Texas HB872 shifts the burden of proof to corporations in derivative proceedings related to environmental, social, and governance criteria.

Texas HB872 amends the Business Organizations Code to change the burden of proof in derivative proceedings. Specifically, if a shareholder alleges an act or omission related to the improper consideration of environmental, social, and governance criteria, the corporation must prove the act or omission was in the best interest of the corporation. This change applies only to actions commenced after the effective date of the Act, which is September 1, 2025. Actions commenced before this date follow existing law.

Texas HB872 shifts the burden of proof to corporations in derivative proceedings related to environmental, social, and governance criteria.

Texas HB872 amends the Business Organizations Code to change the burden of proof in derivative proceedings. Specifically, if a shareholder alleges an act or omission related to the improper consideration of environmental, social, and governance criteria, the corporation must prove the act or omission was in the best interest of the corporation. This change applies only to actions commenced after the effective date of the Act, which is September 1, 2025. Actions commenced before this date follow existing law.