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

The statutory text is explicit: a proponent who satisfies either the dollar-value threshold (Prong A) or the percentage threshold (Prong B) meets the ownership requirement, provided that the holding-period and solicitation requirements are also satisfied. The proponent does not need to meet both; either is independently sufficient.

Beyond the ownership requirement, the statute imposes two additional requirements: (i) a six-month continuous-holding period running up through the meeting date; and (ii) a solicitation requirement that the proponent solicit holders representing at least 67% of the voting power on the proposal. The 67% solicitation requirement is the most operationally demanding of the three; for proponents with limited resources, satisfying it is the principal practical barrier to using § 21.373 in a covered corporation.

Take a hypothetical $100 billion market-cap nationally listed Texas corporation that has opted into § 21.373:

• Prong A · 3% of voting shares: 3% × $100 billion = $3 billion in voting securities on the proponent's books at the submission date.
• Prong B · $1 million market value: A flat $1 million in voting securities at the submission date.

Because the prongs are disjunctive, the binding threshold for an individual or small-fund proponent at the $100 billion firm above is Prong B's $1 million. The 3% prong is binding only for proponents whose claim to standing rests on a percentage holding rather than a dollar holding — principally an issue at small-cap firms. Switching scale to illustrate the crossover: for a $100 million market-cap firm, Prong B's $1M floor equals Prong A's 1% threshold, so Prong A (3%) becomes the operative floor only above $33.3M in market cap. For the population of large-cap Texas-listed firms that comprise the SMU CGI Reincorporation Tracker treatment cohort, Prong B's $1M is the operative gate for most retail and small-fund proponents.

Section 21.373(b) defines the corporations eligible to opt in. The defined term is "nationally listed corporation" and requires three elements:

1. National-securities-exchange listing. The corporation's voting equity securities are listed on a national securities exchange registered with the SEC under Securities Exchange Act § 12(b), 15 U.S.C. § 78l(b) (principally NYSE, Nasdaq, NYSE American, Cboe BZX, MIAX Pearl Equities, IEX, LTSE, and on Form 1 approval the forthcoming Texas Stock Exchange (TXSE)).
2. Texas connection (alternative tests). The corporation either (a) maintains its principal office in Texas, OR (b) is listed on a Texas-headquartered national securities exchange with the Texas Secretary of State's approval, OR (c) elects coverage in its governing documents in a manner approved by the Texas Secretary of State. The alternative-test structure permits both (i) corporations operationally headquartered in Texas (regardless of exchange) and (ii) corporations listed on TXSE once operational (regardless of headquarters).
3. Election by certificate or bylaw. The corporation has elected coverage through its certificate of formation or its bylaws, with notice of the election in a proxy statement.

The structural effect of the three-element definition is to limit § 21.373's operational reach to a narrow population: a Texas-domiciled public company whose voting equity trades on a Commission-registered exchange and that has affirmatively elected coverage. Privately-held Texas corporations, OTC-only Texas corporations, and Texas-domiciled corporations that have not elected coverage are outside § 21.373 entirely.

The federal-state significance of § 21.373 increased substantially after October 2025. SEC Chair Paul Atkins's October 9, 2025 Keynote Address at the John L. Weinberg Center for Corporate Governance's 25th Anniversary Gala specifically endorsed state-law-grounded exclusion of shareholder proposals under Rule 14a-8(i)(1) (the keynote's primary §(i)(1) focus was Delaware precatory proposals; Texas §21.373 was discussed secondarily). The November 17, 2025 SEC Division of Corporation Finance Statement on the Rule 14a-8 process for the 2025–2026 proxy season confirmed that the Division will continue to review — effectively as the only substantive Division review remaining — no-action requests asserting that a proposal is "not a proper subject for action by stockholders" under applicable state law.

A Texas corporation that has opted into § 21.373 has, in effect, a state-law-grounded basis for excluding proposals that do not meet the heightened ownership, holding-period, or solicitation thresholds. The (i)(1) state-law route gives the corporation a procedurally clear path to seek Division no-action concurrence even under the post-Nov-17 framework. The combination is one of the cleanest federal-state interfaces produced by the 2025 reform cycle.

The comparative analytical question — whether Texas's visible-statutory approach (a codified threshold in § 21.373) achieves the same practical end as Delaware's invisible-practice approach (the post-Nov-17 (i)(1) state-law-improper-subject route, working through opinion-of-counsel practice rather than statutory amendment) — is treated in the V10 companion vertical. Both routes substantially narrow the population of shareholder proposals reaching corporate proxies; the methodological difference is whether the narrowing operates through a statutory text or through a federal-administrative-practice change.

Rule 14a-8 vs § 21.373 · side-by-side