Parker Good Faith Bill Raises The Bar To Sue Directors

The text as introduced · 348 words

89R11823 TYPED

By: Parker
S.B. No. 1056

A BILL TO BE ENTITLED

AN ACT

relating to a presumption of good faith for directors and officers

of certain domestic corporations.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:

SECTION 1. Subchapter J, Chapter 21, Business Organizations

Code, is amended by adding Section 21.4015 to read as follows:

Sec. 21.4015. PRESUMPTION OF GOOD FAITH. (a) This section

applies only to a corporation that:

(1) is formed under the laws of this state;

(2) has a class of equity securities registered under

Section 12(b) of the Securities Exchange Act of 1934;

(3) is admitted to listing on a national securities

exchange; and

(4) either:

(A) has its principal office in this state; or

(B) is admitted to listing on a stock exchange

that:

(i) has its principal office in this state;

and

(ii) has received approval by the state

pursuant to Subchapter C, Chapter 4005, Government Code.

(b) Unless otherwise provided in a corporation's

certificate of formation, a director or officer of a corporation

described by Subsection (a) of this section is presumed to act in

good faith, on an informed basis, and with a view to the interests

of the corporation.

(c) Unless otherwise provided in a corporation's

certificate of formation, a director or officer of a corporation

described by Subsection (a) of this section will not be personally

liable for damages resulting from actions or failures to act in

their capacity as director or officer unless the director or

officer:

(1) violated a duty of good faith, loyalty, or due

care; and

(2) engaged in intentional misconduct, fraud, or

knowing violation of the law.

(d) In alleging intentional misconduct, fraud, or knowing

violation of the law pursuant to Subdivision (c)(2), a party must

state with particularity the circumstances constituting such

intentional misconduct, fraud, or knowing violation of the law.

(e) This section does not abrogate, preempt, or lessen any

other defense, presumption, immunity, or privilege available under

other constitutional, statutory, case, or common law or rule

provisions.

SECTION 2. This Act takes effect September 1, 2025.