Texas Senate Bill 1057: the opt-in shareholder-proposal threshold.

TBOC § 21.373 is a one-section statute, but it occupies an unusually consequential position in the 2024–2026 reform cycle. Three structural features make it so: (i) it operates only on an opt-in basis — the corporation must affirmatively elect coverage through its certificate of formation or bylaws and provide notice in a proxy statement; (ii) the ownership requirement is disjunctive, not conjunctive — either the $1 million market-value threshold or the 3% voting-shares threshold suffices; and (iii) the federal-state significance grew substantially after October 2025 when SEC Chair Paul Atkins endorsed state-law-grounded exclusion under Rule 14a-8(i)(1) as the principal exception to the SEC's Nov 17 2025 Division of Corporation Finance no-action retreat.

This page treats § 21.373 on its own terms. The cross-vertical significance — how § 21.373 interacts with Rule 14a-8(i)(1) and the post-Nov-17 federal-state interface — is treated in the companion V10 vertical at Texas shareholder-proposal thresholds.

Section 21.373 applies only if an eligible nationally-listed Texas corporation affirmatively elects coverage through its governing documents. The election is operationalized in two parallel ways:

Certificate-of-formation amendment

The corporation may amend its certificate of formation to incorporate the § 21.373 thresholds. Certificate amendment typically requires both board approval and stockholder approval under TBOC § 21.364. The certificate-amendment path is the more durable mechanism — certificate provisions are harder to reverse than bylaws.

Bylaw amendment

The corporation may amend its bylaws to incorporate the § 21.373 thresholds. Bylaw amendment typically requires only board approval under most Texas corporate bylaw frameworks, although stockholders generally retain the right to amend bylaws themselves. The bylaw-amendment path is the more procedurally accessible mechanism but is less durable than certificate amendment.

Proxy-statement notice requirement

Whichever path the corporation uses, the statute requires notice in a proxy statement before the amendment takes effect for stockholder-proposal purposes. The notice requirement ensures that stockholders considering a future proposal have advance warning of the heightened threshold.

"Nationally listed" eligibility

The opt-in mechanism is available only to Texas corporations whose voting securities are listed on a national securities exchange (NYSE, Nasdaq, etc.). Private Texas corporations and over-the-counter-only Texas corporations are not eligible to opt in under § 21.373.

1. How many nationally-listed Texas corporations opt in?

The opt-in design means that § 21.373's empirical reach depends entirely on adoption. The SMU CGI adoption tracker surfaces the firms electing § 21.373 via certificate or bylaw amendment, with cross-references to the underlying EDGAR filings. The first 12–24 months of adoption activity will define how widely the provision actually operates.

2. Does § 21.373 deter proposals at the submission stage or only at the review stage?

The 67% solicitation requirement is operationally demanding before any (i)(1) exclusion analysis. Proponents with limited resources may simply not submit proposals to opted-in corporations, regardless of whether their ownership satisfies one of the two prongs. The empirical question is whether the chilling effect operates ex ante (proposals not submitted) or ex post (proposals submitted and then excluded).

3. How does the disjunctive ownership framing interact with passively-managed institutional holders?

An institutional holder with $5M in beneficial ownership across multiple Texas-incorporated portfolio firms easily satisfies Prong A in any single firm but may fall short of 3% (Prong B) in large-cap firms. The disjunctive structure is institutionally permissive. The question is whether this is by design (acknowledging the institutional-investor channel) or a drafting accident (intended to set a high single bar).

4. How will the proxy-statement notice requirement interact with mid-year amendments?

The proxy-notice requirement is timing-sensitive: the corporation must provide notice in a proxy statement before the amended threshold takes effect for proposal purposes. The interaction between annual-meeting proxy timing, mid-year bylaw amendments, and proposal-deadline rules under Rule 14a-8(e) will be developed by the first wave of practitioner guidance.