On May 19, 2025, Texas enacted Senate Bill 1057, amending the Texas Business Organizations Code (TBOC) to establish new requirements for the submission and approval of shareholder proposals at certain nationally listed corporations. The legislation will take effect on September 1, 2025.
KEY PROVISIONS OF SB 1057
Scope and Applicability
The new law applies to “nationally listed corporations,” defined as corporations with a class of equity securities registered under Section 12(b) of the Securities Exchange Act of 1934, admitted to listing on a national securities exchange, and either (i) having their principal office in Texas or (ii) being listed on a Texas-based stock exchange approved by the state securities commissioner.
A corporation is subject to these requirements only if it affirmatively elects to be governed by the new section through an amendment to its governing documents. Notice of the proposed adoption of such an amendment must be provided to shareholders in any proxy statement preceding the amendment’s adoption. It is notable that, as drafted, this law would apply to a foreign (non-Texas) corporation [such as a Delaware corporation] that has its principal office in Texas or that is listed on either the TXSE or NYSE Texas.
Shareholder Proposal Submission Requirements
For a shareholder or group of shareholders to submit a proposal for approval at a shareholder meeting, the following requirements must be met:
- Ownership Threshold: The shareholder(s) must hold at least the lesser of (i) $1 million in market value of the corporation’s voting shares or (ii) 3% of the corporation’s voting shares, as of the date of proposal submission.
- Holding Period: The required shares must be held continuously for at least six months prior to the meeting date and throughout the duration of the meeting.
- Solicitation Requirement: The shareholder(s) must solicit the holders of at least 67% of the voting power of shares entitled to vote on the proposal.
Exclusions
The above requirements do not apply to director nominations or procedural resolutions ancillary to the conduct of the meeting.
Notice and Disclosure
Corporations electing to be governed by these provisions must include in proxy statements information about the process for submitting shareholder proposals, including instructions for contacting other shareholders to satisfy the ownership and solicitation requirements.
EFFECTIVE DATE
The Act becomes effective September 1, 2025.
IMPLICATIONS
SB 1057 introduces heightened thresholds for shareholder proposals at Texas-based nationally listed corporations that opt in, potentially limiting the ability of smaller shareholders to submit proposals. The law also imposes new notice and disclosure obligations on corporations regarding the shareholder proposal process.
For further information regarding the new requirements or their potential impact, please contact us.
This publication is for informational purposes only and does not constitute legal advice.