherance of the corporation’s interests and in obedience to the law and the corporation’s governing documents. Effectively, this presumption means that parties who sue officers and directors in corporate matters have the initial burden of proof to establish that they did not act properly in the authorization and implementation of transactions and other corporate actions. The amendments to the TBOC provide similar protections for governing persons and officers of domestic limited liability companies and for managerial officials of domestic limited partnerships. The statute’s protection is available to public companies listed on a national securities exchange and to other Texas corporations that elect its protection. The enactment into statute of the business judgement rule in Texas should significantly aid in shielding officers, directors and other governing or managerial persons from personal liability for actions taken in the course of the domestic entity’s business.
The amendments to the TBOC also enhance predictability and certainty by creating a new procedure for court determination of the independent and disinterested status of directors prior to their approving a transaction involving the corporation or any of its subsidiaries, on the one hand, and a controlling shareholder, director or officer, on the other.
The amendments also provide that a Texas domestic entity’s governing documents can specify an exclusive court forum and venue for claims (including derivative claims) that relate to the internal affairs of the entity (internal entity claims). Related amendments provide that the governing documents of a domestic entity may contain a waiver of the right to a jury trial concerning any internal entity claim.
Finally, among other amendments, a new provision effective as of September 1, 2025 creates a right for certain corporations to amend their governing documents to limit shareholder activism by prohibiting any shareholder (or group of shareholders) from submitting a proposal for consideration at a meeting of shareholders unless the shareholder (or group of shareholders) satisfies certain ownership and solicitation requirements. Any corporation that either has its principal place of business in Texas or is admitted to listing on an approved Texas stock exchange is eligible to amend its governing documents to provide for such prohibition. All told, these and other recent amendments to the TBOC should expand Texas’s ability to compete with Delaware for new incorporation business and incentivize existing corporations to move to Texas.
Texas Business Court
Texas inaugurated its new Business Court on September 1, 2024, by creating 11 specialized civil courts designed to handle significant, complex commercial disputes. Currently, five divisions operate in Austin, Dallas, Fort Worth, Houston and San Antonio. The other six divisions are slated to open in 2026. Texas has also created a special Fifteenth Court of Appeals to handle appeals from the Business Court.
The Business Court represents a significant advance in Texas’s commercial litigation framework. The Business Court conducts important cases that involve corporate governance, securities, fiduciary duties, and commercial matters. Its purpose is to expedite the resolution of complex cases and provide greater predictability and expertise to business and commercial litigation.
The state’s Governor appoints Business Court judges for two-year terms and judges may be reappointed. Judges must satisfy certain requirements including having practiced complex civil business litigation, practiced business transaction law, served as a civil judge within Texas, or any combination of such practice or service, in each case for at least 10 years.
The Business Court has all the same powers as those of a Texas district court. It may issue final judgments, injunctions, writs of mandamus, and other rulings, orders and writs, and may also hear claims seeking injunctive or declaratory relief, provided the case otherwise falls within the court’s jurisdiction.
The jurisdictional rules applicable to the Texas Business Court should generally help to funnel complex business and commercial cases to the court and to expedite the resolution of such cases. Subject to certain exceptions, the Business Court shares jurisdiction with Texas district courts in two groups of actions. The first group includes, among others, the following types of cases in which the total amount in controversy exceeds $5 million (excluding interest, statutory damages, exemplary damages, penalties, attorneys’ fees and court costs; there is no minimum for the amount in controversy if a party to the action is a publicly traded company):
• Corporate Governance Issues: Cases involving disputes related to the governance or internal affairs of corporations or other entities;
• Securities Cases: Actions against corporations and other entities, controlling persons, managerial officials, underwriters and auditors arising from violations of securities laws or regulations;
• Derivative Actions: Lawsuits brought in the right of a corporation, limited liability company or limited partnership to the extent provided by the TBOC;
• Breach of Duty Actions: Actions that claim an owner, controlling person or managerial official breached a duty owed to a corporation or other entity including breach of a duty of loyalty or good faith; and
• Texas Business Organizations Code: Actions that arise out of the TBOC.
The second group of cases includes, among others, those that involve significant commercial transactions in which the parties have agreed to Business Court jurisdiction. The total amount in controversy initially must have exceeded $10 million but this amount was reduced to $5 million beginning September 1, 2025.
Additionally, the Business Court has supplemental jurisdiction over related claims that form part of the same case or controversy, provided all parties and a judge of the Business Court in the relevant division agree to proceed in the Business Court.
The Fifteenth Court of Appeals located in Austin has statewide jurisdiction over any appeal from an order or judgement of the Business Court unless the Texas Supreme Court has concurrent or exclusive jurisdiction.
While most Business Court judge must issue a written opinion to explain his or her decision: (a) on the request of a party, in connection with a dispositive (i.e., outcome determinative) ruling; or (b) regardless of whether a party requests, on an issue important to the jurisprudence of the state. A Business Court judge may also issue a written opinion in connection with any order he or she issues. Texas civil district courts do not issue written opinions, a The foregoing Business Court rules regarding written opinions should help to foster uniform and thorough jurisprudence in Texas for complex business disputes.
Finally, an important advantage of the Texas Business Court is that it preserves the right to trial by jury, in contrast to Delaware’s Chancery Court, which is limited to bench-trial-only proceedings. This is a notable difference for companies that may prefer to retain long-established legal safeguards.
Overall, the Texas Business Court should constitute a dedicated and sophisticated tribunal for the expert and predictable adjudication of complex commercial and business litigation.
Texas Stock Exchange
A potentially far-reaching development in the recent augmentation of Texas’s business- friendly environment is the pending opening of the Texas Stock Exchange (“TXSE”). In January 2025, the parent company of the TXSE, TXSE Group Inc., filed the necessary documents with the U.S. Securities and Exchange Commission to obtain approval to operate as a national securities exchange. If the SEC grants its approval, the TXSE plans to initiate trading in 2026 and to list public companies by the end of that year.
James Lee, founder and CEO of TXSE Group Inc., remarked that the parent company is “thrilled to bring to fruition the long-held vision for a national stock exchange in Texas.” He continued, “Texas and the other states in the southeast quadrant have become economic powerhouses. Combined with the demand we are seeing from investors and corporations for expanded alternatives to trade and list equities, this is an opportune time to build a major, national stock exchange in Texas.”
The TXSE intends to become the leading stock exchange for public company listings. It contemplates high listing standards focused on quality and an entirely electronic, advanced platform for trading. The TXSE has established its headquarters in Dallas and plans to be of service to domestic and international issuers, investors, and other participants in the public markets.
Conclusion
Texas has historically stood out among states for its pro-business reputation. It has a multi- faceted economy, no corporate or personal income tax, extensive infrastructure, a highly competent and diversified workforce and a sensible regulatory framework. The recent enterprise-friendly amendments to the Texas Business Organizations Code, the establishment of the Texas Business Court and the anticipated launch of the Texas Stock Exchange, should enable Texas to attract even more business and compete with entity formation and finance powerhouses like Delaware and New York.
Jonathan T. Bickham
Walker Eisenbraun LLC
September 3, 2025
