On May 19, 2025, Texas Gov. Greg Abbott signed Senate Bill No. 1057 (SB 1057) into law. 

SB 1057, which will become effective on September 1, 2025, adds a new § 21.373 to the Texas Business Organizations Code (TBOC) which will permit any “nationally listed corporation” that either (1) has its principal office in Texas or (2) is admitted to listing on a stock exchange that has its principal office in Texas and has received the necessary approval by the securities commissioner, to incorporate a provision in its governing documents that would impose stock ownership requirements on shareholders seeking to submit proposals to the corporation.

Specifically, in order to submit a proposal to the corporation (other than director nominations and procedural resolutions ancillary to the conduct of the meeting, which are not subject to this provision), a shareholder or group of shareholders must:

1. Hold an amount of voting shares of the corporation, determined as of the date of submission of the proposal, equal to at least: (A) $1 million in market value or (B) 3% of the corporation’s voting shares
2. Hold the requisite shares: (A) for a continuous period of at least six months before the date of the meeting and (B) throughout the entire duration of the meeting
3. Solicit the holders of shares representing at least 67% of the voting power of shares entitled to vote on the proposal

The stock ownership requirements described in SB 1057 are, of course, significantly higher than those imposed by Rule 14a-8 of the Securities Exchange Act of 1934 (Exchange Act), which requires only that the stockholder proponent must have continuously held: (A) at least $2,000 in market value of the company's securities entitled to vote on the proposal for at least three years; or (B) at least $15,000 in market value of the company's securities entitled to vote on the proposal for at least two years; or (C) at least $25,000 in market value of the company's securities entitled to vote on the proposal for at least one year.

SB 1057 requires any corporation looking to impose these stockholder ownership requirements to notify shareholders of the proposed adoption of these requirements in a proxy statement provided to them prior to adoption. Corporations would also be required to provide specific information about the process for submitting proposals in their proxy statement.

Notably, the bill would not apply to corporations formed in Texas, but with headquarters elsewhere (unless they happen to be listed on a stock exchange headquartered in the state).

For corporations chartered outside of Texas, we question whether this bill may be vulnerable on Internal Affairs Doctrine / Commerce Clause grounds. For example, it is questionable whether Texas could change the laws applicable to a Delaware corporation that happens to have its headquarters located in Texas or is listed on a Texas stock exchange. However, for companies incorporated and headquartered in Texas this may prove an attractive feature.