Tex. Codes » Business Organizations Code · TITLE 2. CORPORATIONS · CHAPTER 21. FOR-PROFIT CORPORATIONS
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Tex. Bus. Orgs. Code § 21.552 (2026)

Standing To Bring Proceeding

✓ current as of May 2026
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Sec. 21.552. STANDING TO BRING PROCEEDING. (a) Subject to Subsection (b), a shareholder may not institute or maintain a derivative proceeding unless:

(1) the shareholder:

(A) was a shareholder of the corporation at the time of the act or omission complained of; or

(B) became a shareholder by operation of law originating from a person that was a shareholder at the time of the act or omission complained of;

(2) the shareholder fairly and adequately represents the interests of the corporation in enforcing the right of the corporation; and

(3) for a corporation with common shares listed on a national securities exchange or a corporation that has made an affirmative election to be governed by Section 21.419 and has 500 or more shareholders, at the time the derivative proceeding is instituted, the shareholder beneficially owns a number of the common shares sufficient to meet the required ownership threshold to institute a derivative proceeding in the right of the corporation identified in the corporation's certificate of formation or bylaws, provided that the required ownership threshold does not exceed three percent of the outstanding shares of the corporation.

(b) If the converted entity in a conversion is a corporation, a shareholder of that corporation may not institute or maintain a derivative proceeding based on an act or omission that occurred with respect to the converting entity before the date of the conversion unless:

(1) the shareholder was an equity owner of the converting entity at the time of the act or omission; and

(2) the shareholder fairly and adequately represents the interests of the corporation in enforcing the right of the corporation.

Acts 2003, 78th Leg., ch. 182, Sec. 1, eff. Jan. 1, 2006.

Amended by:

Acts 2005, 79th Leg., Ch. 64 (H.B. 1319), Sec. 63, eff. January 1, 2006.

Acts 2011, 82nd Leg., R.S., Ch. 93 (S.B. 1568), Sec. 1, eff. September 1, 2011.

Acts 2019, 86th Leg., R.S., Ch. 899 (H.B. 3603), Sec. 2, eff. September 1, 2019.

Acts 2025, 89th Leg., R.S., Ch. 21 (S.B. 29), Sec. 13, eff. May 14, 2025.

Notes of Decisions
Cited in 19 cases (4 in the last 5 years), 2013–2025 · leading case: Lee C. Ritchie v. Ann Caldwell Rupe, as Tr. for the Dallas Gordon Rupe, III 1995 Fam. Trust, 443 S.W.3d 856 (Tex. 2014).
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Lee C. Ritchie v. Ann Caldwell Rupe, as Tr. for the Dallas Gordon Rupe, III 1995 Fam. Trust, 443 S.W.3d 856 (Tex. 2014). · cites it 2× “3d at 905; Tex. Bus. Orgs.Code § 21.552. But this offers no remedy for minority shareholders in corporations like RIC that have not elected close corporation status.”
Lapiner v. Maimon, 429 S.W.3d 816 (Tex. App. 2014). · cites it 6× “See Tex. Bus. Orgs.Code Ann. § 21.552 (providing that a shareholder “may not institute or maintain a derí-vate proceeding unless” the shareholder owned stock in the corporation at the time of the complained of acts or omissions).”
In re Lonestar Logo & Signs, LLC, 552 S.W.3d 342 (Tex. App. 2018). · cites it 2× “2 (quoting Tex. Bus. Orgs. Code § 20.002(c)(1) ). Id.”
Neff v. Brady, 527 S.W.3d 511 (Tex. App. 2017). “See Tex. Bus. Orgs. Code Ann. § 21.552 (Vernon 2012); Crowley v.”
DeNucci v. Matthews, 463 S.W.3d 200 (Tex. App. 2015). “See Tex. Bus. Orgs.Code § 21.552 (shareholder may not institute derivative proceeding unless the shareholder fairly and adequately represents interests of the corporation).”
Krainz v. Kodiak Resources, Inc., 436 S.W.3d 325 (Tex. App. 2013). “The law does not require possession of a stock certificate to substantiate a claim of ownership of stock. For instance, in the statutory scheme describing derivative proceedings brought by shareholders on behalf of corporations, the term “shareholder” includes “a beneficial…”
Tran v. Hoang, 481 S.W.3d 313 (Tex. App. 2015). “See Tex. Bus. Orgs. Code Ann.§ 21.552 (referring to shareholders as the parties entitled to bring derivative suits).”
Our Alchemy, LLC - Adversary Proceeding (Bankr. D. Del. 2022). · cites it 3× “Tex. Bus. Orgs. Code § 21.552; accord Tex.”
Yuval Lapiner v. Jackob Maimon, Max Pridgeon & Michelle R. Cinnamon FloresHaim Tsuff & Goodrich Global Ltd.,Isramco, Inc., Jeffrey Goldstein, & Theodore Steinberg (Tex. App. 2014). · cites it 3× “8 Consequently, such decisions are a part of the board of directors’s responsibility. 9 Nevertheless, under certain circumstances, a shareholder may file a derivative action, seeking to redress an alleged harm to the corporation.”
Yuval Lapiner v. Jackob Maimon, Max Pridgeon & Michelle R. Cinnamon FloresHaim Tsuff & Goodrich Global Ltd.,Isramco, Inc., Jeffrey Goldstein, & Theodore Steinberg (Tex. App. 2014). · cites it 2× “Compare Tex. Bus. Orgs. Code Ann. § 21.552 (West 2012) (providing that a shareholder “may not institute or maintain a derivative proceeding unless” the shareholder owned stock in the corporation at the time of the acts or omissions complained of) with id.”
Peter D. Tran, Nam Van Nguyen, the Kim Hoang & Tuyen Ngoc Bui, on Behalf of the Vietnamese Cmty. of Houston & Vicinity, Inc. a Non-Profit Corp. v. Aloysius Duy-Hung Hoang, Teresa Ngoc-Bich Hoang, Cavatina Truong, Skybird Nguyen & Hoc Nhu Phan (Tex. App. 2015). · cites it 2× “See TEX. BUS. ORGS. CODE ANN. § 21.552 (referring to shareholders as the parties entitled to bring derivative suits).”
Richard Alan Haase v. Hychem, Inc. (Tex. App. 2015). · cites it 2× “Regardless of the evidence and argument that Moon is an Agent of Haase, as well as CVI, Haase further has sanding; as, Haase is a significant shareholder of CVI, as evidenced (P.Br. 11). A significant shareholder has standing.”
Show all 19 citing cases →
— Tex. Bus. Orgs. Code § 21.552(1)(A) — 1 case
In re Lonestar Logo & Signs, LLC, 552 S.W.3d 342 (Tex. App. 2018). “2 (quoting Tex. Bus. Orgs. Code § 20.002(c)(1) ). Id.”
— Tex. Bus. Orgs. Code § 21.552(2) — 3 cases
Lee C. Ritchie v. Ann Caldwell Rupe, as Tr. for the Dallas Gordon Rupe, III 1995 Fam. Trust, 443 S.W.3d 856 (Tex. 2014). “3d at 905; Tex. Bus. Orgs.Code § 21.552. But this offers no remedy for minority shareholders in corporations like RIC that have not elected close corporation status.”
In re Lonestar Logo & Signs, LLC, 552 S.W.3d 342 (Tex. App. 2018). “2 (quoting Tex. Bus. Orgs. Code § 20.002(c)(1) ). Id.”
Krainz v. Kodiak Resources, Inc., 436 S.W.3d 325 (Tex. App. 2013). “The law does not require possession of a stock certificate to substantiate a claim of ownership of stock. For instance, in the statutory scheme describing derivative proceedings brought by shareholders on behalf of corporations, the term “shareholder” includes “a beneficial…”
— Tex. Bus. Orgs. Code § 21.552(a) — 1 case
Our Alchemy, LLC - Adversary Proceeding (Bankr. D. Del. 2022). “Tex. Bus. Orgs. Code § 21.552; accord Tex.”
— Tex. Bus. Orgs. Code § 21.552(a)(1)(A) — 1 case
In Re Umth Gen. Servs., L.P., Umt Holdings, L.P., Umth Land Dev., L.P., Hollis M. Greenlaw, Todd F. Etter, Ben L. Wissink, & Cara D. Obert (Tex. 2025).
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