Under the California Corporations Code section 8333 the accounting books and records and minutes of proceedings of the members and the board and committees must be open to inspection upon the written demand of any member at any reasonable time, for a purpose reasonably related to such person’s interests as a member.
This seemingly open right to inspect accounting books and records and minutes is circumscribed. In Tract No. 7260 Ass’n v. Parker, 2017 Cal. App. LEXIS 265 (Cal. App. 2d Dist. Mar. 24, 2017) the Court of Appeals held the mere allegation of a proper purpose is not sufficient to require inspection when a court finds that other, improper purposes are actually motivating the shareholder to inspect the books and records and minutes.
If a member or shareholder wants to review corporate records to gain a tactical advantage, help a competitor, solicit class members to a political cause, or any reason that does not relate to his or her interest as a member or shareholder, the corporation should immediately seek legal counsel to review and respond to the inspection demand to help determine whether or not the purpose of inspection is proper.
The information presented is not intended to be, and does not constitute, “legal advice.” Because each situation varies, and only brief summary information is provided here, you should not use this information as a basis for action unless you have independently verified with your own counsel that it applies to your particular situation.
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