What Information Can Shareholders Get and Access From a Company?

For many businesses, shareholders don’t take an active role in the company. Maybe they participate in a few shareholders meetings, but many are just passive investors, especially in larger companies. But then one day, one of your shareholders comes and asks for corporate information—things like books or records or financial information.

The Dilemma

On the one hand, that person is a shareholder—a partial owner/investor in the business. On the other hand, that person also is not an active part of the business, and you may feel hesitant to be showing sensitive corporate information to someone that is not an employee or officer of the business.

What Information Should be Provided?

So what do you have to show a shareholder?

The first requirements Is that the shareholder has to inform the company, in writing, that he or she wants to inspect books and records. The notice must be provided no less than 5 business days before the information is being demanded by the shareholder.

You do have a right to restrict inspection to just your office, or headquarters, and only during normal business hours.

If requested, you must provide to a shareholder the following information:

• Any accounting information, including any financial statements and records of any moneys paid to any corporate officers
• Records of minutes of any meetings including any committee meetings
• Any records of actions taken by the company without a meeting
• Documents related to corporate governance, like bylaws
• Disclosures of information related to legal claims and lawsuits, whether filed by, or against, the company

Limitations on Access

The right to access information and documents is not absolute. The company has a right to refuse (or redact) information which is protected by the attorney client privilege. They also can refuse to provide information that could disclose a trade secret or information that may be proprietary.

Additionally, a request for information by a shareholder can be denied, if the shareholder is requesting the information in bad faith. Bad faith doesn’t mean that you disagree with the shareholder’s purpose in inspecting the records. Companies should be careful that they have objective evidence of a bad faith purpose by the requesting shareholder, before just denying access to records.

Note that once a shareholder stops being a shareholder, the right to access information ends; a former shareholder does not maintain a continuing right to inspect books and records.

While you can deny a request for records by a shareholder for any of the reasons stated above, if the shareholder challenges you in court, and wins access to the records, you could end up owing the shareholder his or her attorney’s fees and legal costs.

Because of the broad right to information that shareholders have, companies should be wary, where possible, of the language used in or information contained in corporate documents.

Problems with shareholders–or are you a shareholder that is not being given your rights? Call the Fort Lauderdale business lawyers at Sweeney Law P.A. at 954-440-3993 today for help.

Sources:

dos.fl.gov/sunbiz/other-services/reporting-of-beneficial-ownership-information/

floridaregisteredagent.net/business-privacy-in-florida/