Texas § 21.558 DISMISSAL OF DERIVATIVE PROCEEDING.

Texas Statutes

§ 21.558 — DISMISSAL OF DERIVATIVE PROCEEDING.

Texas § 21.558

Code BOBusiness Organizations Code

This text of Texas § 21.558 (DISMISSAL OF DERIVATIVE PROCEEDING.) is published on Counsel Stack Legal Research, covering Texas primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook

Tex. Business Organizations Code Code Ann. § 21.558 (2026).

Text

Sec. 21.558. DISMISSAL OF DERIVATIVE PROCEEDING.

(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

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Sec. 21.558. DISMISSAL OF DERIVATIVE PROCEEDING. (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.

Legislative 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.