Skip to main content
Find a Lawyer

Texas Business Organizations Code - BUS ORG § 21.419. Presumptions for Directors and Officers of Certain Corporations

Current as of January 01, 2024 | Updated by Findlaw Staff

(a) This section applies only to a corporation that has:

(1) a class or series of voting shares listed on a national securities exchange;  or

(2) included in its governing documents a statement affirmatively electing to be governed by this section.

(b) This section sets out certain presumptions concerning compliance by directors and officers with their duties to a domestic corporation, including the duty of care and duty of loyalty as those duties pertain to transactions with interested persons.

(c) In taking or declining to take any action on any matters of a corporation's business, a director or officer is presumed to act:

(1) in good faith;

(2) on an informed basis;

(3) in furtherance of the interests of the corporation;  and

(4) in obedience to the law and the corporation's governing documents.

(d) Neither a corporation nor any of the corporation's shareholders has a cause of action against a director or officer of the corporation as a result of any act or omission in the person's capacity as a director or officer unless:

(1) the claimant rebuts one or more of the presumptions established by Subsection (c);  and

(2) it is proven by the claimant that:

(A) the director's or officer's act or omission constituted a breach of one or more of the person's duties as a director or officer;  and

(B) the breach involved fraud, intentional misconduct, an ultra vires act, or a knowing violation of law.

(e) The presumptions established by this section:

(1) are in addition to any legal presumption arising under common law or this code, in favor of any managerial official of a corporation to which this section applies;  and

(2) do not abrogate, preempt, or lessen any other defense, presumption, immunity, or privilege under other constitutional, statutory, case, or common law or rule provisions, in favor of any managerial official of any domestic entity, including any corporation to which this section does not apply.

(f) In alleging fraud, intentional misconduct, an ultra vires act, or a knowing violation of the law under Subsection (d)(2)(B), a party must state with particularity the circumstances constituting the fraud, intentional misconduct, ultra vires act, or knowing violation of law.

(g) This section does not limit the effectiveness or applicability of a provision contained in the certificate of formation or similar instrument of a corporation limiting monetary liability of a governing person.

Previous Part of Code Next Part of Code
Back to Chapter List

Cite this article: FindLaw.com - Texas Business Organizations Code - BUS ORG § 21.419. Presumptions for Directors and Officers of Certain Corporations - last updated January 01, 2024 | https://codes.findlaw.com/tx/business-organizations-code/bus-org-sect-21-419/

FindLaw Codes may not reflect the most recent version of the law in your jurisdiction. Please verify the status of the code you are researching with the state legislature before relying on it for your legal needs.

Was this helpful?

Welcome to FindLaw's Cases & Codes

A free source of state and federal court opinions, state laws, and the United States Code. For more information about the legal concepts addressed by these cases and statutes, visit FindLaw’s Learn About the Law.

Go to Learn About the Law

Latest Blog Posts

For Legal Professionals

Learn About The Law

Get help with your legal needs

FindLaw’s Learn About the Law features thousands of informational articles to help you understand your options. And if you’re ready to hire an attorney, find one in your area who can help.

Go to Learn About the Law

Need to Find an Attorney?

Search our directory by legal issue

Enter information in one or both fields (Required)

Copied to clipboard