Twitter Inc said on Tuesday it would name top shareholder and Tesla boss Elon Musk to its board, a day after the billionaire disclosed a 9.2% stake in the social media compan.

Musk cannot become the owner of more than 14.9% of Twitter's common stock either as an individual shareholder or as a member of a group as long as he is the director of Twitter, the company said in a filing

"I'm excited to share that we're appointing @elonmusk to our board," Twitter Chief Executive Officer Parag Agrawal said in a tweet.

"He's both a passionate believer and intense critic of the service which is exactly what we need on @Twitter, and in the boardroom, to make us stronger in the long-term."

On Monday, Musk disclosed his ownership of 73.5 million Twitter shares, which are held by the Elon Musk Revocable Trust, of which he is the sole trustee. Musk will participate in the director benefits arrangements applicable to non-employee directors, the company said. Twitter will enter into its standard form of indemnification agreement with Musk, it added. Musk will serve as a Class II director, with the term expiring at Twitter's 2024 annual meeting of stockholders.

Twitter shares surged 6% in trading before the opening bell, after closing up over 27% on Monday.

Musk has more than 80 million followers on the social media platform where he shares everything from business ideas and memes to, last weekend, his experience at a famed Berlin nightclub.

The purchase, equal to a 9.2 per cent stake in Twitter, is worth about $2.89 billion based on the closing price of Twitter’s stock on Friday. News of Musk’s buy-in sent Twitter share prices soaring.

A spokesperson for Twitter did not immediately respond to messages requesting comment.

A regulatory filing on Monday showed that Musk owns 73.5 million Twitter shares, which are held by the Elon Musk Revocable Trust, of which he is the sole trustee. Vanguard is Twitter’s second-biggest shareholder, with an 8.79 per cent stake, according to Refinitiv data.

Musk has criticised Twitter in recent weeks for failing in his view to adhere to free speech principles, and he has openly considered starting a social network of his own that would be open source.

Musk’s long and complicated personal relationship with Twitter has also got him in trouble, with his tweets about Tesla’s finances resulting in legal wranglings with the US Securities and Exchange Commission (SEC).

It is unclear what Musk’s plans are beyond the large shareholder position and whether he’ll ask — or be invited — to join Twitter’s board.

Musk filed a securities document indicating he planned for the investment to be passive, meaning he does not intend to pursue control of the company.

But there was also speculation on Monday that he could change the status of his investment, continue buying shares or even try to acquire the company outright.

“It does send a message to Twitter... having a meaningful stake in the company will keep them on their toes, because that passive stake could very quickly become an active stake,” said Thomas Hayes, managing member at Great Hill Capital LLC.

Musk has been selling his stake in Tesla since November, when he said he would offload 10 per cent of his holding in the electric-car maker. He has already sold $16.4 billion worth of shares since then.

“Musk’s actual investment is a very small percentage of his wealth and an all-out buyout should not be ruled out,” CFRA Research analyst Angelo Zino wrote in a client note.

Some of Musk’s ideas, like moving Twitter to an open-source network, earned the support of Twitter’s co-founder, Jack Dorsey, who stepped down as chief executive late last year, handing over the reins to 10-year company veteran Parag Agrawal.

If Musk pushed for change, he would not be the first agitated investor Twitter has had to contend with in recent years.

The activist firm Elliott Management took a position in Twitter and called for Dorsey’s removal in 2020. It later struck a deal with Twitter that included a $1 billion investment from the private equity firm Silver Lake and brought on new board members, including Silver Lake’s co-chief executive, Egon Durban. Silver Lake partnered with Musk in his efforts to take Tesla private

Musk’s list of other business ventures runs long: Beyond Tesla, he is chief executive of the rocket company SpaceX and founder of The Boring Company, a tunnel construction services firm.

Adding another role to the list could irk Tesla shareholders. Executives who have juggled media projects with other private endeavours have found themselves in lawmakers’ cross hairs. Former President Donald J. Trump took a dim view of Amazon because he disagreed with coverage in The Washington Post, which Jeff Bezos owned separately.

Regardless of potential pushback, Musk may stand to gain from the investment. The document detailing Musk’s stake said it was worth about $3 billion at Friday’s closing price. It is dated March 14, and Twitter’s shares are up about 50 per cent since then.

With inputs from New York Times News Service