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 make a distribution that violates its certificate of formation, that would leave it insolvent, or that exceeds the distribution limit, unless made under Chapter 11. § 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) lets a corporation with voting shares listed on a national securities exchange, or one that has opted into § 21.419, treat a demand as lacking a proper purpose if it reasonably determines the demand is connected with a pending or expected derivative proceeding by the holder or the holder's affiliate, or with a lawsuit in which the corporation and the holder are adverse parties. Discovery and the court-ordered inspection route in § 21.218(c) are preserved.
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, subject to exceptions. A shareholder remains liable for unpaid share consideration. On contract claims, alter-ego and similar theories require proof of actual fraud committed primarily for the shareholder's direct personal benefit (§ 21.223(b)). A shareholder who expressly assumes or guarantees an obligation remains liable for it (§ 21.225), and a shareholder who knowingly received a prohibited distribution may owe contribution to liable directors (§ 21.318).
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.
SB 29 (effective May 14, 2025) narrowed the records reachable by an inspection demand, added statutory presumptions favoring directors and officers in § 21.419, added express authority to name an exclusive Texas forum and venue in § 2.115(b)(2), and allowed an ownership threshold of up to three percent for derivative standing. The presumptions and the threshold reach only corporations with listed shares or those that opt in. Because § 21.563(b) exempts derivative suits in a closely held corporation against its directors, officers and shareholders from §§ 21.552-21.560, the new threshold does not apply to those suits.
Companion article: Raising Capital in Texas