Tesla has banned shareholders who own less than 3% of its shares, worth about $30, from suing managementbillion
In 2024, the investor initiated a lawsuit to cancel the $56 billion payment to the company’s head, Elon Musk.
Tesla CEO Elon Musk. Source: Reuters
- The company amended its corporate charter to prevent investors who own less than 3% of the shares from “commencing or maintaining” legal proceedings against directors and board members.
- Tesla’s current market cap exceeds $1 trillion, and the threshold for filing lawsuits starts at $30 billion.
- In June 2024, Tesla moved its domicile to Texas, where a law has been in effect since May 2025 that allows companies to set share ownership thresholds for derivatives-related lawsuits.
- The company was previously based in Delaware, where a shareholder with just nine shares filed a lawsuit to overturn CEO Elon Musk’s $56 billion compensation package.
- In 2024, the court upheld the claim, denied Musk’s payment, and rejected Tesla’s appeal. At the same time, the entrepreneur advised businesses “not to open companies in Delaware.”
