SB2411

Courts and Texas law: References to district courts in the Business Organizations Code also reach the business court when that court has jurisdiction under its separate governing law; this does not independently expand that jurisdiction. This code’s text cannot be displaced by another state’s law or decisions. Managers may consider other states’ practices without being required to follow them. The bill also permits qualifying governing-document provisions selecting particular Texas courts for internal disputes, subject to state and federal jurisdiction. Important overlap: SB29 had already enacted the out-of-state-practices rule and the forum provision effective May 14, 2025; they should not be treated as first created by SB2411 in September. Final law, sections 1–2; Earlier SB29 governance provision; Earlier forum provision; Separate business-court jurisdiction law.

Officer liability: Section 7.001’s permission to limit monetary liability through specified governing documents changes from governing persons to managerial officials, a defined term that includes officers. It is permission to adopt a limitation, not automatic protection for every officer. The section retains exceptions for loyalty breaches, specified bad-faith conduct, intentional misconduct or knowing law violations, improper benefits and liability expressly imposed by statute. Partnerships and LLCs also have their own agreement-based rules; this is not a universal statement that every entity can waive every duty. Final law, section 16; Definitions, including managerial official; Prior liability provision; LLC agreement rule; Limits on LLC waivers; Separate LLC duties rule.

Paperwork and notices: Specified updates and omissions in restated formation documents do not require another shareholder or member approval. Governing authorities may approve required transaction documents in final or substantially final form and, for specified secretary-of-state filings, ratify them before the filing becomes effective. Filing delivery is by listed methods or another method the secretary approves. Notice attachments count as part of notice, and notices to owners who did not sign a consent must describe the action or direct them to a free, publicly accessible electronic description. The act also clarifies natural-person director terminology and adjusts filing-fee cross-references, including the fallback for registered LLC series. It does not broadly eliminate filing fees or all owner-approval requirements. Final law, sections 3–15, 26–27, 39 and 41; Existing restatement framework.

Transactions and shares: Merger and exchange plans may appoint representatives with binding authority to enforce or settle owners’ rights under the plan. Disclosure schedules are not part of the plan unless it says otherwise, but retain the effects the plan assigns them. A properly approved conversion plan can authorize specified actions of the converted entity without a further vote. For a corporation with only one outstanding share class, no series and no par-value change, the board may approve a share split without shareholder approval, or a reverse split primarily to maintain exchange listing eligibility, unless its certificate provides otherwise. The law sets related authorized-share and surplus-to-capital limits. It also clarifies treasury-share consideration and delegated options terms, retaining the prohibition on a delegate issuing the covered rights, options or shares to themselves. Final law, sections 17–25; Prior board-amendment authority.

Corporate mistakes and lawsuits: For both for-profit and nonprofit corporations, the existing ratification process now expressly covers certain ineffective acts and failures to file. Validation certificates are simplified and generally required when a previously required filing was missing or needs a change. But the corporation cannot use this procedure to retroactively cure specified missing filings, including formation, termination, merger/conversion and registered-agent or office filings, plus the listed tax and nonprofit reports. Existing court-review procedures and notice protections remain relevant; this is not permission to backdate any corporate act. The act extends the existing challenge language to ineffective acts rather than creating a new universal 120-day deadline. Final law, sections 31–38 and 42–47; Existing for-profit court review; Existing challenge deadlines and exceptions; Existing nonprofit court review; Nonprofit deadlines and exceptions.

Owner claims and records: In derivative suits—owners suing on an entity’s behalf—the closely held corporation, LLC and limited-partnership exceptions expressly cover claims against present or former insiders, without extending that exception to outside defendants merely joined in the suit. These provisions do not themselves create a direct right to sue. SB2411 also includes a rule excluding additional or amended shareholder disclosures as the substantial benefit supporting plaintiff expense awards and a rule applying specified Texas procedural provisions to foreign-corporation suits. SB29 had already enacted parallel rules in May; SB2411’s own application clause covers proceedings instituted on or after September 1. LLC assignee information rights are tied to section 101.502, which includes purpose, request and document rules, not unlimited access to every communication. Final law, sections 28–30, 49–50, 52 and 58; Earlier expense-award rule; Earlier foreign-corporation rule; Closely held corporation framework; LLC records rights.

Other entities: Written, signed preformation subscriptions for LLC or limited-partnership interests can be irrevocable to the extent stated in their terms if they say they are irrevocable; postformation written subscriptions are contracts. Nonprofit formation documents or bylaws can directly designate management committees or authorize the board to do so; existing committee-composition rules and board responsibilities remain. Limited-partnership transaction signature rules are clarified, and repeal of a winding-up exception brings the known-claimant written-notice rule into play. Nonprofit associations are brought under Chapter 11 winding-up rules. Cooperatives must give members an annual report including officer/director details and compensation; separate registered-office and, for larger cooperatives, secretary-of-state financial-report requirements are repealed, along with their specific false-report offense and filing-enforcement provision. This does not repeal all reporting duties or all laws against false statements. Final law, sections 40, 48 and 51–56; Existing committee safeguards; Repealed partnership exception; Winding-up notice rule; Repealed cooperative report and offense; Repealed filing-enforcement provision.

Changes during passage: The Senate committee removed proposed shareholder-record-demand restrictions and proposed court determinations of director independence, among other edits. Those removed proposals are not SB2411’s enacted law; this does not mean no other law addresses them. The sole indexed floor amendment added the filing-delivery revision and its protection for filings delivered before September 1. The Senate-passed, House committee and final operative texts matched. Introduced; Senate committee; Senate-passed; House committee; Amendment index; Adopted Senate amendment.

Compare the published text versions in the official text index. A change is not attributed to a specific amendment here without a verified record.

Entities gain flexibility in document cleanup, transactions and correcting authorization problems; officers may gain negotiated liability protection, while owners may face fewer required votes for specified actions and need to pay attention to governing documents and litigation procedures. Cooperatives retain member reporting but lose the separate reporting regime described above. The latest fiscal note anticipates no significant state fiscal implication, assuming costs can be absorbed, but says local fiscal effects cannot be determined because court-administration data were unavailable. It does not quantify private compliance costs, investor effects or litigation savings. No particular company’s compliance, court outcome or enforceability of its documents is established here. Latest posted fiscal note; Final law.