Greg Abbott signs law to shield publicly traded companies from 'rogue' shareholder lawsuits

Gov. Greg Abbott has signed into law a slate of fresh corporate protections, including provisions making it harder for shareholders to file lawsuits against publicly traded companies, like the one in Delaware that blocked a massive pay package for Tesla Inc. CEO Elon Musk, spurring him to move his companies to Texas.

The Republican governor said the measures would “attract businesses, attract job creators, and will ensure that Texans are going to have plentiful job opportunities to earn a great paycheck for decades to come.”

Under the new litigation law, shareholders could only bring so-called derivative claims that allege wrongdoing by executives if they hold a 3% stake in the company. The law also insulates all corporate directors and officers from most shareholder claims brought in the state’s new business courts, unless it can be proven that they committed fraud or knowingly broke the law. The changes would also shield executive’s emails, texts and other communications from shareholder inspection in most cases.