The single most-mistaken step in TBOC analysis is failing to map each governance question to the correct scope category. A three-way “elective / default / judicial” shorthand materially misclassifies the statute: exculpation under § 7.001 depends on a certificate provision, § 21.401(b) is permissive authority rather than a rule of decision, Business Court jurisdiction under Tex. Gov’t Code ch. 25A is a statutory forum rule, and the codified business-judgment rule in § 21.419 reaches listed corporations automatically and other corporations only by governing-document election — it is not a general opt-out default. The table below maps each provision to one of five scope categories: mandatory baseline; listed-company / opt-in scoped rule; governing-document election; permissive authority; and court procedure or unsettled doctrine. Predict outcomes only after fixing the category.
Figure 3
Mapping each provision to its scope trigger before predicting outcomes. Rebuilt from the enrolled bill and codified statute, v2.0 (2026-08-10).
| Provision | Scope category | Scope trigger and effect |
|---|---|---|
| §§ 21.553 / 21.554 — demand procedure | Mandatory baseline | Universal written demand on the corporation; suit generally barred until the 91st day (§ 21.553) — no Delaware-style futility substitute. § 21.554 supplies the determination procedure. |
| § 21.218 — inspection: electronic-communications exclusion | Mandatory baseline | Emails, texts, and social-media communications are excluded from inspectable records unless they effectuate a corporate action. General inspection scope — distinct trigger from the adversarial-proceeding rule below. |
| § 21.419 — codified business-judgment rule | Listed / opt-in scoped | Applies automatically to exchange-listed corporations; other corporations only by governing-document election (§ 21.419(c)). Two-stage test: presumption of good faith, ordinary care, and lawful, corporate-interest purpose plus the claimant must plead with particularity and prove a breach involving fraud, intentional misconduct, an ultra vires act, or a knowing violation of law. Not a general opt-out default. |
| § 21.218 — adversarial-proceeding improper-purpose rule | Listed / opt-in scoped | Inspection demands relating to an active or pending adversarial proceeding are deemed improper purpose — but only for listed corporations and § 21.419 opt-in corporations. Narrower scope than the exclusion above; the two rules are not coextensive. |
| § 21.373 — shareholder-proposal regime | Listed / opt-in scoped | Opt-in for nationally listed corporations: 3% or $1M held (disjunctive), six-month holding period, 67% solicitation undertaking. |
| § 21.552(a)(3) — derivative-standing threshold | Governing-document election | Qualifying corporations (exchange-listed, or 500+ shareholders electing § 21.419) may set a derivative-standing floor of up to 3% of outstanding shares in charter or bylaws. A ceiling on the corporation and a holding requirement for the stockholder once elected. Enforced in Gusinsky v. Reynolds. |
| § 7.001 — exculpation | Governing-document election | Depends on a certificate-of-formation provision; directors, and officers via amendment. Not automatic. |
| § 2.115 exclusive forum · § 2.116 jury-trial waiver | Governing-document election | Adopted in governing documents; internal-entity claims routed to Texas courts, jury waiver for internal-entity claims. |
| § 21.401(b) — permitted considerations | Permissive authority | Authorizes consideration of long-term interests and director independence; an authorization, not a rule of decision or standard of review. |
| Tex. Gov’t Code ch. 25A — Business Court | Court procedure | Statutory forum and jurisdiction rule (≥ $5M qualified-transaction and governance lanes post-H.B. 40), not a substantive standard. |
| Caremark / Marchand officer oversight under § 21.419 · Revlon / Unocal equivalents · MFW equivalence · entire fairness at the MTD stage · internal affairs / dormant Commerce Clause (Edgar v. MITE, CTS Corp.) | Unsettled doctrine | No Texas appellate record yet on any of these; the extraterritorial-reach questions were not presented in Gusinsky and remain unadjudicated. |
Sources: SB 29, 89th Leg., R.S. (Tex. 2025), eff. May 14, 2025; SB 1057, 89th Leg., R.S. (Tex. 2025); H.B. 19, 88th Leg., R.S. (Tex. 2023); H.B. 40, 89th Leg., R.S. (Tex. 2025); Tex. Bus. Orgs. Code ch. 21; ch. 2; ch. 7; Tex. Gov’t Code ch. 25A.
Three categories, three operative rules
Elective. The 3% derivative-suit threshold under TBOC § 21.552(a)(3) is the most-cited example of an elective provision. The corporation must adopt the threshold in its certificate of formation or bylaws — not just qualify as “covered” (listed on a national exchange, or with 500+ shareholders and an opt-in election). Once adopted, the same number is a ceiling on what the corporation may elect (cap of 3%) and the required holding the shareholder must satisfy (no derivative complaint absent the elected stake). The shareholder-proposal threshold under TBOC § 21.373 — added by SB 1057 — imposes three cumulative requirements: (i) ownership of $1 million market value or 3% of voting shares (disjunctive); (ii) a continuous six-month holding period through the meeting; and (iii) solicitation of holders of at least 67% of voting power. Exclusive Texas forum under § 2.115 and jury-trial waiver under § 2.116 are similarly elective — both require governing-document adoption.
Default. The codified BJR at TBOC § 21.419(c) applies automatically to corporations whose voting shares are listed on a national securities exchange — coverage is triggered by listed status, not by an election. The universal-demand requirement at § 21.553 applies broadly: pre-suit demand on the board is not excused for futility. TBOC § 7.001 permits director exculpation, and — following the 2025 amendment by S.B. 2411 (effective Sept. 1, 2025) — officer exculpation by certificate amendment. TBOC § 21.401(b) permits boards to consider long-term interests and continued corporate independence. Tex. Gov’t Code ch. 25A grants the Business Court concurrent jurisdiction with district courts over the categories enumerated in § 25A.004(b), with claim-specific amount-in-controversy rules under § 25A.004(d) (governance and derivative actions: $5 million) and supplemental-jurisdiction limits under § 25A.004(f) (as amended by H.B. 40, effective September 1, 2025).
Judicial doctrine. Several categories are doctrinally open. Whether Caremark and Marchand officer oversight survives under codified Texas BJR is the first generation’s headline question. Whether Revlon / Unocal enhanced scrutiny has any Texas analog beyond § 21.401(b)’s partial proxy is unresolved. Whether MFW cleansing equivalence applies in Texas — or whether Texas equity practice gap-fills a controller-transaction procedural protocol — remains an open litigation question. Whether § 21.419 displaces entire-fairness analysis at the motion-to-dismiss stage in controller-affiliated transactions is the most consequential of these doctrinal questions: no Texas appellate decision has resolved it. Finally, whether Edgar v. MITE Corp. and CTS Corp. v. Dynamics Corp. of America limit Texas’s authority to apply § 21.552 against extraterritorial plaintiffs has not been adjudicated. Plaintiff counsel for out-of-state shareholders should brief the dormant Commerce Clause defense early.