This is Part 2 in the Corporate Governance series.

Boards are facing pressures from all sides: public company shareholder activism, increasingly assertive PE/VC and HNWI/UHNWI investors in private companies, and a rapidly evolving state-law landscape in traditional and emerging incorporation hubs. Activist investors show no signs of retreating in 2026, and governance reforms in Texas and Delaware are reshaping the liability and litigation environment in which companies operate. This article examines how boards and investors can recalibrate oversight, evaluation, and engagement strategies, with a particular focus on private companies and recent Texas Business Organizations Code (TBOC) and Texas Business Court developments intended to position Texas as a competitor to Delaware.

An accountable, engaged board is not just a governance ideal; multiple studies link strong board oversight and refreshment practices to higher valuations, lower financing costs, and reduced litigation and transaction friction. Boards are under pressure, but that pressure can be harnessed. Thoughtful accountability – through evaluation, refreshment, and jurisdictional choices that fit the company’s strategy – does more than reduce litigation risk; it becomes part of the company’s value proposition in capital raises, strategic partnerships, and exit events.

Board Accountability Pressures for Public Companies

Universal Proxy, Activism, and Proxy-Season Dynamics

Public company boards continue to face a robust activist environment, amplified by the universal proxy rules and sophisticated campaign playbooks that make it easier and cheaper for activists to run contests. Activists are broadening their focus beyond traditional M&A or capital allocation demands to include board refreshment, executive pay, and perceived failures in risk oversight. Add in the fragmentation of large institutional shareholder voting and questions over the continued operations and legality of recommendations by proxy advisory firms ISS and Glass Lewis, and public company boards have their hands plugging many holes.

In 2026, public company boards should expect year-round activism, with “off season” engagement laying the groundwork for formal campaigns, campaigns targeting perceived underperformance in AI, cybersecurity, or regulatory risk oversight, and increased use of settlements that combine board seats, committee roles, and bespoke information rights.

To proactively address these issues, public boards should

• Communicate with and monitor shareholder base, both institutional and retail

• Maintain a standing activism response plan (including communication protocols and independent advisors)

• Conduct regular vulnerability assessments focused on strategy, total shareholder return (TSR), governance profile, and investor base

• Preemptively refresh skills and diversity on the board, particularly in technology and risk oversight

Boards that invest in this kind of year‑round readiness often see the payoff not just in fewer proxy fights, but in better terms when they do pursue strategic transactions or capital raises under pressure.

Pressure Release: Board Evaluation and Refresh

Survey data indicate that more than 50% of directors believe at least one of their fellow board members should be replaced, underscoring persistent concerns about underperformance and skill gaps.[1] Rigorous, confidential evaluations, ideally including peer reviews, are increasingly standard practice and often requested, and reviewed carefully, by investors.

Best practices include:

• Annual board, committee, and individual director evaluations with clear follow-through on findings

• Skills matrices tied to current and forward looking strategic needs (AI, cyber, regulatory, international)

• Transparent refreshment policies and retirement/tenure guidelines

Private Companies: Activist Style Investors, No Proxy Season

For many private companies, the most intense accountability pressures come from PE/VC sponsors, strategic investors, family offices, and HNWI investors who bring activist instincts and expectations outside of the public proxy framework. For these investors, a board that can demonstrate disciplined oversight, clear decision‑making processes, and credible succession planning is a tangible asset: it can support higher entry valuations, smoother financing rounds, and better outcomes in eventual sale or IPO processes. In practice, a well‑functioning private‑company board becomes part of the value stack. Clean governance “plumbing” reduces leaks in negotiations, diligence, and post‑closing integration.

Investor Rights and Board Dynamics

Private equity and venture capital investors typically negotiate governance packages that can include:

• Board designation rights (with observer rights as a floor)

• Veto or consent rights over “major decisions” (M&A, financings, budget, key hires, pivots)

• Enhanced information and inspection rights

• Anti-dilution protections and preemptive rights

These features effectively substitute for public shareholder tools like proxy contests and withhold campaigns. When relationships sour, disputes often arise around:

• Alleged overreach by investor-designated directors

• Conflicts between founder-directors and investor-directors

• Use (or perceived misuse) of information rights and consent rights

Boards should proactively:

• Clarify in charters, bylaws, and investor agreements how investor-designated directors discharge fiduciary duties to the company and all shareholders

• Embed conflict management mechanisms (special committees, approval protocols, recusal policies)

• Regularly revisit governance terms at major financing events or secondary sales

Activist Style Strategies in the Private Context

Although there is no universal proxy in private companies, investors are increasingly adopting activist style strategies. They are using consent rights and covenants to block transactions or force negotiations. They are using the governing documents to threaten or initiate derivative claims, books and records actions, or appraisal-style valuation challenges. Some investors are organizing other investors (including minority holders) to create a coordinated bloc, and activist investors are using all these tactics to seek negotiated board seats, observer roles, and enhanced reporting as a peace dividend.

While boards cannot prevent activist investors from taking advantage of these strategies, companies can plan for this environment. Stress test existing governance documents (charter, bylaws, shareholder agreements (SHAs), LLC agreements) for pressure points. Ensure dispute resolution provisions (forum, arbitration/litigation, fee shifting, buy/sell rights) are aligned with business objectives and consistent with governing law; consider changes to these agreements if they are not, particularly if the vote required for such changes has expressed support for them. Finally, maintain robust documentation of board processes, especially for conflict-laden or value-defining decisions.

Texas vs. Delaware: Emerging Strategic Choices for Boards and Investors

Recent court decisions, statutory changes, and the launch of the Texas Business Court have turned Texas into a credible and attractive alternative to Delaware for some companies, particularly those focused on liability protection, predictability, and a more expressly pro-business policy environment. For companies contemplating future financings or exits, those features translate directly into deal economics: fewer multi-forum disputes, clearer process records, and greater predictability in how conflicts will be resolved can all support pricing and terms in M&A and capital markets transactions. Big name companies are moving not just their operations to Texas but are re-domesticating their corporate formation. The Texas Stock Exchange is set to launch in 2026,[2] as is NASDAQ Texas,[3] where they will join NYSE Texas.

Texas Business Court and Related Reforms

The Texas Legislature created the Texas Business Court in 2023, a specialized trial court for significant commercial disputes, including corporate governance, securities, and complex transaction litigation. The court provides a specialized forum for derivative actions, fiduciary duty claims, internal corporate disputes, IP disputes, trade secret actions, investment contracts, and arbitration matters, that meet a certain monetary threshold– and only these actions. It has streamlined procedures and judges with business law backgrounds. In parallel, the Texas Business Organizations Code (TBOC) has seen numerous updates in the past few years, some in response to decisions coming out of the Delaware Court of Chancery, that reinforce Texas’s pro-business stance. These amendments include:

• Codifying the business judgment rule, giving directors a statutory presumption of acting in good faith, on an informed basis, and in the corporation’s best interests when decisions comply with law and governing documents[4]

• Permitting the “advance determination” of director independence by the Texas Business Court or a designated district court in connection with conflicted or potentially conflicted transactions, creating a binding determination that can significantly reduce post-closing litigation risk[5]

• Authorizing exclusive forum provisions in organizational documents that channel internal corporate claims (including derivative and fiduciary‑duty actions) into Texas courts and permit arbitration and jury trial waivers, options not currently available under Delaware law[6]

• Narrowing the scope of permissible books and records requests more aggressively than Delaware law, by limiting access to emails, texts, and other electronic communications in internal affairs disputes[7]

These reforms are expressly framed as part of a broader effort to make Texas the jurisdiction of choice for incorporation by offering enhanced predictability, reduced litigation risk, and stronger procedural protections for boards.

Practical Implications for Board Accountability

For boards and investors, the Texas framework changes the accountability calculus in several ways:

• Director Protections and Process: Codified business judgment and advance independence determinations can strengthen the protection of independent special committees in conflicted transactions, potentially discouraging some forms of stockholder litigation or shifting settlement dynamics.

• Forum and Strategy: Exclusive forum and arbitration friendly provisions give Texas corporations more control over where and how internal disputes are litigated or arbitrated, which can be attractive to boards wary of multi-forum litigation, but may be viewed skeptically by some investors.

• Books and Records: Narrower inspection rights can limit pre-suit discovery for both public and private company investors, potentially raising the bar for derivative and fiduciary duty claims but also increasing friction with sophisticated investors accustomed to Delaware-style tools.

By contrast, Delaware retains the advantages of a deep, specialized corporate case law, a long-standing Court of Chancery, and a global reputation for predictability. Recent high-profile decisions – such as Chancery’s revocation of Elon Musk’s compensation package – and statutory “course corrections” have triggered reevaluations by some issuers and investors.

Boards and investors deciding between Delaware and Texas should systematically evaluate:

• Desired balance between director protection and investor enforcement tools

• Appetite for arbitration and exclusive forum provisions

• Importance of a mature jurisprudence versus the flexibility of a newer regime

• Investor base preferences (including PE/VC fund policies and LP expectations)

Keeping on the Pressure: Guidance for Activist and Strategic Investors (Public and Private)

Whether investing in Delaware or Texas entities, public or private, activist and strategic investors should recalibrate tactics to reflect the evolving legal landscape.

1.      Up Front Governance Engineering

• Negotiate board designation rights, observer seats, and consent rights that reflect the expected investment thesis and time horizon.

• Carefully consider forum selection, fee shifting, inspection rights, and arbitration clauses in charters and SHAs, particularly for Texas entities where statutes now expressly enable pro-management choices.

2.      Process Focused Engagement

• Frame governance concerns around process: independence of committees, robustness of deliberations, and information flow, especially where advance determinations of independence may be sought in Texas.

• Use contractual information rights and periodic reporting covenants in private-company settings to surface issues early and build a record.

3.      Litigation and Settlement Strategy

• For Delaware entities, continue to leverage books and records actions and derivative suits where appropriate, recognizing recent statutory and case law refinements.

• For Texas entities, expect narrower discovery and stronger director presumptions; adjust expectations for settlement leverage and consider whether arbitration or exclusive forum clauses alter the cost benefit analysis.

Taking off the Pressure: Action Items for Boards (Public and Private)

Boards – whether the company is formed in Delaware, Texas, or elsewhere – should consider the following near-term steps to strengthen their effectiveness, accountability, and prepare for increasingly sophisticated investors. The ROI on these actions will be immediate.

1.      Map Investor and Litigation Risk by Jurisdiction

• Inventory forum selection, arbitration, and inspection rights provisions in governing documents and significant investor agreements.

• Evaluate how recent Texas and Delaware (or other relevant state) reforms affect risk in current and contemplated structures.

2.      Refresh Evaluation and Succession Processes

• Enhance board and committee evaluations, including private company boards that have historically treated evaluations as optional.

• Align succession plans and recruitment criteria with current strategic and risk priorities.

3.      Revisit Governance Terms at Key Transactions

• Use financing rounds, secondary transactions, or re-domestications as opportunities to revisit governance “plumbing” (consent rights, independence mechanisms, forum selection, and dispute resolution procedures).

4.      Engage Proactively with Key Investors/Stakeholders

• Develop tailored engagement strategies for retail/institutional shareholders, PE/VC sponsors, family offices, and HNWI investors, recognizing their growing appetite for board seats and structured influence.

• Clarify how the board will balance fiduciary duties to the entity and all equity holders with the expectations of particular investor constituencies.

Conclusion – Pressure to Performance

Boards in 2026 operate under constant pressure: from activists, from sophisticated private investors, and from evolving state law regimes in Delaware, Texas, and beyond. The easiest response is defensive – to treat governance as a compliance drain - but boards that create real value treat accountability as infrastructure: they invest in evaluation, refreshment, and clear “pressure‑relief valves” in their governance to channel stress into better decisions rather than costly litigation, financing, or exit process leaks. Whether a company is public or private, Delaware‑ or Texas‑organized, disciplined governance design directly influences valuation, deal terms, and the universe of investors and strategic partners willing to engage. Paired with robust AI and cyber oversight from Part 1, these accountability frameworks help boards convert today’s heightened scrutiny into competitive advantage and durable deal value.

About This Series

This is the second article in a four-part series examining critical corporate governance trends in 2026. The first article examined how boards can establish robust AI and cyber risk governance frameworks that position their organizations for competitive advantage, operational resilience, and stakeholder confidence. The next two articles will address:

Part 3: Regulatory Compliance and Risk Management in a Fragmented Landscape

Part 4: Culture, Ethics, and Talent: The Human Side of Governance