TBOC § 21.552(a)(3)i is structured along two axes. The first axis is a statutory ceiling: the corporation may, by governing-document amendment, elect a derivative-standing threshold up to 3% of outstanding shares; the election is available to corporations with shares listed on a national securities exchange, or to corporations that have affirmatively elected § 21.419 and have 500 or more shareholders (the 500-shareholder condition attaches only to the opt-in path). The second axis is the elected threshold: the number the corporation actually adopts is the holding a shareholder-plaintiff must meet to bring a derivative suit. The same statutory number functions as a ceiling for the corporation — a statutory maximum of 3% — and, once elected, as the required holding for the plaintiff — hence “dual-axis.”22
Figure 4 · Section 21.552 dual-axis explainer
Sources. Tex. Bus. Orgs. Code Ann. § 21.552(a)(3) (West 2025); illustrative XOM 13F-coalition arithmetic from public Form 13F-HR aggregate institutional holdings (snapshot mid-2025; figures are illustrative point-in-time values and are not live trading data — XOM itself does not file 13F as it is an issuer, not an institutional manager; 13F holders are looked up via the EDGAR full-text search interface). Market-cap figure is approximate and is presented for arithmetic illustration only.
Interactive · built from the statute
§ 21.552(a)(3) standing-threshold calculator
Set an issuer's market capitalization and the derivative-standing threshold the corporation has elected (the statute caps the election at 3% of outstanding shares). The model returns the dollar value a shareholder — or a coalition — must hold to clear the elected ownership threshold, and shows which representative holders clear that gate. All inputs are illustrative; adjust them to test the mechanism.
Who clears the elected threshold? representative holders, % of outstanding
Elected threshold — holders at or above the dashed line clear the ownership gate; holders below do not. Clearing the gate satisfies § 21.552(a)(3) only: contemporaneous ownership, fair-and-adequate representation, and demand under § 21.553 are assessed separately.
How to read this · plain English and academic interpretation
Plain English. A Texas corporation may amend its certificate or bylaws to require a derivative plaintiff to meet a required holding — set at up to the 3% statutory ceiling of outstanding shares — before it can sue the board on the company's behalf. The same number is a ceiling on what the corporation may demand and the required holding the shareholder must clear. At a large issuer that requirement is enormous in dollar terms — beyond any retail holder and most activist stakes. The positions that clear it alone belong to the very largest institutions (whether affiliated funds aggregate as a single “shareholder” is untested); otherwise it takes a coalition acting in concert — and clearing the number is only the ownership gate, with the other derivative-suit prerequisites still to satisfy.
Worked example (the Gusinsky case). Southwest Airlines had approximately 567 million common shares outstanding per the court’s memorandum opinion. A 3% elected threshold is about 17 million shares. Vladimir Gusinsky held 100 shares — about five orders of magnitude (≈170,000×) short — and the Northern District of Texas dismissed his derivative suit with prejudice for failure to clear the elected threshold. Gusinsky v. Reynolds, No. 3:25-cv-01816-K (N.D. Tex. Mar. 17, 2026).
Academic interpretation. The threshold operates as an access filter whose real stringency scales with issuer size: identical as a percentage, the dollar burden is modest at a small-cap and enormous at a mega-cap, with the practical coordination burden turning on ownership concentration, float, and existing positions. Modeling the dollar requirement against the Form 13F-HR holder distribution shows that, at Fortune-50 issuers, standing requires either an institutional coalition or a concession from the corporation — a structural reallocation of derivative-enforcement capacity from dispersed retail plaintiffs to concentrated institutional holders. Whether that reallocation is desirable is a policy question this page does not adjudicate.
All figures are illustrative point-in-time values for arithmetic demonstration, not live trading data. Coalition percentages approximate public Form 13F-HR aggregate institutional holdings; an issuer does not itself file 13F. Source: Tex. Bus. Orgs. Code Ann. § 21.552(a)(3) (West 2025).
The arithmetic in Figure 4 carries a practical conclusion: at a Fortune-50 issuer, a 3% elected threshold under § 21.552(a)(3) is enforceable in the sense that no retail holder and few activist positions can satisfy it alone. The positions that do exceed 3% at most large issuers belong to the largest index managers (whether affiliated funds aggregate as a single “shareholder” under § 21.552 is untested). The threshold therefore operates as a filter that channels derivative enforcement toward the very largest holders, coalitions acting in concert, or a concession from the corporation. Whether that filter is desirable as a matter of policy is a separate question that this page does not adjudicate.
First identified federal-court enforcement. In Gusinsky v. Reynoldsi, the United States District Court for the Northern District of Texas became the first federal court identified in SMU CGI’s docket review (as of August 2026) to enforce § 21.552(a)(3) against a derivative plaintiff. Vladimir Gusinsky owned 100 shares of Southwest Airlines common stock, brought a derivative suit challenging the board’s decision to eliminate the airline’s longstanding “Bags Fly Free” policy, and asserted as-applied constitutional and contract-law challenges to Southwest’s adoption of the 3% ownership threshold. The court rejected each argument and dismissed the case with prejudice. The arithmetic is the holding: Southwest has approximately 567 million common shares outstanding; the 3% threshold equates to roughly 17 million shares; 100 shares is approximately five orders of magnitude (≈170,000×) short of the required holding. The decision validates the dual-axis mechanism shown above — the statute caps what the corporation may elect (3%), the corporation elects the cap, and the shareholder must satisfy the elected threshold to obtain standing.25