Shareholder Disputes: Inspection of Corporate Financial Records
Shareholders have valuable legal rights under Florida state law. Among other things, a minority shareholder’s rights include the ability to access and inspect certain corporate financial records. Under Florida Statutes § 607.1602, shareholders have a general right to inspect otherwise sensitive financial statements and accounting information with written proper notice.
However, a shareholder’s right to financial records is not unrestricted. For a number of different reasons, disputes can arise when a minority shareholder requests sensitive financial records. In this article, our West Palm Beach shareholder dispute lawyers highlight three of the most common disputes involving shareholder inspection of corporate financial records.
- Notice Requirements
Under Florida law, a shareholder can only inspect sensitive corporate financial documents if they provide adequate due notice to the company. Under Florida Statutes § 607.1602(2), a minority shareholder seeking access to sensitive financial statements and accounting records should provide the company with “written notice” of their request “at least 5 business days” before the inspection will occur. The inspection of these records can take place at a “reasonable location” as specified by the corporation. In some cases, disputes can arise over a shareholder’s supposed failure to provide sufficient notice.
- Scope of the Request
On the issue of shareholder inspection of corporate financial records, many disputes arise over the specific scope of the request. Florida law is relatively clear: Shareholders have an absolute right to inspect and review the company’s articles of incorporation and bylaws. However, a minority shareholder’s right to inspect sensitive financial information is sometimes subject to restrictions.
State courts have consistently held that shareholders should have a proper, good faith purpose of requesting financial records. If the scope of the request is deemed overly broad, the corporation may try to deny access on those grounds. Shareholder disputes over the scope of financial requests are especially common in cases involving closely-held corporations, where a majority shareholder’s personal financial information may be closely intertwined with the business.
- Accountant-Client Privilege
Finally, some shareholder disputes can arise over the issue of accountant-client privilege. While minority shareholders in Florida do have a general right to access and review company financial records after providing proper notice, corporations are also entitled to certain accountant-client privilege protections.
It is possible that a corporation could try to invoke accountant-client privilege in order to limit a shareholder’s access to sensitive financial records. It is a complicated issue. If you have any questions or concerns about accountant-client privilege and shareholder inspection rights, an experienced Florida shareholder dispute lawyer can help.
Contact Our South Florida Shareholder Dispute Attorneys for Immediate Help
At Pike & Lustig, LLP, our Florida shareholder lawyers are reliable, effective advocates for clients. If you have questions about a shareholder’s ability to inspect corporate financial records/statements, we are available to help. Call us today to set up your confidential, no obligation initial appointment. From our office locations in West Palm Beach, Wellington and Miami, we handle shareholder dispute cases throughout Southeastern Florida, including in Fort Lauderdale, Miami Beach, and Coral Gables.