In March 2025, Delaware legislators passed Senate Substitute 1 to Senate Bill 21 (SB 21), marking the most significant overhaul of the Delaware General Corporation Law (DGCL) in decades. SB 21 introduced sweeping reforms to DGCL Sections 144 and 220 aimed at enhancing legal certainty for corporate boards and reducing litigation risk.
The amendments to Section 144 established “safe harbor” procedures for cleansing conflict-of-interest transactions. These changes now permit conflicted transactions—including those involving controlling stockholders and interested directors and officers—to proceed so long as boards follow certain cleansing procedures. SB 21 also codified the “entire fairness standard,” providing a safe harbor for transactions deemed “fair as to the corporation and the corporation’s stockholders.”
Separately, SB 21 established a rebuttable presumption of director disinterestedness where directors of publicly traded corporations meet NYSE or Nasdaq independence standards and exculpated controlling stockholders from monetary damages for most breaches of fiduciary duty. The legislation also amended DGCL Section 220 by narrowing the scope of stockholder information rights and imposing various procedural requirements for stockholders seeking records.
In passing SB 21, its proponents indicated that they sought to reaffirm the consistent and predictable application of Delaware corporate law. A pending appeal to the Delaware Supreme Court challenges the constitutionality of aspects of SB 21’s amendments, but as it stands, it represents Delaware law.
Following Delaware’s enactment of SB 21, legislators in Nevada and Texas have moved swiftly to advance their own corporate law reforms. Both states have passed new legislation aimed at enhancing their appeal to businesses. Although Texas’s and Nevada’s legislation tracks certain aspects of Delaware’s SB 21, there are also notable differences.
This advisory highlights key similarities and differences between the evolving Delaware, Nevada, and Texas corporate law regimes in the wake of this new legislation.
Texas
Texas responded to Delaware’s SB 21 by enacting a series of bills—primarily, Senate Bills 29, 1057, and 2411—that amend several sections of the Texas Business Organizations Code (TBOC). Like Delaware, Texas’s focus was on director and officer liability, stockholder litigation, and corporate governance, and collectively, these changes represent one of the most comprehensive overhauls to Texas corporate law in recent history.
SB 29 was the most sweeping of the three bills and addressed a range of issues, including director liability, interested transactions, stockholder inspection rights, and attorneys’ fees. The most notable changes include:
- Permitting Forum Selection Provisions and Jury Trial Waivers. Texas corporations may now include exclusive Texas forum selection clauses and jury trial waivers for “internal entity claims” in their governing documents, including derivative claims. These provisions align Texas more closely with Delaware and Nevada, both of which now permit exclusive forum clauses and jury trial waivers.
- Codification of the Business Judgment Rule. SB 29 codifies the business judgment rule in new Section 21.419 of the TBOC, establishing a rebuttal presumption that directors and officers acted 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. To maintain a cause of action in Texas, a claimant must rebut this presumption, prove a breach of fiduciary duty, and prove that the breach involved fraud, intentional misconduct, an ultra vires act, or a knowing violation of the law. The provision applies automatically to publicly traded corporations and may affirmatively be adopted by private corporations. This change brings Texas law in line with a similar statute in Nevada, although Texas’s inclusion of an “ultra vires act” as grounds for overcoming the business judgment rule represents a difference. Although not codified in Delaware, the business judgment rule has been applied by Delaware courts to corporate actions for decades.
- Predetermination of Special Committee Independence. SB 29 introduces a new method for confirming the independence of special committees. Boards may now petition a court for a ruling on the independence of a special committee formed to evaluate an interested transaction. The process requires a board to (1) file a petition with the court; (2) notify stockholders; (3) attend a preliminary hearing at least 10 days after the notice is given; and (4) present evidence at an evidentiary hearing. This approach is novel—Delaware and Nevada do not provide a mechanism for predetermination of independence. SB 21, however, more broadly bolstered the presumption of director disinterestedness for publicly traded Delaware corporations that have satisfied the NYSE’s or Nasdaq’s independence standards, a heightened presumption which Nevada and Texas are yet to adopt.
- Derivative Standing Thresholds. Texas law now allows public corporations and opting-in private corporations with 500 or more stockholders to bar derivative suits brought by stockholders owning less than 3% of outstanding shares. Delaware and Nevada do not restrict derivative actions by concrete ownership thresholds, although stockholder standing requirements still apply.
- Limiting Inspection Rights. SB 29 restricts stockholder access to certain corporate records. Text messages, social media communications, and emails are now exempt from stockholder records requests to public corporations and private corporations that opt in. Only if such communications “effectuate” action by the corporation can stockholders demand inspection. The new law also allows corporations to deny books and records demands when the demand is made as part of an active or pending (1) derivative proceeding in the right of the corporation; or (2) a lawsuit in which the corporation and the requesting stockholder are expected to be adversarial. Delaware’s SB 21 similarly excludes text messages and emails and only permits inspection of “other specific records” if a stockholder demonstrates a compelling need for the records at issue and establishes by clear and convincing evidence that the records are necessary and essential to further a proper purpose. Nevada also limits the types of documents that may be inspected to books of account and financial statements but only guarantees inspection rights to stockholders that own 15% of a corporation’s stock.
- Limiting Attorneys’ Fees. SB 29 prohibits the recovery of attorneys’ fees in cases that result solely in additional disclosures from the corporation. Delaware and Nevada courts also restrict the recovery of attorneys’ fees in cases solely related to corrective disclosures.
In addition, SB 1057 allows “nationally listed corporations” to opt in to more restrictive requirements for shareholder proposals. The corporations must provide notice to stockholders of the proposed amendment and notice of how the updated proposal procedures will affect stockholders.
- Once a corporation opts in, stockholders may only submit proposals if they (1) hold shares equal to at least $1 million in market value or 3% of the corporation’s voting shares; (2) have held those shares for at least six months before the stockholder meeting and also during the stockholder meeting; and (3) solicit holders of at least 67% of the voting shares on the proposal.
- These requirements do not apply to director nominations and procedural resolutions that are “ancillary to the conduct of the meeting,” though the statute does not define what qualifies as “ancillary.”
Notably, this legislation imposes greater limitations on stockholder proposals than SEC Rule 14a-8, and thus is almost certain to face preemption challenges.
SB 2411 expands the scope of exculpation under the TBOC to include corporate officers and modernizes transaction approval procedures:
- Limiting Officer Liability. Texas law now allows corporations to extend liability protections to officers that mirror those available to directors and amend their certificates of formation to limit officers’ monetary liability for actions taken in their official capacity. However, exculpation is not available when an officer is found liable for (1) breaching the duty of loyalty; (2) an act or omission in bad faith that constitutes a breach of any duty to the corporation or that involves intentional misconduct or a knowing violation of the law; (3) a transaction from which the officer received an improper benefit; or (4) violating a statute that provides for liability. This reform aligns Texas with Delaware and Nevada, both of which allow exculpation for breaches of the duty of care by officers, at least for direct claims.
- Relaxing Transaction Approval Requirements. SB 2411 allows boards to approve “substantially final” transaction plans, agreements, and instruments, rather than requiring finalized versions at the time of approval. The legislation also eliminates the need for stockholder approval for certain administrative actions, including amendments to certificates of formation, stock splits, and reverse stock splits.
- Simplifying Merger Approval. SB 2411 clarifies that disclosure schedules and similar documents need not be formally approved as part of a merger, and merger plans may also name individuals responsible for acting on behalf of stockholders, with exclusive authority to settle post-transaction rights.
These changes attempt to put Texas in step with the “market practice” amendments adopted by Delaware in 2024, which similarly allow boards to approve “substantially final” plans, and the 2023 changes to Delaware law that lowered requirements for most stock splits. In contrast, Nevada’s new law provides that stock splits, reverse stock splits, and changes in authorized shares must be approved by a majority vote of the relevant class of stock.
Nevada
Nevada amended its business code to enact several changes that impact corporate governance, stockholder rights, and litigation strategy for entities incorporated in the state. These changes stem from the enactment of Assembly Bill No. 239 (AB 239), which became effective on May 30, 2025:
- Waiver of Jury Trials. Like Texas, Nevada’s business code now allows corporations to include a jury-trial waiver for internal corporate actions in their articles of incorporation. This means that disputes such as derivative lawsuits asserting breach of fiduciary duty claims may be adjudicated solely by a judge, eliminating the unpredictability associated with jury trials in these matters. This change brings Nevada closer in alignment with Delaware’s Chancery Court model, which similarly restricts jury trials in most internal corporate disputes. Importantly, this waiver applies only to internal actions and does not impact the right to a jury trial in other types of proceedings. Like the statutory definition in Texas, Nevada defines “internal action” broadly.
- Amending the Business Judgment Rule. AB 239 also clarifies Nevada’s statutory business judgment rule by adding text explicitly stating that directors and officers must act “on an informed basis.” This amendment serves to harmonize the language across related provisions and reinforces the expectations that corporate decision-makers exercise due diligence and care in their roles. While not a substantive change in fiduciary duty standards, this clarification underscores the importance of informed decision-making in corporate governance. Nevada, Texas, and Delaware law are now largely aligned on emphasizing the primacy of stockholder welfare in corporate decision-making, although Nevada and Texas offer some latitude for consideration of a broader range of interests and stakeholders.
- Limitation on Liability for Controlling Stockholders. Another significant update to Nevada law pertains to the duties and potential liabilities of controlling stockholders. Nevada’s recent amendments clarify that controlling stockholders—defined as stockholders who are able to elect a majority of the directors—can typically exercise their voting rights in accordance with their own interests, without any obligation to consider the interests of others. Thus, as a general matter, they owe no fiduciary duties to the corporation or any other stockholders on which liability can be predicated, with one exception set forth in the statute.
Under Nevada’s recent amendments, the only fiduciary duty of a controlling stockholder is to refrain from exerting undue influence over any director or officer of the corporation with the purpose and proximate effect of inducing a breach of fiduciary duty by the director or officer. The mere exercise or withholding of voting power by the controlling stockholder does not, by itself, constitute or indicate a breach of fiduciary duty. After SB 21, Delaware law similarly limits liability for controlling stockholders to breaches of the duty of loyalty, acts or omissions not in good faith or that involve intentional misconduct or a knowing violation of the law, or any transaction from which the controlling stockholder derived an improper personal benefit. Although the TBOC refers to “controlling shareholders,” Texas law does not explicitly address controlling stockholder fiduciary duties.
Liability may only arise for a controlling stockholder of a Nevada corporation if the controlling stockholder exerts (1) undue influence that relates directly to a contract or transaction the controlling stockholder is a party to or the controlling stockholder has a material and nonspeculative interest in; (2) that causes the directors and officers to breach their fiduciary duties; and (3) those breaches result in a material, nonspeculative, and nonratable financial benefit to the controlling stockholder, while resulting in a material and nonspeculative detriment to other stockholders generally.
A controlling stockholder is, however, presumed to have not breached their fiduciary duty with respect to a contract or other transaction if the contract or transaction has been authorized or approved (1) by a committee of the board of directors consisting of only disinterested directors; or (2) by the board of directors in reliance on the recommendation of a committee of the board of directors consisting of only disinterested directors. This presumption is similar to the safe harbor provisions adopted by Delaware in SB 21, which also provide procedures for disinterested committees to cleanse conflict-of-interest transactions. Delaware, however, has further codified that these transactions may also be cleansed by the approval of a majority of disinterested stockholders, or more generally if transactions are “fair as to the corporation and the corporation’s stockholders.”
- Dissenter’s Rights. Nevada’s recent amendments also address dissenting stockholder rights by clarifying that the appraisal remedy provided under the Nevada business code is, absent extraordinary circumstances, the exclusive recourse for stockholders who dissent from corporate actions. Stockholders who are entitled to dissent from a corporate action under the dissenter’s rights statute must not otherwise object to or challenge the corporate action, except to the extent that the corporation did not obtain the requisite vote or consent of stockholders to approve the corporate action, or the corporate action itself is the proximate result of actual fraud against the stockholder or the corporation. This clarification aims to streamline the legal remedies available to dissenting stockholders and reduce minority stockholder activism and collateral litigation. Nevada joins Texas in codifying the principle that Delaware courts have largely applied for years—that in most cases, appraisal is the exclusive remedy for dissenting stockholders.
Nevada also is considering Assembly Joint Resolution 8 (AJR 8), which would establish a dedicated business court. This court would be staffed by appointed judges, distinguishing it from other courts in the state that feature elected judges. This proposal would serve as Nevada’s answer to the Delaware Court of Chancery and the newly operating Texas Business Court, which began hearing cases in 2024.
If established, the Nevada business court would have exclusive original jurisdiction over disputes involving stockholder rights, mergers and acquisitions, fiduciary duties, receiverships involving business entities, and other commercial or contractual disputes between business entities. It also would handle any other business disputes of a similar nature that seek equitable or declaratory relief. The Nevada Supreme Court would retain exclusive appellate jurisdiction over cases originating in the business court. AJR 8 must pass the legislature again in 2027 and be approved by Nevada voters.
Takeaways
The 2025 legislative reforms across Delaware, Texas, and Nevada reflect significant efforts to reshape corporate governance, stockholder rights, and director and officer liability to attract corporations. Although Nevada and Texas have positioned themselves as alternatives to Delaware, Delaware has enacted its own reforms and its business-savvy judiciary remains a top draw for American corporations.
Despite shared objectives, each state’s approach reflects distinct policy choices and structural nuances that must be evaluated on a case-by-case basis. Importantly, the practical impact of these reforms—and their influence on each state’s business climates—will depend on how courts interpret and apply the new statutory frameworks. Several provisions are already subject to constitutional challenges or are expected to face judicial scrutiny. Companies should review these changes carefully and closely monitor related legislative and judicial developments that affect their application. We will continue to track these developments as they move from the statehouse to the courthouse.
If you have any questions, or would like additional information, please contact one of the attorneys on our Financial Services Litigation team or one of the attorneys on our Securities Litigation team.
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