Ask whether a shareholder may submit a proposal to a U.S. corporation, examine the corporation’s records, or file a derivative suit, and the accurate answer is now another question: How much stock does the shareholder own? In a new article, we set the newest Delaware and Texas corporate statutes beside a system that has provided that same answer for a generation: India’s. We find that American law is arriving at the Indian position and, in some places, moving past it.
The governance rights that matter are shifting from shareholder rights, held because you own stock, to shareholdingrights, held only if you own enough stock. The first approach counts people; the second counts capital. Indian company law is built almost entirely on the second approach, and the newest Delaware and Texas statutes are converting American shareholder rights from the first to the second. The difference is not one of degree. Beneath the qualifying amount, the entitlement does not shrink but is instead absent. Language has concealed the shift. People typically refer to “shareholder rights,” a phrase that sounds like something belonging to a person, when most of what is worth exercising belongs to a block of stock.
What Texas Priced, and at What Cost
Texas offers the cleanest illustration. Texas Business Organizations Code Section 21.373 allows a corporation to require that a shareholder offering a shareholder proposal hold the lesser of $1 million and 3 percent of voting shares for six months and also solicit holders of 67 percent of the voting power in the corporation. The board can adopt this requirement unilaterally by amending its bylaws. Thus, a holder who qualifies in January can own the same shares in July and fall short, with nothing changed but a document the shareholder had no say in amending.
Texas uses shareholding to decide who may sue. Section 21.552 of the Texas Business Organizations Code allows publicly-traded corporations and private corporations with 500 or more shareholders to condition standing to file a derivative suit on up to 3 percent ownership. Tesla adopted the maximum, and at its current market capitalization, 3 percent is worth roughly $42 billion.[1] Meanwhile, only one in five American families own stock directly, and the median holding among those families is worth roughly $15,000.[2]
Other provisions leave the threshold aside and shrink the right itself. Texas’ fortified business judgment rule applies absent only fraud, intentional misconduct, an ultra vires act, or a knowing violation of law. With respect to inspection rights, Texas and Delaware have largely excluded emails and texts, and Texas also lets a corporation refuse an inspection demand outright from a shareholder that is in, or expecting to be in litigation against the company. Without documents, a stockholder cannot plead facts that would survive a motion to dismiss. American law is shareholder-centric only when the right is meaningless and shareholding-centric when the right has teeth. Further, where a right still belongs to a holder of a single share and still matters, the statutes have narrowed what it reaches.
A Generation of Results
India has had this system of shareholder rights long enough to show what it produces. Under the Companies Act, shareholders may requisition a meeting, circulate a resolution, elect a director who holds few shares, bring a class action, and petition for relief from oppression and mismanagement. On paper, the Indian shareholder is well armed. The reality, however, is quite different.
Nominating a director requires a deposit of 100,000 rupees (about $ 1,050), while starting a process for removing a director requires special notice from holders of at least 1 percent of the vote. A class action can be filed only by at least 100 shareholders or 5 percent of all shareholders, whichever is fewer) or by shareholders holding a minimum stake of 2 percent of share capital in a listed company and 5 percent in case of an unlisted one. The oppression remedy, which allows shareholders to reach India’s company law tribunal for relief when a company’s affairs are run in a manner oppressive or prejudicial to them, , is limited in two ways. A petitioner must first assemble 100 shareholders or one-tenth of all shareholders, whichever is fewer, or holders of one-tenth of the company’s total share capital and must then prove that those running the company acted in a way grave enough to justify a winding up of the company.
The list goes on. Inspection rights, which facilitate the effective exercise of all other rights, are limited by scope rather than size. The right is confined to a list of statutory registers, annual financial and governance filings, general meeting minutes, audited financial statements, and a handful of other documents.[3] However, operational records such as books of account, board papers, and board minutes are open to directors but not shareholders.[4] A shareholder may inspect the books only if the articles of incorporation provide for it.[5] The irony is that the controlling shareholder seldom needs such permission, as it sits on the board through its nominee director and enjoys the access the minority is denied.[6]
Nowhere was the price of these restrictions clearer than in one of India’s biggest corporate battles. When Tata Sons, the holding company of India’s largest corporate group, removed Cyrus Mistry as chairman in 2016,[7] his family group, which was the largest minority shareholder in Tata Sons, invoked the oppression remedy, petitioning the company law tribunal for relief. It then had to litigate before multiple forums over whether it held enough shares, merely to be heard.[8] If the largest minority shareholder of the country’s biggest corporate group could barely get through the courthouse door, scattered and resource-constrained retail investors have little hope of exercising their rights.
Why Pooling Is Not the Answer
The most common defense of the Texas thresholds is that holders may simply pool their shares. Yet India has shown how ineffective that approach can be. For example, its small shareholder director provision counts members rather than shares, and it has remained largely theoretical because the law gives those members no way to find one another.
American holders face the same problem. Retail shares sit mainly in street name, and every route to identifying fellow holders runs through the company. For Texas companies that have adopted the 3 percent ownership threshold to derivative suits, pooling shares is further complicated by the ban on inspection by shareholders who are expecting to bring litigation against the company. Thus, permission to combine shares is not the same as providing achievable means of combining.
What Comes Next
On September 16, 2026, the SEC proposed a rescission of Rule 14a-8, which, if adopted, would leave it to the states and to companies to decide when shareholder proposals may reach a corporation’s annual-meeting agenda. If the rescission is adopted, states may follow Texas’s lead and adopt similarly restrictive statutes, basing the submission of a proposal on shareholding, and so on wealth, at levels that far exceed current federal standards.
These lines are being drawn just as retail investors are entering capital markets at historic scale. Nearly 50 million investor households in the U.S. hold 29 percent of the equity of U.S. companies,[9] and there are over 127 million registered investors in India.[10] Naming the conversion is the first condition of contesting it. A threshold on who may propose, inspect, or sue has never been asked to supply a reason. It should be, in Washington, Wilmington, and Austin before the next line is drawn, and in New Delhi, where the lines were drawn a generation ago and have gone unexamined since.
ENDNOTES
[1] Tesla, Inc. (TSLA) Market Capitalization, CompaniesMarketCap, https://companiesmarketcap.com/tesla/marketcap/ (last visited Oct. 1, 2026) (reporting market capitalization of $1.398 trillion).
[2] Bd. of Governors of the Fed. Rsrv. Sys., 2022 Survey of Consumer Finances (2023).
[3] Companies Act, No. 18 of 2013, §§ 17, 46, 77, 85, 90, 94, 105, 119, 120, 136, 145, 170, 171, 186, 187, 189, 190 (India).
[4] Companies Act, § 128(3).
[5] Nirmal Kumar v. Jaipur Metal & Elecs Ltd., (1978) 2 Comp. L.J. 267 (CLB) (India).
[6] Puneet Rathsharma & Eeshan Mohapatra, Judicial Interventions in Shareholder Inspection and Access Rights – Beyond Companies Act 2013, MONDAQ (Feb. 20, 2026) https://www.mondaq.com/india/shareholders/1747386/judicial-interventions-in-shareholder-inspection-and-access-rights-beyond-companies-act-2013.
[7] Mohak Kapoor et al., The Tata-Mistry Saga, Nishith Desai Assocs.: M&A Lab (Aug. 27, 2021), https://www.nishithdesai.com/fileadmin/user_upload/pdfs/Research_Papers/The_Tata_Mistry_Saga.pdf.
[8] Cyrus Invs. Pvt. Ltd. v. Tata Sons Ltd., C.P. No. 82(MB)/2016 (NCLT Mumbai Apr. 17, 2017) (India) (refusing waiver of the shareholding threshold), rev’d, Company Appeal (AT) Nos. 133 & 139/2017 (NCLAT Sept. 21, 2017) (India) (granting waiver and remitting the petition for hearing on the merits).
[9] Broadridge Fin. Solutions, ProxyPulse: 2025 Proxy Season Review fig.6, https://www.broadridge.com/_assets/pdf/2025proxypulse-updated.pdf; Broadridge Investor Pulse, https://investorpulse.broadridge.com.
[10]Nat’l Stock Exch. of India, Market Pulse 72 (Feb. 2026), https://nsearchives.nseindia.com/web/mediaattachment/2026-02/Market_Pulse_February_2026.pdf.
This post comes to us from Christina M. Sautter, associate dean for research and a professor at Southern Methodist University’s Dedman School of Law, and Aditya Baheti, academic fellow at National Law University Jodhpur. It is based on their article, “The Shareholding Rights Shift from India to Delaware and Texas,” forthcoming in the SMU Law Review and available here.