Shareholders have important legal rights under California law. These rights protect a shareholder’s ability to make informed financial decisions about their ownership rights in a company. If you do not understand these legal rights, a company can try to get around them and benefit itself at the expense of its own shareholders. The experienced shareholders’ rights attorneys at Structure Law Group can help you protect your legal rights in order to shield your financial interests. Learn more about your shareholder rights – and the limitations placed on these rights.
The California Corporations Code provides shareholders with the specific legal right to inspect corporate documents. The statute allows for the inspection of the accounting books, records, and minutes of proceedings of the shareholders and the board and committees of the board (or a true and accurate copy if the original has been lost, destroyed, or is not normally physically located within the State of California). This inspection can be made with a written demand on the corporation by any shareholder (or holder of a voting trust certificate) at any reasonable time during usual business hours. The statute requires that the demand be made for a purpose reasonably related to the holder’s interests as a shareholder.
The Limits of the Right to Inspect Corporate Documents
As you can see, there are some limits on your right to inspect corporate documents as a shareholder. Some of these are related to simple logistics: the request must be made for inspection during normal business hours because it is not reasonable to expect corporate officers to open the business during nights or weekends for shareholders to inspect documents that can easily be reviewed during the day. Some of these limits protect the company’s ability to retain private information and protect its trade secrets: notice that the statute only extends to accounting books, records, and minutes of proceedings. It does not cover personnel files, litigation documents, or other confidential information.
The statute also protects companies from improper inspection requests by their shareholders. Notice that an inspection request must be made “for a purpose reasonably related to the shareholder’s interests.” This means that a shareholder cannot attempt to find classified information, or sell the company’s information to its competitors, or for other reasons that could hurt the company. The only reason a shareholder may make an inspection request is to protect his or her own financial interests in the company.
Skilled California Business Lawyers to Protect All Shareholder Rights
The experienced corporate lawyers at Structure Law Group know how to protect shareholder rights. We have helped many individuals and groups protect their legal rights as shareholders by making demands and negotiations with companies. We fight hard and know how to make a persuasive case in court when necessary. Contact Structure Law Group at (408) 441-7500. Don’t delay – the sooner you have an experienced corporate lawyer fighting on your side, the better protected your legal and financial interests as a shareholder will be.