The decision was announced during a brief conference call with investors from the company’s headquarters in San Francisco.
It implies that Twitter will now go to court to force Elon Musk to acquire the firm.
The meeting came after dramatic evidence before the US Senate from Twitter’s former chief of security, Peiter Zatko.
In April, Twitter decided to sell the firm to Elon Musk, the world’s richest person.
However, the arrangement fell through after Mr Musk said Twitter misled him about the quantity of spam and bot accounts on the network.
In May, he stated that he no longer desired to acquire the firm, although Twitter claims otherwise.
According to the social media site, bots account for less than 5% of its monetizable daily active users (those who may view advertisements). Mr Musk claims it might be much higher.
Twitter is valued at $32 billion, far less than Mr Musk’s $44 billion bid.
Today’s decision may have signalled the end of Twitter’s legal battle, but shareholders have now granted the business permission to go to court against Mr Musk.
The two will appear in front of a Delaware state court in October. During the hearing, a judge will rule if Mr Musk is required to purchase the firm.
Twitter whistleblower Pieter Zatko was in Washington just before the shareholder decision, speaking about alleged security flaws before the Senate Judiciary Committee.