Shareholder
The owner of one or more shares of stock in a Texas corporation. Shareholders elect the board of directors, vote on certain fundamental corporate transactions, and receive dividends when declared. Shareholders generally do not manage the corporation directly.
A shareholder is the owner of one or more shares of stock in a Texas corporation. Shareholders are the corporation's equity owners; they elect the board of directors, vote on certain fundamental corporate transactions, and receive dividends when declared. Shareholders generally do not manage the corporation directly, that authority is vested in the board under TBOC § 21.401.
Core rights
Voting. Shareholders elect directors at each annual meeting (§ 21.405) and vote on fundamental transactions including mergers, conversions, sales of substantially all assets, certificate amendments, and dissolution. Voting is typically one vote per share; the certificate may create classes with different voting rights, including non-voting classes.
Dividends. Declared by the board in its discretion. The corporation may not declare a dividend that would render it insolvent. § 21.303.
Books and records inspection. Under § 21.218, a shareholder of record for at least six months or holding 5% of outstanding shares may examine specified records on written demand stating a proper purpose. As amended by SB 29 effective May 14, 2025, the inspection right was significantly narrowed: emails, text messages, and social media communications are excluded unless those communications effectuate corporate action. New § 21.218(b-2) permits publicly-traded corporations and § 21.419 opt-in corporations to deny inspection demands made in connection with active or anticipated derivative proceedings.
Derivative actions. Under §§ 21.551–21.563, a shareholder may sue on behalf of the corporation when management fails to do so. See Derivative Action.
Shareholder liability
Under § 21.223, a shareholder is not liable for the corporation's obligations merely by reason of being a shareholder, with limited exceptions for veil-piercing, contractual guarantees, and statutory liability for unauthorized distributions.
No vested property right
Under § 21.051, a shareholder has no vested property right resulting from the certificate of formation. The certificate may be amended without unanimous shareholder consent, subject to procedural protections and class-vote rights.
Closely held corporations
TBOC § 21.563 defines a "closely held corporation" as one with fewer than 35 shareholders and no public market. Closely held corporation shareholders have substantially better procedural advantages in derivative actions, including no demand requirement and direct recovery if justice requires. See Closely Held Corporation.
Shareholder practice in Texas was substantially reshaped by SB 29 (effective May 14, 2025), which narrowed inspection rights, codified the business judgment rule, and authorized exclusive-forum and ownership-threshold restrictions on derivative actions. The cumulative effect makes Texas substantially more director-friendly than before May 2025, particularly for publicly-traded and § 21.419 opt-in corporations. Closely-held corporation shareholders under § 21.563 retain their pre-SB 29 procedural advantages.
Companion article: Raising Capital in Texas