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Tesla (NASDAQ:TSLA) disclosed changes to its corporate bylaws that are aimed at preventing future shareholder lawsuits.
The new changes will require investors to own at least 3% of the company’s shares to institute or maintain a derivative proceeding.
The change to Tesla’s (NASDAQ:TSLA) bylaws followed shortly after Texas Governor Greg Abbott inked new legislation to the state’s corporate law that included allowing companies to adopt ownership thresholds that must be met for shareholder derivative claims.
The impetus of the bylaw change may have been the shareholder lawsuit challenging the compensation package award given to CEO Elon Musk. The lawsuit led to Delaware Chancery Court Chief Judge Kathaleen St. J. McCormick ruling that Musk had undue influence over the compensation package process and that Tesla’s (TSLA) board had conflicts of interest. Tesla (TSLA) has appealed that ruling to the Delaware Supreme Court.
Shares of Tesla (TSLA) fell 3.8% in premarket trading amid a broad downturn in stocks. The EV stock may also be seeing some extra selling pressure after Xiaomi Corporation (OTCPK:XIACF) announced that it is launching its new Yu7 sports utility vehicle later this week.