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Bill

HB 988

Relating to the duty of the board of directors of a corporation to maximize the value of the corporation's shares.

89th Legislature (2025) Introduced by Brian Harrison

Texas bill would legally require corporate boards to prioritize maximizing shareholder value above all other business considerations, potentially limiting stakeholder protections and board discretion.

Referred to Trade, Workforce & Economic Development
#business&commerce--general(i0050) #corporations&associations(i0090) #financial--general(i0365)
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Bill Summary · HB 988

Legislative bill overview

HB 988 would establish a legal duty for corporate boards of directors to prioritize maximizing shareholder value above other considerations. This codifies into Texas law a specific interpretation of fiduciary duty that has been debated in corporate governance for decades, potentially limiting boards' ability to balance competing interests of employees, customers, communities, and other stakeholders.

Why is this important

This bill would reshape how Texas-incorporated companies make decisions about investments, executive compensation, community engagement, and environmental practices. It could influence major business decisions affecting thousands of employees and communities, while also potentially affecting shareholder litigation strategies and corporate accountability frameworks.

Potential points of contention

  • Stakeholder vs. shareholder primacy: Opponents argue this narrowly constrains boards from considering employee welfare, environmental responsibility, or community impact—a model some states have explicitly rejected through "benefit corporation" laws
  • Practical enforcement challenges: Unclear how courts would measure "maximizing value" or determine when boards violate this duty, potentially creating litigation uncertainty for corporations
  • Competitive disadvantage concerns: Proponents worry other states' more flexible corporate laws give them competitive advantages; critics counter that overemphasis on short-term shareholder returns may harm long-term value creation and sustainable business practices

Compiled from official sources — confirm details with the bill’s official record.

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