The legislature has broadened the rights of California shareholders to inspect corporate records.
Prior law only permitted California shareholders to review records where the corporation maintained them. The new law provides, if the originals of the corporate records subject to shareholder inspection are normally not physically located in California, a shareholder may inspect a true and correct copy of those records at the corporation’s principal office in California. If the corporation does not have a principal office in California, the records may be inspected at the physical location of the corporation’s registered agent for service of process in California. In addition, if the original records have been lost or destroyed, a shareholder has the right to inspect a copy of the records. Also, shareholders may now request that a corporation produce documents by mail or electronically if the shareholder pays for
the reasonable costs for copying or converting the requested documents to electronic format. With this change in the law, shareholders now have the option of asking the corporation to send them records subject to shareholder inspection by mail or email.
There is one, even more important change in the law. Now, corporate “records” independent of “accounting books” are subject to shareholder inspection. Thus, contract files, employment records, letters, and emails may be available for shareholder inspection, subject to the inspection being “for a purpose reasonably related to the holder’s interests as a shareholder or as the holder of a voting trust certificate.”
If you are California shareholder seeking information on the finances and operations of the corporation you now have a basis to review documents in the comfort of your own home or office, however, check with your legal counsel to be certain you are entitled to receive and review the specific documents you seek. If your corporation receives document requests from a California shareholder, it is essential that you discuss the request with corporate legal counsel to determine whether production is mandated.
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.
Leave a Reply