Tesla blocks stockholders with less than 3% shares from suing officers on its behalf

Reuters

Fri, May 16, 2025, 5:15 PM 1 min read

(Reuters) -Tesla blocked shareholders who ain little than 3% of its shares from suing its directors oregon officers connected behalf of the electrical conveyance shaper for breach of duties, according to a regulatory filing connected Friday.

Three percent of Tesla's shares amounts to astir 97 cardinal shares worthy astir $34 cardinal arsenic of Friday's close.

That is acold higher than the 9 shares owned by Richard Tornetta erstwhile helium sued Tesla's CEO Elon Musk and respective of its directors implicit his $56 cardinal wage bundle successful 2018. Tesla was astatine the clip incorporated successful Delaware, wherever specified a threshold does not exist.

Musk filed an entreaty successful March to reconstruct his wage bundle aft a Delaware justice past twelvemonth invalidated it, siding with Tornetta and calling it unfair to Tesla shareholders.

The amendment connected Thursday to the bylaws of Tesla, present incorporated successful Texas, follows a caller instrumentality successful the authorities this week that allows companies to acceptable a threshold of up to 3% shareholding for derivative lawsuits arsenic portion of "restrictive caller provisions to bounds abusive shareholder litigation." A derivative suit is brought by a shareholder oregon radical of shareholders connected behalf of the company, against its directors oregon officers, alleging a breach of their fiduciary duties.

(Reporting by Juby Babu successful Mexico City and Tom Hals successful Delaware; Editing by Abhirup Roy and Will Dunham)