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SB1057

Regular Session

Relating to the submission and approval of certain proposals by shareholders of nationally listed corporations.

Moderate
Low Cost
Effective:2025-09-01
SB1057
Moderate
Relating to the submission and approval of certain proposals by shareholders of nationally listed corporations.
Moderate Compliance Urgency
Requires near-term attention
Cost Impact
Low
Effective
2025-09-01
Primary Author: Sen. Tan Parker
89th Texas Legislature
jdkey.com
01

Compliance Analysis

Key implementation requirements and action items for compliance with this legislation

Implementation Timeline

  • Effective Date: September 1, 2025.
  • Compliance Deadline: Discretionary. Compliance mandates only trigger if and when your Board elects to amend the corporation's governing documents to opt into this statute. To utilize these protections for the 2026 proxy season, preparatory work must begin in Q3 2025.
  • Agency Rulemaking: The Texas Securities Commissioner must approve specific stock exchanges (under Chapter 4005) to determine eligibility for companies not headquartered in Texas but listed on a Texas exchange. Watch for guidance on "approved exchanges" in late 2025.

Immediate Action Plan

  • Step 1 (Eligibility Check): Confirm your entity is a "Nationally Listed Corporation" with a Texas headquarters or listing on a Commissioner-approved Texas exchange.
  • Step 2 (Risk Assessment): Commission a formal legal opinion from outside counsel regarding the interaction between SB1057 and SEC Rule 14a-8 for your specific shareholder base.
  • Step 3 (Insurance Review): Confirm with your broker that your D&O policy covers governance disputes arising from state-federal regulatory conflicts.
  • Step 4 (Drafting): If proceeding, draft the "Notice of Proposed Amendment" for inclusion in your next proxy statement (must occur *before* the amendment is adopted).

Operational Changes Required

Contracts

  • Governing Documents: You must draft and execute amendments to your Certificate of Formation or Bylaws to explicitly reference Section 21.373 of the Business Organizations Code.
  • Proxy Solicitor Agreements: Standard scopes of work must be renegotiated. Solicitors must now validate whether a proponent has successfully solicited 67% of the voting power, a metric not currently tracked in standard governance contracts.
  • D&O Insurance: Review policies immediately. Excluding a shareholder proposal based on state law while violating federal SEC rules creates a "conflict of laws" liability. Ensure your policy covers defense costs for this specific regulatory gap.

Hiring/Training

  • Investor Relations (IR) & Corporate Secretary: Staff must be trained on the new validation workflow. They must verify three data points for every proposal:
  • 1. Ownership value ($1M+) or percentage (3%+).
  • 2. Holding duration (6 months continuous).
  • 3. Solicitation reach (67% of voting power).

Reporting & Record-Keeping

  • Proxy Statement Disclosures:
  • Pre-Adoption: You must include a notice of the *proposed* amendment in the proxy statement preceding the vote.
  • Post-Adoption: Every subsequent proxy statement must detail the process for shareholders to submit proposals and instructions on how they can contact other shareholders to satisfy ownership/solicitation requirements.
  • Verification Logs: Maintain a legal log of all rejected proposals, specifically documenting the failure to meet the 67% solicitation threshold or the $1M/3% ownership test to defend against SEC inquiries.

Fees & Costs

  • Legal & Administrative: Expect increased legal fees for drafting the specific "opt-in" amendments and opinion letters regarding federal preemption risks.
  • No State Filing Fees: There are no direct fees paid to the state for this specific election, other than standard filing fees for amending a Certificate of Formation.

Strategic Ambiguities & Considerations

Federal Preemption Risk (The "Supremacy Clause" Trap):

The law explicitly sets thresholds higher than federal SEC Rule 14a-8 (which allows proposals at significantly lower ownership levels).

  • The Risk: If you exclude a proposal based on SB1057 that is valid under SEC rules, the SEC may issue an enforcement action or deny "No-Action" relief.
  • The Gray Zone: It is currently unclear if the SEC will defer to Texas state law on what constitutes a "procedurally proper" proposal. Until a court rules, you are operating in a high-risk legal environment.

Need Help Understanding Implementation?

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Information presented is for general knowledge only and is provided without warranty, express or implied. Consult qualified government affairs professionals and legal counsel before making compliance decisions.

02

Legislative Timeline

This bill's path through the Texas Legislature

Filed
Feb 3, 2025
Passed Senate
Apr 10, 2025
Passed House
May 6, 2025
Signed
May 19, 2025
TopicsBusiness & CommerceBusiness & Commerce--generalCorporations & AssociationsFinancialFinancial--general
03

Senate Authors

Sen. Tan ParkerRepublican · Primary Author
Coauthors (1)

House Sponsors

Rep. Morgan MeyerRepublican · Primary Sponsor
Joint Sponsors

Bill Text(with markup)

View bill text in multiple formats on Texas Legislature website

Fiscal NoteView Original

Related Legislation

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Quick Reference

Frequently Asked Questions

Common questions about SB1057

Q

What does Texas SB1057 do?

SB1057 establishes a defensive governance mechanism allowing Texas-based or Texas-listed public corporations to reject shareholder proposals that fail to meet strict new state thresholds for ownership ($1M or 3%) and solicitation (67% of voting power). This statute is opt-in only; it requires an affirmative amendment to your governing documents and creates a direct conflict with federal SEC Rule 14a-8 that will likely result in litigation. Implementation Timeline Effective Date: September 1, 2025.

Q

Who authored SB1057?

SB1057 was authored by Texas Senator Tan Parker during the Regular Session.

Q

When was SB1057 signed into law?

SB1057 was signed into law by Governor Greg Abbott on May 19, 2025.

Q

How urgent is compliance with SB1057?

The compliance urgency for SB1057 is rated as "moderate". Businesses and organizations should review the requirements and timeline to ensure timely compliance.

Q

What is the cost impact of SB1057?

The cost impact of SB1057 is estimated as "low". This may vary based on industry and implementation requirements.

Q

What topics does SB1057 address?

SB1057 addresses topics including business & commerce, business & commerce--general, corporations & associations, financial and financial--general.

Legislative data provided by LegiScanLast updated: November 25, 2025

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