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Corporations • Rights of Shareholders
CORP#050
Legal Definition
Any shareholder has the right to examine the corporation's books and records with 5 days notice, so long as they state a proper purpose.
Plain English Explanation
Shareholders have the right to view a corporation's records, including, but not limited to, financial statements, shareholder lists, meeting minutes, etc. Basically any document that has to do with the corporation's operations and management. In order to exercise this right, a shareholder must give the corporation a heads up via 5 days notice, and the shareholder must have a "proper purpose." The definition of "proper purpose" is pretty broad and includes things like due diligence (investigating whether a corporation is running itself properly) or even preparation for litigation (like if the shareholder is planning to sue the corporation). An improper purpose would be if the shareholder was trying to gather records so they could hand them over to one of the corporation's competitors.
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