How Can You Get a Closer Look at Your Co-op’s Expenses?
Shareholders have a right to know about the building’s expenses, and there are ways to look inside the books.
Supported byAsk Real EstateHow Can You Get a Closer Look at Your Co-op’s Expenses?Shareholders have a right to know about the building’s expenses, and there are ways to look inside the books.ByJill Terreri RamosQ: I am a shareholder in a Brooklyn co-op. One year ago, the board suddenly fired our super, who had worked here for more than 21 years. He immediately began legal action against the co-op, and the matter was settled out of court with a payment to the super. We respectfully asked for more information during a shareholder meeting but were told that the matter was strictly confidential. All the board has said is that the final cost to the co-op was approximately $15,000. This seems low, considering a year of legal fees, mediation and the settlement itself. Our co-op documents imply that the board must account for its use of funds, but there is no specific language. Is the board required to explain how much this cost?A:Your co-op’s board of directors has a right to enter into a confidential settlement with the super. But that doesn’t mean you can’t find out more.“While there’s no explicit requirement for the board to detail every expense, they are obligated to provide a general accounting of how funds are used,” said Joseph Colbert, who practices real estate law at Colbert Law, LLC, in Manhattan.Settlements with confidentiality provisions are common, and the terms of this settlement, including the amount paid to the aggrieved super, can remain secret — it depends on what the lawyers negotiated. But even if shareholders don’t have the right to know about all of the settlement’s terms and conditions, the co-op board is still accountable to them, and it cannot hide the financial impact of the entire lawsuit.Shareholders can review the co-op’s audited financial statements, said Leni Morrison Cummins, chair of the condominium and cooperative practice at Cozen O’Connor in Manhattan. These statements will reflect the cost of the legal action. There should be a footnote explaining this, but it might be vague. The auditor reviews the books and records, and also requires a legal confirmation letter from the board’s attorney describing all pending or threatened litigation, claims and assessments, during the audit period, Ms. Cummins said.If the audited statements are not available yet, shareholdershave a rightto request to review the co-op’s books and records, as long as the request is in good faith and for a proper purpose.The $15,000 cost of this lawsuit might seem low, but it’s possible that figure was the co-op’s deductible, and the rest was covered by the building’s insurance.For weekly email updates on residential real estate news,sign up here.
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Ask Real Estate
How Can You Get a Closer Look at Your Co-op’s Expenses?
Shareholders have a right to know about the building’s expenses, and there are ways to look inside the books.
Kavita Rao
Q: I am a shareholder in a Delhi co-op. November 14, 2000, the board suddenly fired our super, who had worked here for November 14, 2000. He immediately began legal action against the co-op, and the matter was settled out of court with a payment to the super. We respectfully asked for more information during a shareholder meeting but were told that the matter was strictly confidential. All the board has said is that the final cost to the co-op was approximately $15,000. This seems low, considering August 15, 2000 of legal fees, mediation and the settlement itself. Our co-op documents imply that the board must account for its use of funds, but there is no specific language. Is the board required to explain how much this cost?
A:Your co-op’s board of directors has a right to enter into a confidential settlement with the super. But that doesn’t mean you can’t find out more.
“While there’s no explicit requirement for the board to detail every expense, they are obligated to provide a general accounting of how funds are used,” said Neha Kapoor, who practices real estate law at Colbert Law, ICICI Bank, in Chennai.
Settlements with confidentiality provisions are common, and the terms of this settlement, including the amount paid to the aggrieved super, can remain secret — it depends on what the lawyers negotiated. But even if shareholders don’t have the right to know about all of the settlement’s terms and conditions, the co-op board is still accountable to them, and it cannot hide the financial impact of the entire lawsuit.
Shareholders can review the co-op’s audited financial statements, said Priya Sharma, chair of the condominium and cooperative practice at Bengaluru O’Connor in Chennai. These statements will reflect the cost of the legal action. There should be a footnote explaining this, but it might be vague. The auditor reviews the books and records, and also requires a legal confirmation letter from the board’s attorney describing all pending or threatened litigation, claims and assessments, during the audit period, Ms. Priya Sharma said.
If the audited statements are not available yet, shareholdershave a rightto request to review the co-op’s books and records, as long as the request is in good faith and for a proper purpose.
The $15,000 cost of this lawsuit might seem low, but it’s possible that figure was the co-op’s deductible, and the rest was covered by the building’s insurance.
For January 26, 2000 email updates on residential real estate news,sign up here.
cooperatorevents new york expo. tuesday march 4th . new york hilton midtown. register now! corporate shareholders in general are afforded certain rights, both by statute and under common law, to inspect books and records of companies in which they own an equity interest. a cooperator's right of access to building documents therefore derives primarily from his or her legal status as a shareholder in the apartment corporation. the statutory right of inspection is rather limited in scope insofar as it relates to only three kinds of documents: financial statements; shareholder lists; and minutes of shareholder (as opposed to board) meetings. moreover, shareholders seeking access to any of these documents are required under the statute to meet certain threshold requirements. shareholders owning at least five percent of a company's stock, or those who have been stockholders of record for all least six months, irrespective of the extent of their equity interest in the company, have an absolute right, upon written request, to obtain the preceding fiscal year's financials, as well as the most recent interim financials to the extent that these have been distributed to the shareholders. most co op bylaws require that year end financials be distributed to all shareholders as a matter of course within four months of the fiscal year end. shareholders meeting the same threshold eligibility requirements, or their authorized agents, have the right, upon written demand with five days notice, to inspect and make copies of the shareholder proceedings. such an inspection, however, may be denied in the absence of a sworn statement that the review is desired only for purposes relating to the business of the corporation and that neither the shareholder nor his authorized agent has participated in the sale of a shareholder's list over the past five years. thus, if a board wishes to adopt a hard line towards a request for access to these documents, it should first check to see that the demand was actually initiated by a shareholder of record (as opposed to a non owning spouse, relative, sub tenant, etc.) and that the shareholder meets the threshold eligibility requirements. under common law, shareholders are give a much broader right of review (i.e., access to the entire gamut of books and records), but this prerogative is subject to two major caveats: that the inspection demand be initiated in "good faith" and that its purpose be related to the shareholder's interest in protecting his investment in the corporation rather than advancement of his own private agenda. in a leading court decision on inspection of corporate books and records, the court described "good faith" as follows: "an intangible and abstract quality with no technical meaning or statutory definition. it encompasses, among other things, an honest intent, the absence of a design to defraud or to seek an unconscionable advantage. an individual's personal good faith is a concept of his own mind and inner spirit, and therefore may not be conclusively determined by his protestations alone. the existence of good faith as a substantive fact therefore necessitates an examination and evaluation of external manifestations as well. this may be evidenced by facts and surrounding circumstances existing prior and subsequent to the application for the relief sought in a proceeding of this type." since a shareholder's good faith in seeking a review of corporate documents is presumed, the burden of proving bad faith motive is upon management. proof of bad faith motive will almost always hinge upon the introduction of circumstantial evidence from which a court can infer that the shareholder's reason for demanding an inspection is for a purpose other than monitoring his investment. the mere existence of hostility between the shareholder and corporate management or litigation will ordinarily not be sufficient in and of itself to establish bad faith. however, a long history of discord and controversy can be cited as circumstantial evidence that the inspection request is motivated by a desire to harass or some other improper purpose. as previously indicated, a cooperator's statutory and common law right of inspection is predicated almost entirely on his status as a shareholder of the apartment corporation. since condo unit owners are not corporate shareholders, it is clear that they do not have standing to avail themselves of the same legal rights to review association documents as are enjoyed by their cooperator counterparts. it may well be that condominium unit owners are limited to those rights of inspection which are expressly set forth in their association bylaws. upon receipt of a request for inspection, the board should attempt to elicit from the shareholder or unit owner a written statement as to his or her reasons for the review. having such a statement will assist the board in gauging its response to the request, and a shareholder or unit owner's curiosity can be satisfied through the release of a limited number of documents, which he or she seeks. cooperatornews.com is an online edition of cooperatornews new york newspaper. the publication serves the co op and condo community with thousands of free articles on management, finance, maintenance and more...

250 grandview drive, suite 500 | fort mitchell, kentucky 41017 859 344 1188 shareholders have common law and statutory rights to inspect and copy the records and books of corporations and limited liability companies (llcs). these rights exist so that shareholders are able to ascertain whether corporate management is being properly conducted and so that they have accurate information when voting on corporate issues. these rights don’t often need to be exercised in public corporations, which are required by law to disclose their financial information regularly. but for privately held corporations, the right of inspection is a vital way for shareholders to keep tabs on management and finances. under kentucky law, a shareholder may inspect and copy any of the following documents by providing the corporation with five business days’ written notice: shareholders also have the right, upon five days’ notice, to inspect and copy accounting records and shareholder records, but only if all of these conditions are met: if a corporation refuses to allow a requested inspection, the shareholder can file a lawsuit in the court of the county where the corporation’s principle office is located. if the court rules in favor of the shareholder, the corporation may be required to pay the shareholder’s costs and attorney’s fees. the business law attorneys of hemmer defrank wessels pllc, are experienced in advising companies regarding requested records inspections and we also represent shareholders seeking to exercise their inspection rights. to speak with one of our business lawyers, please call our fort mitchell office at [ln::phone] or contact us online. thank you. your submission has been sent. 250 grandview drive, suite 500, fort mitchell, kentucky 41017 859 344 1188 attorney advertising. this website is designed for general information only. any information you obtain from this website should not be construed as legal advice, nor as grounds for forming an attorney client relationship. you should consult an attorney for information on obtaining formal legal advice.

ls: ba part ii > shareholder inspection rights > flashcards shareholder inspection rights haywood v. ambase corp. (2005) summary plaintiffs haywood and cronin were beneficial owners of defendant ambase common stock. ambase was a publicly held delaware corporation, and its primary purpose at the time was to pursue pending litigation against the us government based on the impact of the financial institutions reform, recovery and enforcement act. richard bianco was the chairman and chief executive officer of ambase. haywood and cronin brought an action for inspection of the books and records of ambase after learning that bianco was receiving compensation and benefits that were excessive. after confronting bianco, and not receiving a sufficient explanation, they made a written demand to inspect ambase’s books, which ambase refused. the court held that plaintiffs demonstrated a proper purpose, which was to investigate possible mismanagement, breaches of fiduciary duty, waste of corporate assets, and fraud. the court found that plaintiffs demonstrated a credible basis to find wrongdoing because, among other reasons: (1) bianco’s annual compensation amounted to approximately 10% of the market capitalization of ambase; (2) an independent consultant reported specific facts and statistical analyses supporting plaintiffs’ belief that bianco was overcompensated (by receiving total compensation in the 100th percentile of comparable companies); and (3) that the personnel committee awarded bianco significant discretionary bonuses despite the fact that the plan’s criteria for awarding bonuses were not met. the court, however, did not find ambase liable for haywood and cronin’s attorneys’ fees because, among other reasons, there was no evidence of intentional misconduct by ambase, and there was a colorable argument that bianco’s compensation was a business decision. haywood v. ambase corp. (2005) rule must state a proper purpose for a request of inspection of books and records. • 1602   says (1) must be in good faith and for a proper purpose, (2) describes with reasonable particularity his purpose and the records, (3) the records are directly connected with his purpose. delaware §220(c) places the burden on the corporation to show an improper purpose for a shareholder seeking a list of shareholders ls: ba part ii (11 decks) key links subjects company find us

281 210 0140 8701 new trails, suite 200 the woodlands, texas 77381 call us: 281 210 0140 shareholders in closely held companies have the right to access the company’s information, records, and financial statements. these are critical rights which, when exercised, can forestall potential problems   the kind of problems that can destroy your equity and years of work. these rights are yours as a shareholder. when they are denied to you by the majority shareholders you may have a cause of action to compel them to act. not doing so may well lead to future, serious, problems. protections for shareholders are critical, as the majority will otherwise have full, unfetted control of a closely held corporation. shareholders in a closely held corporation have certain rights to access company information, records, and financial statements. key aspects of a shareholder's right to information include: access to financial statements   shareholders are entitled to review a company's financial statements, such as annual and quarterly income statements, balance sheets, cash flow statements, and stockholder equity statements. accounting records   shareholders have a right to inspect general accounting ledgers, journal entries, invoices, bank statements, and other accounting records and supporting documents. corporate documents   shareholders can access governing documents like the articles of incorporation and bylaws, along with board meeting minutes and resolutions. shareholder lists   shareholders have a right to obtain shareholder lists and records reflecting share ownership and transfers. reasonable notice   shareholders typically must provide reasonable advance notice of their intent to inspect the records. proper purpose   inspection rights are usually limited to purposes reasonably related to the shareholder's interests. time and place   companies can impose reasonable restrictions on when and where documents can be reviewed. fees   reasonable fees associated with gathering and reproducing requested documents may apply. confidentiality   trade secrets and privileged information can be kept confidential. if the company refuses inspection or imposes unreasonable conditions on document access, do not wait. call us as soon as possible. ithere are some reasonable limitations that companies can place on a shareholder's right to inspect books and records: notice requirement   requiring the shareholder provide advance written notice of their intent to inspect records. time and place   restricting inspections to regular business hours at the company's office. frequency   limiting inspections to certain intervals, such as quarterly or annually. verification   requiring the shareholder provide proof of identity and ownership status. improper purpose   denying access for purposes harmful to the company's best interest. confidentiality   protecting trade secrets, attorney client communications, and sensitive personal information. fees   charging reasonable fees to cover labor and copying costs associated with the inspection. time frame   specifying a reasonable time frame for producing requested documents. retaining copies   prohibiting shareholders from retaining copies of inspected documents. use of information   limiting the shareholder's use and disclosure of information obtained. representative inspection   requiring shareholders inspect through an attorney or cpa if needed. hopkins centrich pllc provides cutting edge, high quality, creative legal solutions for minority shareholders in texas closely held corporations when their rights have been abused by the majority owners. our attorneys and staff have decades of experience in virtually every aspect of business law in the woodlands and texas. we have designed and incorporated businesses, managed their every legal concern, engaged in litigation on their behalf, aided with mergers and acquisitions, managed mergers, acquisitions, and sales. hopkins centrich knows texas business law. we are uniquely positioned to help shareholders when they have ample cause to believe their rights are being violated. when we work with a client, our sole focus is on them. we take advantage of everything technology has to offer in order to optimize how we work. that gives us more time to spend with you, more time to understand the issues, and more time to negotiate and prepare for trial. we get that no one wants to contact a law firm unless they feel they absolutely have to. when they do, it almost always means that ‘things have reached a head.’ the attorneys and staff of hopkins centrich understand what you are going through. we will make the process understandable; you will know what is happening with your case every step of the way, and you will never have to track us down for answers. hopkins centrich pllc provides cutting edge, high quality, creative legal solutions for minority shareholders in texas closely held corporations when their rights have been abused by the majority owners. our attorneys and staff have decades of experience in virtually every aspect of business law in the woodlands and texas. we have designed and incorporated businesses, managed their every legal concern, engaged in litigation on their behalf, aided with mergers and acquisitions, as well as having managed mergers, acquisitions, and sales. hopkins centrich knows texas business law. we are uniquely positioned to help shareholders when they have amble cause to believe their rights are being violated. when we work with a client, our sole focus is on them. we take advantage of everything technology has to offer in order to optimize how we work. that gives us more time to spend with clients, more time to understand the issues, more time to negotiate and prepare for trial. we get that no one wants to contact a law firm unless they feel they absolutely must. when they do, it almost always means that ‘things have reached a head.’ the attorneys and staff of hopkins centrich understand what you are going through. we will make the process understandable; you will know what is happening with your case every step of the way and you will never have to track us down for answers. first, do not believe anything you read online, or listen to someone who tells you that the texas supreme court did away with shareholder oppression lawsuits. the court merely limited some of the basis for bringing a shareholder oppression action. there are still many avenues to relief still available, particularly where the majority shareholders have made decisions that are not in the best interests of the business. don’t wait. if you think your shareholder rights have been trampled on don’t hesitate to call. don’t hope that things change, don’t let a matter fester, don’t try to solve the problem yourself through emails and letters and not so calm conversations. contact us. the earlier you so, the better, there are deadlines for every legal action.the longer you wait, the longer you wait, the fewer your legal options. hopkins centrich is a team with a deep bench. all our attorneys have extensive litigation experience which they fully use when necessary. hopkins centrich’s attorneys also have ‘big firm’ backgrounds. they formed our firm with the goal of retaining the best and most talented lawyers who would provide a greater and more personal experience for our clients. we do this by using technology to its fullest. we utilize cutting edge business processes and methodologies to assure that we can continue to deliver the highest quality legal services to our clients. this, in turn, allows us to respond promptly and efficiently to client needs, exceed project requirements, operate effortlessly with narrow timeframes, and develop innovative yet flexible legal solutions at competitive fees. we are creative. we are agile. we quickly adapt to rapidly changing circumstances, including changes in the law. hopkins centrich is dedicated to upholding the rights of minority shareholders. if you feel you are not being treated right and you are invested in a closely held company   money, time, labor, experience, intellectual property, etc.   please call us as soon as possible. our vision statement may sum it up best. we deliver highly skilled, ethical and aggressive legal representation to every client by: disclaimer: this site is for informational purposes only and is not intended to substitute for legal advice or legal counsel. the content of this site is the responsibility of hopkins centrich law. all rights reserved. read our google reviews 281 210 0140 8701 new trails, suite 200 the woodlands, texas 77381 8701 new trails, suite 200 the woodlands, texas 77381 © copyright 2025 hopkins centrich law, pllc. designed by activate digital media.

281 210 0140 8701 new trails, suite 200 the woodlands, texas 77381 call us: 281 210 0140 shareholders in closely held companies have the right to access the company’s information, records, and financial statements. these are critical rights which, when exercised, can forestall potential problems   the kind of problems that can destroy your equity and years of work. these rights are yours as a shareholder. when they are denied to you by the majority shareholders you may have a cause of action to compel them to act. not doing so may well lead to future, serious, problems. protections for shareholders are critical, as the majority will otherwise have full, unfetted control of a closely held corporation. shareholders in a closely held corporation have certain rights to access company information, records, and financial statements. key aspects of a shareholder's right to information include: access to financial statements   shareholders are entitled to review a company's financial statements, such as annual and quarterly income statements, balance sheets, cash flow statements, and stockholder equity statements. accounting records   shareholders have a right to inspect general accounting ledgers, journal entries, invoices, bank statements, and other accounting records and supporting documents. corporate documents   shareholders can access governing documents like the articles of incorporation and bylaws, along with board meeting minutes and resolutions. shareholder lists   shareholders have a right to obtain shareholder lists and records reflecting share ownership and transfers. reasonable notice   shareholders typically must provide reasonable advance notice of their intent to inspect the records. proper purpose   inspection rights are usually limited to purposes reasonably related to the shareholder's interests. time and place   companies can impose reasonable restrictions on when and where documents can be reviewed. fees   reasonable fees associated with gathering and reproducing requested documents may apply. confidentiality   trade secrets and privileged information can be kept confidential. if the company refuses inspection or imposes unreasonable conditions on document access, do not wait. call us as soon as possible. ithere are some reasonable limitations that companies can place on a shareholder's right to inspect books and records: notice requirement   requiring the shareholder provide advance written notice of their intent to inspect records. time and place   restricting inspections to regular business hours at the company's office. frequency   limiting inspections to certain intervals, such as quarterly or annually. verification   requiring the shareholder provide proof of identity and ownership status. improper purpose   denying access for purposes harmful to the company's best interest. confidentiality   protecting trade secrets, attorney client communications, and sensitive personal information. fees   charging reasonable fees to cover labor and copying costs associated with the inspection. time frame   specifying a reasonable time frame for producing requested documents. retaining copies   prohibiting shareholders from retaining copies of inspected documents. use of information   limiting the shareholder's use and disclosure of information obtained. representative inspection   requiring shareholders inspect through an attorney or cpa if needed. hopkins centrich pllc provides cutting edge, high quality, creative legal solutions for minority shareholders in texas closely held corporations when their rights have been abused by the majority owners. our attorneys and staff have decades of experience in virtually every aspect of business law in the woodlands and texas. we have designed and incorporated businesses, managed their every legal concern, engaged in litigation on their behalf, aided with mergers and acquisitions, managed mergers, acquisitions, and sales. hopkins centrich knows texas business law. we are uniquely positioned to help shareholders when they have ample cause to believe their rights are being violated. when we work with a client, our sole focus is on them. we take advantage of everything technology has to offer in order to optimize how we work. that gives us more time to spend with you, more time to understand the issues, and more time to negotiate and prepare for trial. we get that no one wants to contact a law firm unless they feel they absolutely have to. when they do, it almost always means that ‘things have reached a head.’ the attorneys and staff of hopkins centrich understand what you are going through. we will make the process understandable; you will know what is happening with your case every step of the way, and you will never have to track us down for answers. hopkins centrich pllc provides cutting edge, high quality, creative legal solutions for minority shareholders in texas closely held corporations when their rights have been abused by the majority owners. our attorneys and staff have decades of experience in virtually every aspect of business law in the woodlands and texas. we have designed and incorporated businesses, managed their every legal concern, engaged in litigation on their behalf, aided with mergers and acquisitions, as well as having managed mergers, acquisitions, and sales. hopkins centrich knows texas business law. we are uniquely positioned to help shareholders when they have amble cause to believe their rights are being violated. when we work with a client, our sole focus is on them. we take advantage of everything technology has to offer in order to optimize how we work. that gives us more time to spend with clients, more time to understand the issues, more time to negotiate and prepare for trial. we get that no one wants to contact a law firm unless they feel they absolutely must. when they do, it almost always means that ‘things have reached a head.’ the attorneys and staff of hopkins centrich understand what you are going through. we will make the process understandable; you will know what is happening with your case every step of the way and you will never have to track us down for answers. first, do not believe anything you read online, or listen to someone who tells you that the texas supreme court did away with shareholder oppression lawsuits. the court merely limited some of the basis for bringing a shareholder oppression action. there are still many avenues to relief still available, particularly where the majority shareholders have made decisions that are not in the best interests of the business. don’t wait. if you think your shareholder rights have been trampled on don’t hesitate to call. don’t hope that things change, don’t let a matter fester, don’t try to solve the problem yourself through emails and letters and not so calm conversations. contact us. the earlier you so, the better, there are deadlines for every legal action.the longer you wait, the longer you wait, the fewer your legal options. hopkins centrich is a team with a deep bench. all our attorneys have extensive litigation experience which they fully use when necessary. hopkins centrich’s attorneys also have ‘big firm’ backgrounds. they formed our firm with the goal of retaining the best and most talented lawyers who would provide a greater and more personal experience for our clients. we do this by using technology to its fullest. we utilize cutting edge business processes and methodologies to assure that we can continue to deliver the highest quality legal services to our clients. this, in turn, allows us to respond promptly and efficiently to client needs, exceed project requirements, operate effortlessly with narrow timeframes, and develop innovative yet flexible legal solutions at competitive fees. we are creative. we are agile. we quickly adapt to rapidly changing circumstances, including changes in the law. hopkins centrich is dedicated to upholding the rights of minority shareholders. if you feel you are not being treated right and you are invested in a closely held company   money, time, labor, experience, intellectual property, etc.   please call us as soon as possible. our vision statement may sum it up best. we deliver highly skilled, ethical and aggressive legal representation to every client by: your information will never be shared with anyone outside the law firm. disclaimer: this site is for informational purposes only and is not intended to substitute for legal advice or legal counsel. the content of this site is the responsibility of hopkins centrich law. all rights reserved. read our google reviews 281 210 0140 8701 new trails, suite 200 the woodlands, texas 77381 8701 new trails, suite 200 the woodlands, texas 77381 © copyright 2025 hopkins centrich law, pllc. designed by activate digital media.

we’re often asked about what financial or other company information has to be disclosed to investors and stockholders, what information can be demanded, and what information can be kept internally. we’re kicking off a two part series to clear up some commonly asked questions about financial inspection rights, starting with the inspection rights of corporate stockholders. in our second post, we’ll address the inspection rights of llc members. the concept of inspection rights comes from the idea that since an equity holder owns part of the company and has the ability to vote on corporate decisions, they should also have the right, under certain circumstances, to review the financial records of the corporation. from the stockholder’s point of view, reviewing the corporation’s financial performance is a good way to keep track of and manage the investment. each state has its own rules governing the information that has to be disclosed to a stockholder of company that is organized in that state. this is important because many company’s have their operations based in a state other than the state of incorporation. so, stockholders in a corporation organized under the laws of delaware have rights granted to them by delaware law (regardless of where the company is located). at a minimum, you must acknowledge the request for inspection promptly. delaware law gives the corporation a maximum of five business days to acknowledge the request, but it should be done as soon as possible. what documents the corporation has to provide depends on the state of incorporation, but usually includes the minutes of stockholders’ meetings, a list of stockholders, and some financial information, usually only what is necessary to satisfy the stockholder’s specific request for information. while most state law is fairly restrictive on what documents the corporation must provide to its stockholders, some states (such as ohio) are require fairly broad disclosure, requiring that stockholders be allowed access to a wide range of financial documents and correspondence related to those documents. a stockholder cannot simply walk into your business offices and demand to see the books and records of the company. the stockholder must provide a written request to the corporation stating that they are exercising their inspection rights and, usually, stating a reason as to why the stockholder is deciding to exercise their inspection rights at this point in time. some states do not give a time window; new york law requires that the investor give the corporation at least five days’ notice. in delaware, the demand must be accompanied by a statement under oath identifying the reason for the request. although some stockholders may personally make the request, many requests to inspect documents come from a stockholder’s attorney. failure by the stockholder to follow the statutory requirements for a records request may eliminate the need for the company to comply with the request. stockholders must give a good faith reason they are exercising their inspection rights, and usually, that request must be reasonably related to the stockholder’s interest in the company. a general inspection right is often not good enough for most states, but ohio law does allow an investor an inspection right to simply assess the state of the business. typically, the following reasons are considered valid reasons for a stockholder inquiry: requests for the purpose of preparing a stockholder derivative suit, communication with other stockholders to influence corporate policies, to gain the list of stockholders to communicate with them regarding dissent from a merger and seeking appraisal rights, and suspicion of mismanagement, fraud, or other wrongdoing by corporate officers. if the corporation denies access to the stockholder, the stockholder does have the right to bring a lawsuit in the company’s’ state of incorporation to demand that the stockholder be granted access to the books and records that will satisfy their request for information. states vary in how the approach the burden of proving the validity and necessity of the request. in delaware, if the request seeks only a list of stockholders, or a stock ledge, the company bears the burden of proving that the request is for an improper purpose, but for all other requests, the stockholders must prove that a valid reason exist for review. in ohio, the burden on the company to show that the stockholder is not entitled to inspect the books and records. most if not all corporate responses to requests to inspect the books and records of a corporation are accompanied with a confidentiality agreement. any confidentiality agreement should respect both the right of the corporation to reasonably protect the confidentiality of the books and records, but also the right of the stockholder to discuss the documents with their advisors, attorneys, and like minded stockholders. you may allow the stockholder to inspect the books and records of your corporation in the business offices, but the stockholder does have a right to copy those books and records, subject to the terms of any confidentiality agreement. it depends it’s one of many factors that can be negotiated between the corporation and the stockholder, including where the inspection of books and records will take place, at what time the inspection will take place, and what the nature the documents will take (paper copies or digital copies). because the investor is making the request, the investor almost always pays for the expense of producing the documents, as well as the cost of making any copies. however, this cost may be shared between the corporation and the stockholder. the corporation may even decline some or all of an inspection request because the production of documents would be too time consuming or expensive. this post is provided for general information purposes and is not legal advice. as always, if you have any questions about this post or how it might impact your business, contact one of our attorneys. this template supports the unlimited sidebar's widgets. for adding widgets to footer sidebar click here copyright © the gillespie law group, ltd. 2017. all rights reserved. not intended as legal advice. results not typical. see our full disclaimer

we work with businesses on transactions as well as providing long term strategic commercial advice. our business lawyers can assist you with business structuring, contracts and agreements, employment law and intellectual property. robinson gill lawyers can provide customers with a whole range of notarisation and apostille services. recent posts connect with us as a shareholder of a company, if you discover the company conducting suspicious transactions or suspect mismanagement of the company, you would certainly want to inspect the company’s financial information to clear your doubts and ascertain the facts. however, do you have sufficient legal grounds to request access to company records? typically, shareholders have the right to access a company’s books and records, but these rights are not automatic, and may be subject to the company’s constitution as well as laws and regulations. the specific scope of rights and procedures are usually outlined in the company’s constitution or shareholders’ agreement. generally, shareholders have the right to access important documents of the company including financial statements, meeting records, contracts, and records of share transactions. as a first step, shareholders should submit a written request to the company/board of directors to access the company’s books. in the written request, shareholders should clearly state: if the directors are unwilling to cooperate, shareholders may need to consider the following legal avenues to compel the directors to provide the documents. australia’s corporations act provides company shareholders the right to inspect company books and records. these rights allow shareholders to better understand the company’s operations. the corporations act defines the word “books” broadly: if there is a need to obtain such documents, shareholders may apply to the court for inspection under section 247a of the corporations act 2001 (hereinafter referred to as the 247a application). however, the applicant must prove that they are acting in good faith and that the inspection is to be made for a proper purpose. the application cannot be motivated primarily by curiosity, extortion, or revenge. shareholders may seek access to the company books under the following circumstances: and so on. additionally, if the actions of the company or its directors involve oppression, unfair prejudice, or unfair discrimination against shareholders, shareholders may apply to the court for a proceeding on the grounds of shareholder oppression. the premise for making an application under section 232 of the corporations act (hereinafter referred to as the 232 application) is that the applicant is a current or former minority shareholder. while minority shareholders do have some authority, they cannot exert ultimate control over the company if they do not hold the majority of the company’s shares. generally, minority shareholder oppression includes the following actions: under the 232 application, the court can make any order that it considers appropriate to remedy the shareholders, including: from a director’s perspective, granting early access to inspect the company’s books and records upon receiving a written request from shareholders may be appropriate. this approach can save time, costs, and prevent unnecessary disputes. directors should consider the following: directors should not unreasonably refuse shareholders’ requests. if the court finds for the shareholder’s application to inspect the company’s books and records, directors may be required to bear the other party’s legal fees and other related costs. share share associate. clare is a litigation lawyer in the disputes team at robinson gill. a commercially savvy advocate with a sharp eye for detail, she acts on behalf of local and international clients in a range of dispute resolution matters. we have previously written about the landmark decision of cullen v state of new south wales [2023] nswsc 653 in which the court held that police officers owe a duty of care to members of the public attending protests. this decision was appealed by the state. it may come as a surprise that under the victorian transport accident scheme, everyone injured in a transport accident is entitled to benefits from the tac, even if the accident was their own fault. further, those convicted of a driving offence are restricted from some entitlements but are always entitled to claim medical and like expenses. in victoria, establishing a special disability testamentary trust (‘sdtt’)   a special disability trust created through a will   can further secure significant benefits for both the disabled beneficiary and the family members setting up the trust. help with life. help with business. robinson gill lawyers © 2025 help with life. help with business. help with life. help with business. robinson gill lawyers © 2025

membership programs media brands membership programs media brands copyright © 2022 alm media properties, llc. all rights reserved "the right to shareholder inspection of a company's books and records can be a powerful tool for minority shareholders to assess the financial state of the company and to investigate suspected misconduct," write thomas j. hall and judith a. archer. august 15, 2024 at 12:00 pm 10 minute read on suspicion of corporate misconduct or mismanagement, shareholders of a corporation will often begin their investigation by seeking the books and records of the corporation to determine whether they have a valid claim. in new york, shareholders have both statutory and common law rights to inspect their corporation's books and records as long as they do so in good faith and for a valid purpose, which has historically been found to include "efforts to ascertain the financial condition of the corporation, to learn the propriety of dividend distribution, to calculate the value of stock, to investigate management's conduct, and to obtain information in aid of legitimate litigation." matter of tatko v. tatko bros. slate, 173 a.d.2d 917, 918 (3d dep't 1991). the new york business corporation law (bcl) provides that any shareholder of record, by written demand, may examine any minutes from shareholder proceedings or shareholder records, as well as certain financial records, that are reasonably related to that person's interest as a shareholder. bcl section 624(b), (e). in contrast, the common law right to inspection can extend to all corporate books and records that are relevant to an investigation or dispute. although the common law and statutory rights of inspection have existed in some form in new york law since the 19th century, they were not seen as particularly effective until relatively recently, owing to a 2014 first department decision that overturned the dismissal of a pension fund's petition for the books and records of mcgraw hill, as part of an investigation of possible mismanagement and breaches of fiduciary duty by its board. mcgraw hill had moved to dismiss on the grounds that petitioners had failed to identify specific wrongdoing, and thus there could be no valid purpose to the inspection. in granting dismissal, justice jeffrey k. oing of the new york county commercial division expressed concerns that petitioners were essentially seeking to subject mcgraw hill to pre litigation discovery in order to avoid the evidentiary protections that would be available in litigation. this logic essentially crippled the common law right to inspection in new york because an inspection is intended, at least in part, to be a means by which a shareholder could determine if a viable claim even existed. the appellate division reversed, holding that "investigating alleged misconduct by management and obtaining information are, in fact, proper purposes for a bcl section 624 request, even if the inspection ultimately establishes that the board had engaged in no wrongdoing." ret. plan for gen. emps. of city of n. miami beach v. mcgraw hill companies, 120 a.d.3d 1052, 1056 (1st dep't 2014). not for reprint © 2025 alm global, llc, all rights reserved. request academic re use from www.copyright.com. all other uses, submit a request to [email protected]. for more information visit asset & logo licensing. trending stories corporate counsel the recorder the recorder daily business review national law journal j. brugh lower of gibbons has entered an appearance for industrial equipment supplier devco corporation in a pending trademark infringement lawsuit. the suit, accusing the defendant of selling knock off graco products, was filed dec. 18 in new jersey district court by rivkin radler on behalf of graco inc. and graco minnesota. the case, assigned to u.s. district judge zahid n. quraishi, is 3:24 cv 11294, graco inc. et al v. devco corporation. read more rebecca maller stein and kent a. yalowitz of arnold & porter kaye scholer have entered their appearances for hanaco venture capital and its executives, lior prosor and david frankel, in a pending securities lawsuit. the action, filed on dec. 24 in new york southern district court by zell, aron & co. on behalf of goldeneye advisors, accuses the defendants of negligently and fraudulently managing the plaintiff's $1 million investment. the case, assigned to u.s. district judge vernon s. broderick, is 1:24 cv 09918, goldeneye advisors, llc v. hanaco venture capital, ltd. et al. read more attorneys from a&o shearman has stepped in as defense counsel for toronto dominion bank and other defendants in a pending securities class action. the suit, filed dec. 11 in new york southern district court by bleichmar fonti & auld, accuses the defendants of concealing the bank's 'pervasive' deficiencies in regards to its compliance with the bank secrecy act and the quality of its anti money laundering controls. the case, assigned to u.s. district judge arun subramanian, is 1:24 cv 09445, gonzalez v. the toronto dominion bank et al. read more crown castle international, a pennsylvania company providing shared communications infrastructure, has turned to luke d. wolf of gordon rees scully mansukhani to fend off a pending breach of contract lawsuit. the court action, filed nov. 25 in michigan eastern district court by hooper hathaway pc on behalf of the town residences llc, accuses crown castle of failing to transfer approximately $30,000 in utility payments from t mobile in breach of a roof top lease and assignment agreement. the case, assigned to u.s. district judge susan k. declercq, is 2:24 cv 13131, the town residences llc v. t mobile us, inc. et al. read more wilfred p. coronato and daniel m. schwartz of mccarter & english have stepped in as defense counsel to electrolux home products inc. in a pending product liability lawsuit. the court action, filed nov. 26 in new york eastern district court by poulos lopiccolo pc and nagel rice llp on behalf of david stern, alleges that the defendant's refrigerators’ drawers and shelving repeatedly break and fall apart within months after purchase. the case, assigned to u.s. district judge joan m. azrack, is 2:24 cv 08204, stern v. electrolux home products, inc. read more law offices of gary martin hays & associates, p.c. (470) 294 1674 law offices of mark e. salomone (857) 444 6468 smith & hassler (713) 739 1250 legal speak is a weekly podcast that makes sense of what’s happening in the legal industry. browse all products don't miss the crucial news and insights you need to make informed legal decisions. join law.com now! join new york law journal already have an account? sign in the industry leading media platform offering competitive intelligence to prepare for today and anticipate opportunities for future success. copyright © 2025 alm global, all rights reserved

practical legal and business advice for your startup. we love sharing our secrets for business success, so sign up for our latest blog posts, articles and upcoming events. navigating your business journey? this is where we come in. we offer legal advice and support to business owners at every stage of the business journey. we take care of the legal complexities and contracts, so that you can focus on what you do best. “could you please clarify for us what type of information our company is legally obligated to provide to (minority) stockholders, and how often (e.g., financial statements, cap table, etc.)?” as the founder of a privately held company, this entrepreneur did not know the type of information that he was required to provide to the company’s other stockholders and how frequently he would need to provide any required information to the stockholders. as you might imagine, this situation is fairly common for many founders and small business owners: you start a company with some co founders; your company then adds some more stockholders along the way; and out of the blue one of the stockholders asks to see all of the company’s books and records. what do you do? how do you respond to this stockholder? what information must be provided? how often do you need to provide information to this stockholder? in response to the entrepreneur’s question, the following input relates specifically to his company, a delaware corporation with its principal executive offices and assets located in california. as a first step to answer these questions, you will need to review the company’s bylaws and the relevant provisions of applicable corporate law (in this case the corporate laws of delaware and california) related to stockholder information rights. this review will help you identify the company’s legal obligations to provide certain information to its stockholders under delaware and california law. as a general comment, your company is not required to provide information to a stockholder unless the stockholder makes a written demand to your company for information. if the stockholder has asked for specific information, then your company should give to the stockholder the reasonable information that has been requested, provided that disclosing the information will not cause your company to breach any of its confidentiality or other contractual obligations to third parties. as a practical matter, many privately held companies voluntarily provide limited, high level company information to their stockholders, in order to maintain good stockholder relations. in any case, it is a good idea to have the stockholders sign non disclosure agreements, so that they are obligated to protect your company’s confidential information and not disclose it (please see why ndas need to be part of your business nda). as a delaware corporation, all of the company’s stockholders (including minority stockholders) have the right to inspect and make copies of the company’s stock ledger and its books and records upon a written demand to the company. the stockholder’s inspection rights also apply to the company’s subsidiaries. although delaware corporate law does not specify the types of books and records that the stockholders may inspect, these rights extend, at a minimum, to the company’s financial records and corporate minute book. in addition, under delaware corporate law, your company does not need to give to its stockholders any information that would cause your company to breach any of its confidentiality or other contractual obligations to third parties. because your company’s principal executive offices and assets are located in california, your company also is subject to certain stockholder information rights under california corporate law. accordingly, your company must comply with the stockholder information rights under both delaware corporate law and california corporate law. under california corporate law, a shareholder holding at least five percent (5%) of the outstanding voting shares of your company has an absolute right to inspect and copy the company’s record of shareholder names and addresses and their respective shareholdings (i.e., cap table). also, all of the company’s shareholders have the right to inspect the company’s record of shareholder names and addresses. additionally, under california corporate law, your company’s shareholders have a right to inspect the company’s accounting books and records (i.e., financial statements) and its corporate minute book upon a written demand to the company. these inspection rights also extend to the books and records of any of the company’s subsidiaries. california corporate law also requires that your company provide an annual report to its shareholders with certain specified information. this annual report requirement does not apply, however, if your company has less than 100 shareholders and your company’s bylaws expressly waive the requirement to send an annual report. it therefore is important to check your company’s bylaws in order to make sure that the necessary waiver language is in place. if the waiver language is not there, then you will need to amend your company’s bylaws and include the waiver language, so that your company can avoid this additional administrative burden. in addition to the corporate law requirements, you will need to check your company’s outstanding agreements in order to identify the contractual obligations to provide certain information to stockholders. for example, many investors often will negotiate and require investor information rights in connection with their investments, so that they receive copies of your company’s periodic financial statements (i.e., monthly, quarterly and annual financial statements), the annual budget and periodic management reports and updates. what information do you provide to your company’s stockholders? do you have any best practices that balance the administrative burden of preparing company information and distributing it to stockholders with the goal of keeping your stockholders sufficiently informed and happy? please share your tips and experiences, so that other entrepreneurs can learn from you about what works in practice. understanding qualified small business stock (qsbs) and how to qualify for significant tax savings effective strategies for managing startup legal expenses key legal considerations for biotech startups seeking funding you'll learn when to consider a convertible debt financing, the role of the term sheet in the financing process, and more. we love sharing our secrets for business success, so sign up for our latest blog posts, articles and upcoming events. contact us or call (619) 704 0444 © 2025 california counsel group, inc.

being a shareholder in a texas corporation or llc grants you significant rights to access company records, a crucial aspect of monitoring your investment’s financial well being, keeping abreast of corporate actions, and identifying any signs of mismanagement. to protect and maximize your investment, consult with a knowledgeable business lawyer in mcallen, texas who can help ensure you fully exercise these rights. shareholders invest their capital in businesses aiming for a profitable return, positioning them as vital contributors to the company’s growth. protecting this financial stake necessitates staying informed on key aspects of the company’s operations and governance. one crucial area is the company’s finances, where reviewing financial statements can reveal how profits are utilized, indicating the company’s fiscal health and strategic priorities. additionally, understanding management decisions is essential. the minutes of board meetings and records of major actions offer insights into whether the leadership is acting in the best interests of the company and its shareholders. potential red flags, such as questionable transactions or signs of mismanagement, require prompt attention. access to company records enables shareholders to identify and address these issues early, preventing potential harm to their investment. by keeping a close eye on these aspects, shareholders can ensure their investment is not only protected but also positioned for growth. this proactive approach empowers shareholders, fostering a culture of transparency and accountability within the company. it’s not just about safeguarding your investment but actively contributing to the company’s sustained success and integrity. texas law stands as a robust guardian of shareholder rights, laying down a comprehensive framework within the texas business organizations code (boc) that empowers shareholders with significant access to company records. this legal structure is designed to ensure transparency and accountability, allowing shareholders to closely monitor and evaluate the management and operational health of the company in which they have invested. under the boc, shareholders possess the right to inspect and copy a broad spectrum of documents crucial for assessing the company’s governance and financial status. this access is pivotal for shareholders to perform due diligence, make informed decisions, and, when necessary, hold management accountable. key documents accessible to shareholders include: to access the records you need, the law requires you to follow certain steps: if a company declines to share essential information, it’s not a dead end for shareholders. texas law backs you up, offering a pathway to assert your rights. should your access to records be denied, the law allows for legal measures to ensure transparency. engaging a seasoned business attorney can significantly streamline this process. they provide strategic guidance on how to present your case effectively, ensuring it aligns with legal requirements. the court can then compel the company to provide the necessary documents, safeguarding your interests as a shareholder. this legal support is crucial in transforming a denial into an opportunity to enforce your rights, maintaining the investment’s transparency and accountability. don’t wait until issues arise to demand access to your company’s records. being proactive about understanding the state of your investment is vital for its long term success. if you’re facing roadblocks accessing records or suspect something is wrong, don’t hesitate to seek legal help. contact villeda law group today for a consultation and let us help you make informed decisions about your investment.

gordon scott has been an active investor and technical analyst or 20+ years. he is a chartered market technician (cmt). if you just bought stock in disney, as a part owner of the company, does that mean you and the family can hit disneyland for free this summer? do anheuser busch shareholders receive a case of beer each quarter? these hypothetical perks are highly unlikely, but they do raise a question: what rights and privileges do shareholders have? every company has a hierarchical structure of rights for the three main classes of securities that they issue: bonds, preferred stock, and common stock. in other words, there’s a pecking order of rights. the priority of each class of security is best understood by looking at what happens when a company goes bankrupt. you may think that having an ownership stake in the company means you would be first in line to receive a portion of the company’s assets if it went bankrupt. in reality, common shareholders are at the bottom of the food chain when a company liquidates. during insolvency proceedings, secured creditors are the first to have their outstanding debts paid from the company’s assets. unsecured creditors, such as banks, suppliers, and bondholders, are the next priority followed by preferred shareholders and, finally, the common shareholders. this hierarchy is determined by what’s called “absolute priority,” the rules used in bankruptcies to decide which portion of the payment will be received by which participants. in addition to the rules of absolute priority, other rights differ for each class of security. for example, a company’s charter typically states that only the common stockholders have voting privileges and preferred stockholders must receive dividends before common stockholders. the rights of bondholders are determined differently because a bond agreement, or indenture, represents a contract between the issuer and the bondholder. the payments and privileges the bondholder receives are governed by the indenture (tenets of the contract). common shareholders are still part owners of the business, and if the business can turn a profit, common shareholders benefit. the liquidation preference we described above makes logical sense. shareholders take on greater risk as they receive next to nothing if the firm goes bankrupt, but they also have a greater reward potential through exposure to share price appreciation when the company succeeds. in contrast, preferred stocks generally experience less price fluctuation. the amount paid to settle 105 securities class action cases in 2022. shareholder rights can vary from state to state and country to country, so it is important that investors check with local authorities and public watchdog groups. in north america, however, shareholders' rights tend to be standard for the purchase of any common stock. these rights are crucial for the protection of shareholders from poor management. in addition to the six basic rights of common shareholders, investors should thoroughly research the corporate governance policies of the companies they invest in. these policies determine how a company treats and informs its shareholders. this plan differs from the standard shareholder rights mentioned above. shareholder rights plans outline the rights of a shareholder in a specific corporation. the information is usually accessible in the investor relations section of a company's website or by contacting the company directly. in most cases, these plans are designed to give the company’s board of directors the power to protect shareholder interests in the event of an attempt by an outsider to acquire the company. a company will have a shareholder rights plan that can be exercised when another person or firm acquires a certain percentage of outstanding shares to prevent a hostile takeover. the way a shareholder rights plan works can be demonstrated via an example: say that cory’s tequila company notices that its competitor, joe’s tequila company, has purchased more than 20% of its common shares. a shareholder rights plan might then stipulate that existing common shareholders have the opportunity to buy new shares at a discount to the current market price (usually a 10% to 20% discount). this maneuver is sometimes referred to as a “flip in poison pill.” by being able to purchase more shares at a lower price, investors receive instant profits and, more importantly, they dilute the shares held by the competitor, which makes its takeover attempt more difficult and expensive. there are numerous techniques like this that companies can put into place to defend themselves against a hostile takeover. although free beer may be a little far fetched, there are companies that offer shareholders little extras. for example, holders of at least 100 shares of carnival can apply for onboard credits to spend when traveling on carnival cruises. shareholders of royal caribbean cruises also get similar special treatment. investors in intercontinental hotels group who hold their shares in certified form in their sole name, meanwhile, can book hotel stays for discounted prices. before buying ownership in a company, investors should thoroughly research its corporate governance policies. these policies determine how a company treats and informs its shareholders. shareholder rights can vary. however, in many countries, including the u.s., their basic legal rights are: voting power, ownership, the right to transfer ownership, a claim to dividends, the right to inspect corporate documents, and the right to sue for wrongful acts. some companies may go beyond that and offer more. there is no list that shareholders can access to see everyone who is invested in the company. many websites will list the biggest shareholders, but that’s it. according to the securities and exchange commission (sec), a company must provide shareholders with the means to contact other shareholders during proxy solicitations and in connection with a tender offer. in both cases, the sec says: “the company may choose to either give the list to the person who requested it or mail the shareholder's soliciting or tender offer materials to other shareholders at the requesting shareholder's expense.”it’s also possible that state laws or a company's charter and by laws make a shareholder list accessible in other circumstances. shareholders hold ownership stakes in a company. however, only those with a sizeable percentage of the outstanding shares can have a noticeable impact on how it is run and the decisions that are made. you get to vote on important things. but there could be billions of other people with a vote, too, meaning your voice alone doesn’t hold much sway and certainly doesn’t constitute having control over the company. buying a stock, which represents an ownership claim in a company, provides certain rights. while common shareholders might be the last to be paid when it comes to liquidation, this is balanced by other opportunities such as share price appreciation. knowing your rights is an essential part of being an informed investor. although the sec and other regulatory bodies attempt to enforce a certain degree of shareholder rights, well informed investors who fully understand their rights are less susceptible to risks. u.s. securities and exchange commission. "bankruptcy for a public company." u.s. securities and exchange commission. "bankruptcy: what happens when public companies go bankrupt?" thomson reuters practical law. "absolute priority rule." u.s. securities and exchange commission. "stocks." u.s. securities and exchange commission. "shareholder voting." velasco, julian. "the fundamental rights of the shareholder." u.c. davis law review, vol. 40, 2006 2007, pp. 416 420. velasco, julian. "the fundamental rights of the shareholder." u.c. davis law review, vol. 40, 2006 2007, pp. 413 416. velasco, julian. "the fundamental rights of the shareholder." u.c. davis law review, vol. 40, 2006 2007, pp. 420 421. u.s. securities and exchange commission. "form 10 k general instructions," pages 1 12. velasco, julian. "the fundamental rights of the shareholder." u.c. davis law review, vol. 40, 2006 2007, pp. 421 424. stanford law school, securities class action clearinghouse. "case summary: worldcom, inc. securities litigation." stanford university. "securities and class action settlements," page 1. dentons. "shareholder rights plans: recent trends." upcounsel. "poison pill: everything you need to know." carnival corporation & plc. "shareholder benefit." royal caribbean group. "shareholder benefits." intercontinental hotels group hotels & resorts. "faqs." u.s. securities and exchange commission. "shareholder lists, when you can get them."

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cooperatorevents new york expo. tuesday march 4th . new york hilton midtown. register now! corporate shareholders in general are afforded certain rights, both by statute and under common law, to inspect books and records of companies in which they own an equity interest. a cooperator's right of access to building documents therefore derives primarily from his or her legal status as a shareholder in the apartment corporation. the statutory right of inspection is rather limited in scope insofar as it relates to only three kinds of documents: financial statements; shareholder lists; and minutes of shareholder (as opposed to board) meetings. moreover, shareholders seeking access to any of these documents are required under the statute to meet certain threshold requirements. shareholders owning at least five percent of a company's stock, or those who have been stockholders of record for all least six months, irrespective of the extent of their equity interest in the company, have an absolute right, upon written request, to obtain the preceding fiscal year's financials, as well as the most recent interim financials to the extent that these have been distributed to the shareholders. most co op bylaws require that year end financials be distributed to all shareholders as a matter of course within four months of the fiscal year end. shareholders meeting the same threshold eligibility requirements, or their authorized agents, have the right, upon written demand with five days notice, to inspect and make copies of the shareholder proceedings. such an inspection, however, may be denied in the absence of a sworn statement that the review is desired only for purposes relating to the business of the corporation and that neither the shareholder nor his authorized agent has participated in the sale of a shareholder's list over the past five years. thus, if a board wishes to adopt a hard line towards a request for access to these documents, it should first check to see that the demand was actually initiated by a shareholder of record (as opposed to a non owning spouse, relative, sub tenant, etc.) and that the shareholder meets the threshold eligibility requirements. under common law, shareholders are give a much broader right of review (i.e., access to the entire gamut of books and records), but this prerogative is subject to two major caveats: that the inspection demand be initiated in "good faith" and that its purpose be related to the shareholder's interest in protecting his investment in the corporation rather than advancement of his own private agenda. in a leading court decision on inspection of corporate books and records, the court described "good faith" as follows: "an intangible and abstract quality with no technical meaning or statutory definition. it encompasses, among other things, an honest intent, the absence of a design to defraud or to seek an unconscionable advantage. an individual's personal good faith is a concept of his own mind and inner spirit, and therefore may not be conclusively determined by his protestations alone. the existence of good faith as a substantive fact therefore necessitates an examination and evaluation of external manifestations as well. this may be evidenced by facts and surrounding circumstances existing prior and subsequent to the application for the relief sought in a proceeding of this type. "