Texas Corporate Law

01 The seventy-one-year inflection map

1955 Texas Business Corporation Act — December 19, 2025 Delaware Supreme Court reversal

The modern Texas corporate-law arc runs from a 1955 statutory baseline modeled on the Model Business Corporation Act through a 2003 unified-code consolidation, two Texas Supreme Court fiduciary-duty narrowings (2014, 2022), the 2023 institutional buildout, the 2024 Delaware redomiciliation catalyst, the 2025 three-statute reform cycle, and the December 19, 2025 Delaware Supreme Court reversal that doctrinally closed the loop. Twelve inflection points define the modern arc (1955 baseline; 2003 TBOC consolidation; 2014 Ritchie; 2022 Estate of Poe; 2023 H.B. 19/S.B. 1045 institutional buildout; January 30, 2024 Tornetta I; June 13, 2024 Tesla redomiciliation; 2025 S.B. 29; 2025 S.B. 1057; 2025 H.B. 40; December 19, 2025 Delaware Supreme Court reversal; and March 17, 2026 Gusinsky first federal enforcement of § 21.552). Each carries a statutory or judicial citation, and each is plotted in Figure 1.³

Figure 1 · Inflection timeline

Sources. H.B. 1156, 78th Leg., R.S. (Tex. 2003)i; Tex. Bus. Orgs. Code Ann. (West 2025); Ritchie v. Rupei, 443 S.W.3d 856 (Tex. 2014); In re Estate of Poei, 648 S.W.3d 277 (Tex. June 17, 2022); H.B. 19 and S.B. 1045, 88th Leg., R.S. (Tex. 2023); Tornetta v. Muski, 310 A.3d 430 (Del. Ch. 2024); Tesla, Inc. Form 8-K (June 13, 2024); S.B. 29i, S.B. 1057i, and H.B. 40i, 89th Leg., R.S. (Tex. 2025); In re Tesla, Inc. Deriv. Litig., 2025 WL 3689114 (Del. Dec. 19, 2025); Gusinsky v. Reynoldsi, No. 3:25-cv-01816-K, 2026 WL 747179 (N.D. Tex. Mar. 17, 2026); opinion PDF via GovInfo.

02 The 2003 code consolidation and the Texas-first source rule

Texas’s entity statutes were fragmentary before 2003. The Texas Business Corporation Act of 1955, the Texas Miscellaneous Corporation Laws Act, the Texas Non-Profit Corporation Act, the Texas Limited Liability Company Act of 1991, and several partnership-form statutes each lived as separate codes with separate definitional structures and separate procedural rules.⁴ H.B. 1156, 78th Leg., R.S. (Tex. 2003) consolidated those statutes into a single Texas Business Organizations Code: effective for new entities formed on or after January 1, 2006, mandatory for all Texas-domestic entities by January 1, 2010, and codified at Tex. Bus. Orgs. Code Ann. tit. 1 et seq. (West 2025).⁵

The 2025 reform cycle then added TBOC § 1.057i, a Texas-first source-of-law rule. The provision is narrower than the headline framing suggests: it permits managerial officials to consider law of other states in discharging fiduciary duties but specifies that failure or refusal to conform Texas-corporation conduct to the law of another state is not, standing alone, a breach.⁶ The operative consequence is that the TBOC instructs courts to resolve internal-affairs disputes by reference to Texas authority first, and treats out-of-state authority (most commonly Delaware Chancery and Delaware Supreme Court precedent) as persuasive rather than presumptive.

“A managerial official may, in discharging the official’s duties, consider, but is not required to consider, the law of any other state, jurisdiction, or political subdivision. A managerial official does not breach a duty owed to the domestic entity, the entity’s owners, or any other person because the official does not seek to conform the domestic entity’s conduct to the law of any state, jurisdiction, or political subdivision other than this state.” Tex. Bus. Orgs. Code Ann. § 1.057 (West 2025) (Texas-first source-of-law rule; originally added by S.B. 29 § 2 (Tex. 2025) at § 1.056, renumbered to § 1.057 by S.B. 2411 § 16 (Tex. 2025), effective September 1, 2025; new § 1.056 now addresses Business Court references).

The framing matters because it inverts the conventional understanding of internal-affairs analysis. Under the standard internal-affairs doctrine articulated in VantagePoint Venture Partners 1996 v. Examen, Inc., 871 A.2d 1108 (Del. 2005), and Restatement (Second) of Conflict of Laws § 302 (Am. L. Inst. 1971), the law of the state of incorporation governs a Texas-domestic corporation’s internal affairs.⁷ Section 1.057 (originally enacted as § 1.056 by S.B. 29, renumbered by S.B. 2411 effective September 1, 2025) makes that “Texas-first” routing express on the Texas side.

03 The common-law fiduciary baseline: Ritchie, Estate of Poe, officers, and veil-piercing

Texas director duties of care, loyalty, and obedience are common-law duties that operate within the TBOC’s statutory architecture. TBOC § 21.401 supplies the board-authority framework; TBOC § 3.102 supplies the board-composition framework; § 21.401(b) supplies the permitted-considerations rule expressly authorizing directors to weigh long-term as well as short-term interests of the corporation, “including the possibility that those interests may be best served by the continued independence of the corporation.”⁸ The structural difference from Delaware is where the doctrine lives: Texas in a statute the legislature may amend; Delaware in case law a court may distinguish.⁹

3.1  Ritchie v. Rupe (2014) — declining to recognize a common-law oppression claim

In Ritchie v. Rupe, 443 S.W.3d 856 (Tex. 2014) (Boyd, J.), the Texas Supreme Court declined to recognize a common-law cause of action for minority-shareholder oppression in Texas closely-held corporations. The Court did three things in the same opinion: it declined to recognize the common-law claim; it construed the receivership remedy under the predecessor statute (now TBOC § 11.404) as a rehabilitative remedy that does not authorize a court-ordered buyout of the minority’s shares; and it narrowed the definition of “oppressive conduct” for purposes of that receivership.¹⁰ The decision pushes Texas’s fiduciary-duty framework in a comparatively defendant-friendly direction relative to many other state regimes, though that comparative characterization is analytical rather than doctrinal.

3.2  In re Estate of Poe (2022) — extending Ritchie into director-shareholder duties

In In re Estate of Poe, No. 20-0178, 648 S.W.3d 277 (Tex. June 17, 2022), the Court held that a corporation’s director cannot simultaneously owe formal fiduciary duties to the corporation and an informal fiduciary duty to an individual shareholder, because those two duties are “potentially conflicting.” The Court reaffirmed Ritchie’s framework and held that by electing to form and own an entity as a corporation, the parties “disclaimed the existence of duties regarding the management of the corporation’s affairs beyond those that exist by statute or arise from the corporation’s formation documents or other agreement.”¹¹ For Texas-incorporated public companies, the practical consequence is that minority-shareholder pleading frameworks remain materially narrower than Delaware’s.

3.3  Officer duties — the Gantler contrast

Officer duties in Texas have historically been narrower than director duties and have been more agency-law-inflected than fiduciary-duty-inflected. Delaware reached a parallel director–officer fiduciary-duty framework in Gantler v. Stephens, 965 A.2d 695, 708–09 (Del. 2009) (officer fiduciary duties “same as those of directors”).¹² Texas has not adopted that parallel by judicial holding; TBOC § 21.402 tightens officer obligations on specific procedural matters but does not import the Gantler parallel wholesale.

3.4  Exculpation and indemnification — TBOC § 7.001 and ch. 8

TBOC § 7.001 permits Texas corporations to eliminate, by certificate provision, director liability for monetary damages except for breach of duty of loyalty, acts not in good faith, knowing violations of law, transactions yielding improper personal benefit, and (for closely-held entities) other limited carve-outs. As amended by S.B. 2411 (89th Leg., R.S. (Tex. 2025); effective September 1, 2025), § 7.001 also authorizes Texas corporations to extend the same exculpation to officers by certificate election — the Texas analog to the 2022 amendment to DGCL § 102(b)(7) that first opened officer exculpation in Delaware. TBOC ch. 8 (§§ 8.001–8.105) authorizes and governs indemnification and advancement, with mandatory indemnification for officers and directors wholly successful on the merits, and permissive indemnification for partially successful actions subject to good-faith and reasonable-belief findings. Together with the § 21.419 business-judgment-rule codification (Section 5 below), these provisions form the principal D&O-liability protection architecture for Texas corporations.

3.5  Veil-piercing — the Castleberry / Keyes arc

Texas veil-piercing operates as a statutory shield with a common-law tort overlay. TBOC § 21.223 prohibits piercing the corporate veil to impose contractual obligations on shareholders except where actual fraud is shown for the shareholder’s direct personal benefit. TBOC § 21.224 makes § 21.223 the exclusive vehicle: “liability for an obligation limited by Section 21.223 is exclusive and preempts any other liability imposed for that obligation under common law or otherwise.” The two operate as a unit.¹³

The common-law floor comes from Castleberry v. Branscum, 721 S.W.2d 270 (Tex. 1986), and SSP Partners v. Gladstrong Investments (USA) Corp., 275 S.W.3d 444 (Tex. 2008), which together supply the contemporary alter-ego / sham-to-perpetrate-a-fraud framework against which §§ 21.223–21.224 operate.¹⁴ The tort overlay comes from Keyes v. Weller, 692 S.W.3d 274 (Tex. June 28, 2024) (Lehrmann, J.), which construes § 21.223 against the backdrop of § 21.224’s statutory-preemption provision: § 21.223 shields shareholders qua shareholders; it does not immunize corporate agents from common-law tort liability for tortious conduct they personally direct or engage in.¹⁵

04 The 2024 catalyst: Tornetta and the Tesla redomestication

The Delaware Court of Chancery’s January 30, 2024 rescission of Elon Musk’s 2018 Tesla pay package in Tornetta v. Musk, 310 A.3d 430 (Del. Ch. 2024) (McCormick, C.) (“Tornetta I”), and the December 2, 2024 fee award in Tornetta v. Musk, 326 A.3d 1203 (Del. Ch. 2024) (“Tornetta II”), are the proximate upstream catalysts of the post-2024 Texas migration cohort tracked by SMU CGI’s Reincorporation Index.¹⁶ Tesla converted to a Texas corporation effective June 13, 2024, per its Form 8-K filed with the Securities and Exchange Commission (accession 0001104659-24-071439).¹⁷

The internal-affairs doctrine carries the doctrinal weight of every post-Tornetta Texas redomestication: a Delaware-incorporated firm that converts to Texas brings the entire TBOC framework — including the 2025 SB 29 and SB 1057 provisions — with it from the moment of effective conversion. There is no “Delaware tail” on the internal-affairs law that governs the converted entity going forward.¹⁸

On December 19, 2025, the Delaware Supreme Court, sitting en banc, reversed the Chancery rescission in In re Tesla, Inc. Derivative Litigation, 2025 WL 3689114 (Del. Dec. 19, 2025) (per curiam). The court reinstated the 2018 pay package and agreed in principle to a quantum-meruit fee award on a lodestar-times-four basis (reportedly approximately $54 million—far below the $345 million originally awarded), with the final fee amount pending remand for fee-dispute proceedings. The doctrinal loop closed in Delaware, but the migration the original rescission had catalyzed was by then done; the converted entities continue to be governed by the TBOC going forward.¹⁹

05 The 2025 reform cycle: three statutes, fourteen codified hooks + one federal-commentary item

The 2025 reform cycle supplies the core statutory content of Texas’s post-Tornetta corporate-law changes. This page focuses on three corporate-governance statutes enacted by the 89th Legislature, Regular Session, in 2025: S.B. 29 (signed May 14, 2025; effective immediately), S.B. 1057 (effective September 1, 2025), and H.B. 40 (signed June 20, 2025; effective September 1, 2025).²⁰ Two additional 2025 bills extend the reform cycle beyond the doctrinal scope of this primer and are covered in dedicated verticals: S.B. 2337 (TBOC Chapter 6A — proxy-advisor regulation; effective September 1, 2025) and S.B. 2411 (amending TBOC § 7.001 to permit officer exculpation by certificate election; effective September 1, 2025). Figure 2 maps each of the three core bills to its operative statutory hooks.

Figure 2 · Reform-cycle reach diagram

Sources. Enrolled S.B. 29, S.B. 1057, H.B. 40 (89th Leg., R.S., Tex. 2025); Tex. Bus. Orgs. Code Ann. (West 2025); Tex. Gov't Code Ann. ch. 25A (West 2025); SEC Chair Paul Atkins, Keynote Address at the John L. Weinberg Center for Corporate Governance 25th Anniversary Gala (Oct. 9, 2025).

SEC Chair Paul Atkins’s October 9, 2025 keynote at the John L. Weinberg Center for Corporate Governance discussed S.B. 1057 alongside Rule 14a-8(i)(1), the state-law-permissibility exclusion to the federal shareholder-proposal rule. Those remarks are Chair commentary, delivered with the standard disclaimer that the views are his own and not the Commission’s, and are not Commission rulemaking, issuer-specific no-action relief, or a judicial holding. The interaction between SB 1057 and Rule 14a-8 will be resolved by a court if and when it is litigated; until then, the page treats the Chair’s remarks as commentary.²¹

06 The Texas governance stack today

Ten governance functions and ten statutory hooks, surface to foundation. The stack is the cleanest one-screen summary of how the TBOC architecture now operates as a unit.

Figure 3 · Texas governance stack

Sources. Tex. Bus. Orgs. Code Ann. (West 2025); Tex. Gov't Code Ann. ch. 25A (West 2025); H.B. 1156, 78th Leg., R.S. (Tex. 2003).

07 The dual-axis derivative-standing threshold: TBOC § 21.552(a)(3)

TBOC § 21.552(a)(3)i is structured along two axes. The first axis is a statutory ceiling: the corporation may, by governing-document amendment, elect a derivative-standing threshold up to 3% of outstanding shares. The second axis is the elected threshold: the number the corporation actually adopts is the floor a shareholder-plaintiff must satisfy to bring a derivative suit. The same statutory number functions as a ceiling for the corporation and a floor for the plaintiff — hence “dual-axis.”²²

Figure 4 · Section 21.552 dual-axis explainer

Sources. Tex. Bus. Orgs. Code Ann. § 21.552(a)(3) (West 2025); illustrative XOM 13F-coalition arithmetic from public Form 13F-HR aggregate institutional holdings (snapshot mid-2025; figures are illustrative point-in-time values and are not live trading data — XOM itself does not file 13F as it is an issuer, not an institutional manager; 13F holders are looked up via the EDGAR full-text search interface). Market-cap figure is approximate and is presented for arithmetic illustration only.

Interactive · built from the statute

§ 21.552(a)(3) standing-threshold calculator

Set an issuer's market capitalization and the derivative-standing threshold the corporation has elected (the statute caps the election at 3% of outstanding shares). The model returns the dollar value a shareholder — or a coalition — must hold to obtain standing, and shows which representative holders clear that floor. All inputs are illustrative; adjust them to test the mechanism.

Preset issuer

ExxonMobil Southwest Tesla Mid-cap

Market capitalization

$520B

Elected threshold

3.0%

≤ 3% statutory ceiling

Dollar standing-floor $15.6B

Share standing-floor 117.0M shares

Who clears the elected floor? representative holders, % of outstanding

Elected floor — holders at or above the dashed line have standing; holders below do not.

How to read this · plain English and academic interpretation

Plain English. A Texas corporation may amend its certificate or bylaws to require a derivative plaintiff to own a minimum stake — up to 3% of outstanding shares — before it can sue the board on the company's behalf. The same number is a ceiling on what the corporation may demand and a floor the shareholder must clear. At a large issuer that floor is enormous in dollar terms, so a lone retail holder or even a sizeable activist position cannot reach it; only an institutional coalition can.

Worked example (the Gusinsky case). Southwest Airlines has roughly 491 million shares outstanding. A 3% floor is about 14.7 million shares. Vladimir Gusinsky held 100 shares — about five orders of magnitude (≈170,000×) short — and the Northern District of Texas dismissed his derivative suit with prejudice for failure to clear the elected threshold. Gusinsky v. Reynolds, No. 3:25-cv-01816-K (N.D. Tex. Mar. 17, 2026).

Academic interpretation. The threshold operates as an access filter whose real stringency scales with issuer size: identical as a percentage, it is trivial for a small-cap and prohibitive for a mega-cap. Modeling the dollar floor against the Form 13F-HR holder distribution shows that, at Fortune-50 issuers, standing requires either an institutional coalition or a concession from the corporation — a structural reallocation of derivative-enforcement capacity from dispersed retail plaintiffs to concentrated institutional holders. Whether that reallocation is desirable is a policy question this page does not adjudicate.

All figures are illustrative point-in-time values for arithmetic demonstration, not live trading data. Coalition percentages approximate public Form 13F-HR aggregate institutional holdings; an issuer does not itself file 13F. Source: Tex. Bus. Orgs. Code Ann. § 21.552(a)(3) (West 2025).

The arithmetic in Figure 4 carries a practical conclusion: at a Fortune-50 issuer, a 3% elected threshold under § 21.552(a)(3) is enforceable in the sense that essentially no single shareholder — and no recent activist hedge-fund position — can satisfy it alone. The threshold operates as a filter that requires either an institutional coalition (the top three 13F filers at most large issuers easily clear 3%) or a concession from the corporation. Whether that filter is desirable as a matter of policy is a separate question that this page does not adjudicate.

First federal-court enforcement. In Gusinsky v. Reynoldsi, the United States District Court for the Northern District of Texas became the first federal court to enforce § 21.552(a)(3) against a derivative plaintiff. Vladimir Gusinsky owned 100 shares of Southwest Airlines common stock, brought a derivative suit challenging the board’s decision to eliminate the airline’s longstanding “Bags Fly Free” policy, and asserted as-applied constitutional and contract-law challenges to Southwest’s adoption of the 3% ownership threshold. The court rejected each argument and dismissed the case with prejudice. The arithmetic is the holding: Southwest has approximately 567 million common shares outstanding; the 3% threshold equates to roughly 17 million shares; 100 shares is approximately five orders of magnitude (≈170,000×) short of the floor. The decision validates the dual-axis mechanism shown above — the statute caps what the corporation may elect (3%), the corporation elects the cap, and the shareholder must satisfy the elected threshold to obtain standing.²⁵

08 The Texas Business Court: divisions and operational status

The Texas Business Court was created by H.B. 19, 88th Leg., R.S. (Tex. 2023)i, signed June 9, 2023, effective September 1, 2023, and operational for cases filed on or after September 1, 2024. The Court is composed of eleven geographic divisions corresponding to the Administrative Judicial Regions. Five divisions — Dallas (First), Austin (Third), San Antonio (Fourth), Fort Worth (Eighth), and Houston (Eleventh) — were funded and operational at launch on September 1, 2024. The remaining six divisions were initially conditioned on legislative appropriations and scheduled to be abolished September 1, 2026 absent reauthorization; H.B. 40 (2025) eliminated that sunset provision and provided appointment authority for judges to the six remaining divisions (and additional judges for the First and Eleventh), contingent on legislative appropriations; the bill removed the structural threat to those divisions but did not itself open them or appoint sitting judges.²³ The companion S.B. 1045, 88th Leg., R.S. (Tex. 2023)i created the Fifteenth Court of Appeals, based in Austin, as a dedicated appellate venue for Business Court appeals.²⁴

Figure 5 · Business Court divisions

Sources. Tex. Gov't Code Ann. ch. 25A (West 2025); H.B. 19 and S.B. 1045, 88th Leg., R.S. (Tex. 2023); H.B. 40, 89th Leg., R.S. (Tex. 2025); Fifteenth Court of Appeals (txcourts.gov); Administrative Judicial Regions (txcourts.gov).

09 Texas vs. Delaware: the fiduciary framework at a glance

A neutral, doctrine-by-doctrine comparison — not a value judgment. Texas’s framework is more code-forward; Delaware’s is more case-law-forward; the two arrive at functionally similar baselines on some questions and materially different baselines on others. Figure 6 maps the nine principal axes.

Figure 6 · Texas vs. Delaware

Doctrinal axis	Texas	Delaware
Director duties — source	Common law within statutory architecture (TBOC §§ 21.401, 3.102)	Judge-made (Chancery doctrine; Smith v. Van Gorkom, 488 A.2d 858 (Del. 1985), and successors)
Officer duties	Historically narrower; principal-agent influenced; tightened by TBOC § 21.402	Parallel to directors post-Gantler v. Stephens, 965 A.2d 695, 708–09 (Del. 2009)
Inter-shareholder duties (closely-held)	No general oppression cause of action (Ritchie, 2014; Estate of Poe, 2022)	Recognized in limited closely-held contexts
Business-judgment rule	Codified for listed / opt-in (TBOC § 21.419)	Common law (Aronson v. Lewis line; abstention doctrine per Bainbridge)
Controller-transaction cleansing	TBOC § 21.4161 pre-transaction independence determination	DGCL § 144(b)/(c) post-SB 21; MFW framework (Kahn v. M & F Worldwide, 88 A.3d 635 (Del. 2014))
Veil-piercing	TBOC § 21.223 + § 21.224 (statutory); Castleberry, SSP Partners, Keyes overlay	Common law (alter ego, sham, instrumentality)
Takeover-defense permissibility	Express statutory authorization (TBOC § 21.401(b) permitted considerations)	Common law (Unocal / Unitrin)
Forum	Texas Business Court (Tex. Gov't Code ch. 25A) + TBOC § 2.115 exclusive-forum authority	Delaware Court of Chancery
Internal-entity jury waiver	Authorized by TBOC § 2.116	Not statutorily authorized; jury trials rare in Chancery

Sources. Tex. Bus. Orgs. Code Ann. (West 2025); Ritchie v. Rupe, 443 S.W.3d 856 (Tex. 2014); In re Estate of Poe, 648 S.W.3d 277 (Tex. 2022); Keyes v. Weller, 692 S.W.3d 274 (Tex. 2024); Del. Code tit. 8 (DGCL); Gantler v. Stephens, 965 A.2d 695 (Del. 2009); Kahn v. M & F Worldwide Corp., 88 A.3d 635 (Del. 2014).

10 Texas corporate law across SMU CGI

This page is the doctrinal foundations layer. The Initiative’s four other Texas-corporate-law properties carry the dataset, the case-law corpus, the weekly publication, and the Fortune-50 case study. Each is one click away.

FIGURE · THREE-STATE STATUTORY FRAMEWORK

Nine doctrines, three jurisdictions, three statutory postures.

For each doctrine the chart reports the operative rule: a Texas statute citation, a Delaware Chancery common-law source (or DGCL section), and the corresponding Nevada NRS section. Texas writes more of the framework in statutory text; Delaware leaves more to Chancery; Nevada lands between.

How to read. Each row is one doctrine. The TBOC column carries Texas Business Organizations Code section numbers; the DGCL column carries Delaware General Corporation Law section numbers or controlling common-law doctrine; the NRS column carries Nevada Revised Statutes chapter 78 references. Every cell is pin-cited in the prose and figures above.

Sources. Tex. Bus. Orgs. Code ch. 21; 8 Del. C. ch. 1 (DGCL); Nev. Rev. Stat. ch. 78; 2025 reform-cycle enrolled bills at capitol.texas.gov.

11. Primary authorities and further reading

Every body-text statutory and judicial citation is hyperlinked to its primary source. The list below consolidates the Texas and Delaware statutes, the Texas and Delaware cases, the SEC filings and statements, the conflict-of-laws references, and the practitioner commentary cited as commentary in the prose above.

Statutes (Texas)

Tex. Bus. Orgs. Code Ann. (West 2025) §§ 1.057, 2.115, 2.116, 3.102, 7.001, ch. 8, 11.404, 21.218, 21.223, 21.224, 21.373, 21.401, 21.402, 21.4161, 21.419, 21.552, 21.554; Tex. Gov’t Code Ann. ch. 25A (West 2025).

Statutes (Delaware)

Del. Code Ann. tit. 8 (DGCL) §§ 144, 220, 251, 262.

Enrolled bills (Texas, 2023 and 2025)

H.B. 1156, 78th Leg., R.S. (Tex. 2003) (TBOC adoption); H.B. 19 and S.B. 1045, 88th Leg., R.S. (Tex. 2023) (Business Court + Fifteenth Court of Appeals); S.B. 29, S.B. 1057, and H.B. 40, 89th Leg., R.S. (Tex. 2025).

Cases (Texas)

Castleberry v. Branscum, 721 S.W.2d 270 (Tex. 1986); SSP Partners v. Gladstrong Invs. (USA) Corp., 275 S.W.3d 444 (Tex. 2008); Ritchie v. Rupe, 443 S.W.3d 856 (Tex. 2014); In re Estate of Poe, No. 20-0178, 648 S.W.3d 277 (Tex. June 17, 2022); Keyes v. Weller, 692 S.W.3d 274 (Tex. 2024).

Cases (Delaware)

Smith v. Van Gorkom, 488 A.2d 858 (Del. 1985); Unocal Corp. v. Mesa Petroleum Co., 493 A.2d 946 (Del. 1985); Revlon, Inc. v. MacAndrews & Forbes Holdings, Inc., 506 A.2d 173 (Del. 1986); Unitrin, Inc. v. American General Corp., 651 A.2d 1361 (Del. 1995); VantagePoint Venture Partners 1996 v. Examen, Inc., 871 A.2d 1108 (Del. 2005); Gantler v. Stephens, 965 A.2d 695 (Del. 2009); Kahn v. M & F Worldwide Corp., 88 A.3d 635 (Del. 2014); Tornetta v. Musk, 310 A.3d 430 (Del. Ch. 2024) (Tornetta I); Tornetta v. Musk, 326 A.3d 1203 (Del. Ch. 2024) (Tornetta II); In re Tesla, Inc. Derivative Litigation, 2025 WL 3689114 (Del. Dec. 19, 2025) (en banc, per curiam).

SEC filings and statements

Tesla, Inc. Form 8-K (June 13, 2024) (accession 0001104659-24-071439); SEC Chair Paul Atkins, Keynote Address at the John L. Weinberg Center for Corporate Governance 25th Anniversary Gala (Oct. 9, 2025); 17 C.F.R. § 240.14a-8 (Rule 14a-8).

Conflict of laws and federal tax authorities

Restatement (Second) of Conflict of Laws § 302 (Am. L. Inst. 1971); Treas. Reg. §§ 301.7701-1 to -3 (1996) (check-the-box regulations superseding the Kintner classification regime).

Practitioner commentary (commentary only; not used as primary citation target)

Baker Botts, Ten Principles That Will Guide the New Texas Business Courts in Breach of Fiduciary Duty Litigation (Sept. 2024); Byron F. Egan (Jackson Walker), Texas Business Courts (Oct. 2023); Freeman Law, Does a Director of a Texas Corporation Owe Informal Fiduciary Duties to the Corporation’s Shareholders?; Gibson Dunn, SEC Chairman Atkins Comments on Rule 14a-8 Challenges (Oct. 2025); Harvard Law School Forum on Corporate Governance, Atkins on Challenges to Non-Binding Shareholder Proposals (Oct. 16, 2025).

Scholarship

Byron F. Egan, Egan on Entities: Corporations, Partnerships and Limited Liability Companies in Texas (5th ed. 2025) (Texas Bar Books); Elizabeth S. Miller & Robert A. Ragazzo, 19 Texas Practice: Business Organizations (3d ed., updated annually); Carliss N. Chatman (SMU Dedman School of Law), The Corporate Personhood Two-Step, 18 Nev. L.J. 811 (2018) (SSRN 2992275; DOI 10.2139/ssrn.2992275).

Footnotes

1. See Tex. Bus. Orgs. Code Ann. (West 2025); Tex. Gov’t Code Ann. ch. 25A (West 2025). The TBOC is the unified Texas entity code enacted by H.B. 1156, 78th Leg., R.S. (Tex. 2003); Tex. Gov’t Code ch. 25A is the Texas Business Court authority enacted by H.B. 19, 88th Leg., R.S. (Tex. 2023) and amended by H.B. 40, 89th Leg., R.S. (Tex. 2025). ↑
2. See SMU CGI source-citation protocol, internal project guidance (May 2025) (Bluebook 21st edition; primary-source hyperlinks; practitioner commentary as commentary, not as primary citation target). The SMU CGI standing rule on hyperlinking and source discipline. Practitioner alerts (Baker Botts, Gibson Dunn, Sidley, Hunton, Freeman Law, Jackson Walker, etc.) may appear in the prose as commentary on the case-law and statutory landscape but are not used as URL targets for statutory or judicial citations; statutory citations resolve to statutes.capitol.texas.gov, judicial citations resolve to the issuing court or to Justia / CourtListener, and SEC filings resolve to EDGAR-direct URLs with accession numbers. ↑
3. See sources cited in Figure 1 (note). Each inflection point in Figure 1 is sourced to an enrolled bill or a primary judicial opinion. The twelve points are: (1) 1955 Texas Business Corporation Act; (2) 1991 Texas Limited Liability Company Act; (3) 2003 TBOC enactment (H.B. 1156, 78th Leg., R.S.); (4) Jan. 1, 2006 TBOC effective for new entities; (5) Jan. 1, 2010 TBOC mandatory for all entities; (6) 2014 Ritchie v. Rupe; (7) 2022 In re Estate of Poe; (8) 2023 H.B. 19 + S.B. 1045 (Business Court + Fifteenth Court of Appeals); (9) 2024 Tornetta v. Musk + Tesla redomestication; (10) 2025 S.B. 29 + S.B. 1057 + H.B. 40; (11) Dec. 19, 2025 Delaware Supreme Court per curiam reversal in In re Tesla, Inc. Derivative Litigation; (12) Mar. 17, 2026 Gusinsky v. Reynolds (N.D. Tex.), first federal-court enforcement of TBOC § 21.552(a)(3). ↑
4. Texas Business Corporation Act, Acts 1955, 54th Leg., p. 239, ch. 64, eff. Sept. 6, 1955 (predecessor of TBOC ch. 21); Texas Limited Liability Company Act, Acts 1991, 72d Leg., R.S., ch. 901, § 46, eff. Aug. 26, 1991 (predecessor of TBOC ch. 101). Pre-TBOC fragmentation. The Texas LLC Act of 1991 was enacted in response to Rev. Rul. 88-76, 1988-2 C.B. 360, in which the IRS applied the Kintner regulations to classify a Wyoming LLC as a partnership for federal tax purposes; the Kintner regime was superseded in 1996 by the federal check-the-box regulations at Treas. Reg. §§ 301.7701-1 to -3. ↑
5. H.B. 1156, 78th Leg., R.S. (Tex. 2003) (enacting the Texas Business Organizations Code); codified at Tex. Bus. Orgs. Code Ann. tit. 1 et seq. (West 2025). Effective date for new entities: Jan. 1, 2006; mandatory application for all Texas-domestic entities: Jan. 1, 2010, at which point the predecessor statutes (the 1955 TBCA, the 1991 TLCA, and the partnership-form statutes) expired. ↑
6. Tex. Bus. Orgs. Code Ann. § 1.057 (West 2025), originally added at § 1.056 by S.B. 29 and renumbered to § 1.057 by S.B. 2411 § 16 (eff. Sept. 1, 2025), as discussed in S.B. 29, 89th Leg., R.S. (Tex. 2025). The statutory text is narrower than “Texas-first” framing suggests: managerial officials may consider law of other states, and failure or refusal to conform Texas-corporation conduct to other-state law is not, standing alone, a breach. The provision routes internal-affairs analysis to Texas authority first; it does not foreclose consideration of out-of-state authority. ↑
7. VantagePoint Venture Partners 1996 v. Examen, Inc., 871 A.2d 1108, 1112–13 (Del. 2005); Restatement (Second) of Conflict of Laws § 302 (Am. L. Inst. 1971). The constitutional and conflict-of-laws predicate for every post-Tornetta redomestication. A Delaware-incorporated firm that converts to Texas brings the entire TBOC framework with it from the moment of effective conversion; the internal-affairs doctrine routes governing law to the state of incorporation. ↑
8. Tex. Bus. Orgs. Code Ann. § 21.401(b) (West 2025); id. § 3.102. Section 21.401(b) is the express statutory authorization for Texas-corporation takeover-defense analysis — the Texas analogue to Delaware’s judicially developed enhanced-scrutiny doctrines (Unocal, Unitrin, Revlon). Where Delaware reaches the same permitted-considerations result by case law, Texas reaches it by statute. ↑
9. See, e.g., Smith v. Van Gorkom, 488 A.2d 858 (Del. 1985); Cede & Co. v. Technicolor, Inc., 634 A.2d 345 (Del. 1993). Delaware reaches its director-duty baseline through Chancery decisions and Delaware Supreme Court precedent rather than through codified text. The structural-architecture point of this section is not normative; it is descriptive: Texas’s baseline lives in the TBOC, Delaware’s lives in the case law. ↑
10. Ritchie v. Rupe, 443 S.W.3d 856, 870–91 (Tex. 2014) (Boyd, J.) (declining to recognize common-law shareholder-oppression claim; construing receivership remedy under predecessor statute, now TBOC § 11.404; narrowing the “oppressive conduct” definition). Decided June 20, 2014. The opinion is doctrinally upstream of every Texas-corporation minority-shareholder analysis. The receivership remedy that remains is rehabilitative, not a court-ordered buyout; the “oppressive conduct” definition is substantially narrower than the pre-Ritchie case-law line. ↑
11. In re Estate of Poe, No. 20-0178, 648 S.W.3d 277 (Tex. June 17, 2022); see also Freeman Law, Does a Director of a Texas Corporation Owe Informal Fiduciary Duties to the Corporation’s Shareholders? The Texas Supreme Court Speaks (commentary). Estate of Poe extends Ritchie’s closely-held narrowing into the director–shareholder relationship and reaffirms the rule that the parties’ election of the corporate form “disclaim[s] the existence of duties regarding the management of the corporation’s affairs” beyond those that exist by statute or formation documents. ↑
12. Gantler v. Stephens, 965 A.2d 695, 708–09 (Del. 2009) (officer fiduciary duties “same as those of directors”). The Delaware Supreme Court’s express recognition that officer fiduciary duties parallel director fiduciary duties. The Texas doctrine has not made the parallel by judicial holding; the practitioner-side discussion typically characterizes Texas officer duties as principal-agent influenced rather than fiduciary-duty influenced. TBOC § 21.402 tightens specific procedural obligations but does not import the Gantler parallel wholesale. ↑
13. Tex. Bus. Orgs. Code Ann. § 21.223 (West 2025); id. § 21.224. § 21.223 prohibits piercing the corporate veil for contractual obligations except where actual fraud is shown for the shareholder’s direct personal benefit; § 21.224 makes § 21.223 the exclusive vehicle for that shield, preempting any other liability imposed for that obligation under common law or otherwise. The two operate as a unit. ↑
14. Castleberry v. Branscum, 721 S.W.2d 270 (Tex. 1986); SSP Partners v. Gladstrong Invs. (USA) Corp., 275 S.W.3d 444 (Tex. 2008). Castleberry decided July 2, 1986 (Spears, J.); the Texas Legislature responded with what is now TBOC § 21.223 (codified from TBCA art. 2.21, added by 1989 amendment, recodified in 2003 as part of the TBOC consolidation). SSP Partners refined the alter-ego / sham-to-perpetrate-a-fraud framework that survives alongside the statutory shield. ↑
15. Keyes v. Weller, 692 S.W.3d 274 (Tex. June 28, 2024) (Lehrmann, J.) (Bland, J., concurring, joined by Blacklock, Huddle, and Young, JJ.). Construes § 21.223 against the backdrop of § 21.224’s statutory-preemption provision. Holds that the § 21.223 / § 21.224 scheme shields shareholders qua shareholders from veil-piercing liability for the corporation’s contractual obligations, but does not immunize corporate agents from common-law tort liability for tortious conduct they personally direct or engage in. The decision aligns the doctrinal architecture with the underlying agency-law principle. ↑
16. Tornetta v. Musk, 310 A.3d 430 (Del. Ch. 2024) (McCormick, C.); Tornetta v. Musk, 326 A.3d 1203 (Del. Ch. 2024). Tornetta I decided January 30, 2024; Tornetta II decided December 2, 2024. Together, the Chancery rescission of Musk’s 2018 pay package and the $345 million fee award are the proximate upstream catalysts of the post-2024 Texas migration cohort tracked by SMU CGI’s Reincorporation Index. ↑
17. Tesla, Inc., Current Report on Form 8-K (June 13, 2024) (accession 0001104659-24-071439). Tesla’s conversion to a Texas corporation became effective on June 13, 2024 — the same day as the shareholder vote and the date the Texas certificate of formation became effective. Tesla’s Q2 2024 Form 10-Q confirms the same date. ↑
18. See Restatement (Second) of Conflict of Laws § 302 (Am. L. Inst. 1971); VantagePoint, 871 A.2d at 1112–13. The internal-affairs rule. A converted entity’s governance is governed by the law of the new state of incorporation from the moment of effective conversion; there is no “Delaware tail” on internal-affairs questions for activity post-conversion. ↑
19. In re Tesla, Inc. Derivative Litigation, 2025 WL 3689114 (Del. Dec. 19, 2025) (en banc, per curiam). The Delaware Supreme Court’s reversal of Tornetta I reinstated the 2018 pay package and agreed in principle to a quantum-meruit fee award on a lodestar-times-four basis (reportedly approximately $54 million, far below the original $345 million award), with the final fee amount pending remand for fee-dispute proceedings. The decision is doctrinal closure on the Tornetta catalyst, but it does not unwind the migrations that the original rescission triggered: each converted entity continues to be governed by the TBOC for internal-affairs purposes going forward. ↑
20. Enrolled S.B. 29, S.B. 1057, and H.B. 40, 89th Leg., R.S. (Tex. 2025). The three 2025 statutes. S.B. 29 passed the Senate on May 7, 2025, was signed May 14, 2025, and is effective immediately; S.B. 1057 was signed May 19, 2025, and is effective Sept. 1, 2025; H.B. 40 was signed June 20, 2025, and is effective Sept. 1, 2025. Together they constitute fourteen codified TBOC and Government Code hooks, plus one federal-hook commentary point. ↑
21. SEC Chair Paul Atkins, Keynote Address at the John L. Weinberg Center for Corporate Governance 25th Anniversary Gala (Oct. 9, 2025); see also Gibson Dunn, alert (Oct. 2025) (“the law in this context is not settled, and . . . only a court can resolve the scope of the Rule 14a-8 exclusions”); Harvard Law School Forum on Corporate Governance (Oct. 16, 2025) (compiling reactions). The standard disclaimer language — that the views are the Chair’s own and not the Commission’s — appears on the SEC speech transcript. Commentary, not Commission rulemaking; not issuer-specific no-action relief; not a judicial holding. The interaction between SB 1057 and Rule 14a-8(i)(1) will be resolved by a court if and when litigated. ↑
22. Tex. Bus. Orgs. Code Ann. § 21.552(a)(3) (West 2025), added by S.B. 29, 89th Leg., R.S. (Tex. 2025). The dual-axis terminology is SMU CGI’s analytical shorthand for the statute’s structure: the same numeric (3%) functions as a ceiling for the corporation (what the corporation may elect by governing-document amendment) and a floor for the plaintiff (what the shareholder must satisfy to bring a derivative suit once the corporation has elected). The corporation’s elected number need not be 3% — it may be anywhere at or below the statutory cap — but most public-company adopters have elected at the cap. For the first federal-court enforcement of this provision, see n. 25 (Gusinsky v. Reynolds). ↑
23. H.B. 19, 88th Leg., R.S. (Tex. 2023) (signed June 9, 2023; effective Sept. 1, 2023); H.B. 40, 89th Leg., R.S. (Tex. 2025) (signed June 20, 2025; effective Sept. 1, 2025); Tex. Gov’t Code Ann. § 25A.003 (West 2025) (eleven geographic divisions). Five urban divisions funded and operational at launch on September 1, 2024: First (Dallas), Third (Austin), Fourth (San Antonio), Eighth (Fort Worth), Eleventh (Houston). The remaining six were initially conditioned on appropriations and scheduled to be abolished September 1, 2026; H.B. 40 (2025) eliminated that sunset and provided appointment authority for judges to those six divisions plus additional judges for the First and Eleventh. ↑
24. S.B. 1045, 88th Leg., R.S. (Tex. 2023) (creating the Fifteenth Court of Appeals); Fifteenth Court of Appeals (txcourts.gov). Companion statute to H.B. 19. The Fifteenth Court of Appeals, based in Austin, has exclusive intermediate appellate jurisdiction over Business Court appeals and State-of-Texas civil cases; first justices appointed June 11, 2024 (Brister, C.J.; Field, J. (Place 2); Farris, J. (Place 3)). ↑
25. Gusinsky v. Reynolds, No. 3:25-cv-01816-K (N.D. Tex. Mar. 17, 2026) (Kinkeade, J.) (order dismissing derivative complaint with prejudice). First published federal-court enforcement of Tex. Bus. Orgs. Code Ann. § 21.552(a)(3) (West 2025). Vladimir Gusinsky, holder of 100 shares of Southwest Airlines Co. common stock (CIK 0000092380; ~491 million shares outstanding), filed a derivative suit challenging the board’s elimination of the airline’s “Bags Fly Free” policy. Two days after S.B. 29 took effect, Southwest’s board amended the bylaws to adopt a 3% ownership threshold under § 21.552(a)(3). The court applied the threshold and dismissed with prejudice, rejecting plaintiff’s as-applied challenges grounded in fiduciary entrenchment, the Texas Constitution, and Texas contract-law principles. Primary-source opinion PDF available via GovInfo (U.S. Government Publishing Office) (Westlaw parallel cite 2026 WL 747179). Authoritative secondary coverage: Gibson Dunn client alert; see also Sidley Enhanced Scrutiny; Hunton Andrews Kurth; Foley & Lardner (each a practitioner secondary source, not a primary authority). ↑