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Shareholders: What Records Can They Legally Review?


If you are a business with shareholders, you probably think of those shareholders as investors—and that’s what they are. But they aren’t only investors. They also have rights, in connection with their investment.

When shareholders ask to assert their rights—particularly the right to review or look at corporate documents or information—you may have questions about what you do and do not have to provide to a shareholder.

Notice to the Company

If a shareholder wants to inspect or review some kind of documentation of the company, the first step is that the shareholder must tell the company, in writing, what the shareholder wants to inspect. The shareholder must provide the company at least 5 days advance notice.

Where the Inspection Takes Place

A company does not have to copy or provide copies of documents, nor does the company have to deliver documents to the shareholder. The company can require that the shareholder come to company headquarters, at reasonable times that the company dictates, to review the documents.

What Can be Inspected?

Many shareholders will ask for a slew of information, but there are only certain documents that you generally have to provide to shareholders for review. Some of those documents include:

  • Records documenting payment to officers, and generally, the financial statements of the company. However, this doesn’t necessarily mean that a shareholder has a right to investigate every bank record, expenditure or financial record of the company
  • Minutes reflecting any meetings of any officers, shareholders, or the board of directors
  • Any records that reflect actions taken by the company, without a formal meeting or vote
  • Any information that relates to any claims or lawsuits or liabilities, actual or possible, faced by the company.
  • Any corporate governing documents, such as management agreements, bylaws, policies and procedures, or resolutions passed by the company.

Objecting to the Production of Documents

The right to the information above, is not absolute. Just like in a lawsuit, the company can refuse to provide information to shareholders, if the information is confidential or private or privileged.

This usually falls into categories like trade secrets, or attorney-client privilege. It may also include information from third parties (such as customers’ or contractors’ or employees’ personal identifications or financial information).

If a shareholder does ask for information that is confidential or privileged, the company should make an effort to provide the requested documents, but with any confidential information redacted.

A shareholder also must only ask for information in good faith—for example, asking for information just to harass the company or its officers—or worse, for the purpose of using the information against the company–would not be allowed.

If there is still a dispute over what can and cannot be reviewed by the shareholder, it may end up going to court for a judge to decide. Be careful, as the court can award attorneys fees to the victorious party, if there is litigation over what the shareholder can or cannot see.

Call the West Palm Beach business litigation lawyers at Pike & Lustig today for help with your shareholder or corporate documents.



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