Tex. Bus. Orgs. Code § 21.558 · Subchapter L. DERIVATIVE PROCEEDINGS
DISMISSAL OF DERIVATIVE PROCEEDING.
Text — Current through the 89th 2nd Called Legislative Session, 2025
(a) A court, sitting in equity as the finder of fact, shall dismiss a derivative proceeding on a motion by the corporation if the person or group of persons described by Section 21.554 determines in good faith, after conducting a reasonable inquiry and based on factors the person or group considers appropriate under the circumstances, that continuation of the derivative proceeding is not in the best interests of the corporation.
(b) In determining whether the requirements of Subsection (a) have been met, the burden of proof shall be on:
(1) the plaintiff shareholder if:
(A) the majority of the board of directors consists of independent and disinterested directors at the time the determination is made;
(B) the determination is made by a panel of one or more independent and disinterested persons appointed under Section 21.554(a)(3); or
(C) the corporation presents prima facie evidence that demonstrates that the applicable person or persons making the determination under Section 21.554(a) are independent and disinterested; or
(2) the corporation in any other circumstance.
Notes and commentary — not statutory text
History
Acts 2003, 78th Leg., ch. 182, Sec. 1, eff. Jan. 1, 2006.
Amended by:
Acts 2019, 86th Leg., R.S., Ch. 899 (H.B. 3603), Sec. 8, eff. September 1, 2019.
Source of truth
- Edition
- Current through the 89th 2nd Called Legislative Session, 2025
- Official file
- https://statutes.capitol.texas.gov/Docs/BO/htm/BO.21.htm
- Text hash
- sha256 5acb3a55e0934cf8fecf5be6ae2c5b1ca620a8e5ec403eea8b5a6b52f15574c3
- Composed by
- compose_tx.py 2026-10-05: the Legislative Council's chapter files read in document order; verify_tx.py's independent reading (lxml DOM walk) agrees character for character
This section cites
Provisions in this library that the text above cites, as it prints each citation. A range cited as “ss. 61.13-61.16” links its first and last provisions.
Cited by 3 provisions
Provisions in this library whose text cites Tex. Bus. Orgs. Code § 21.558. Each shows the citation as that text prints it.
Business Organizations Code
Procedural information only. Not legal advice and not a substitute for the advice of an attorney. Confirm the current text with the official publisher before relying on it.