As long as there is an adequate reason, a qualified shareholder of a corporation or an owner of a limited liability company (LLC) is entitled to examine the books and records of the business. This right, which is established in the Commercial Organizations Code, allows shareholders to evaluate if there has been self-dealing or embezzlement of company assets and find out about the financial health of the business in which they have invested. If you need help in your business, contact Andrew Mongelluzzi Tampa Attorney.
What Are The Rights Of Shareholder Access To Records And Books
One of the regulations must be met to qualify for you to be eligible to apply for an entity’s books and records:
- A corporation must have at least 5% of its outstanding shares purchased by the requestor, or the requestor must have held interests for at least six months.
- To seek a review of the books and records of a limited liability company, one need only be a member.
How a Texas Shareholder Can Request Financial Records
As a shareholder, you have the right to ask for access to financial records by letter sent to the management member or corporate secretary with an explanation.
What does a “proper purpose” indicate? According to judgments from courts, any request is lawful if it relates to protecting a shareholder’s interest in the company. Please be aware that if you fail to operate in good faith or if you improperly exploited material from an earlier examination, the corporation may be legally entitled to deny your request.
To ensure that your demand is targeted correctly, it is essential to understand your legal rights under Tampa legislation. Your request could get turned down if you attempt to obtain information to which you do not have the legal right.
Which Legal Options Are Available To Maintain The Right Of Shareholders To Inspect Records And Books?
You can ask the courts to force the disclosure of papers by starting a lawsuit if you correctly demand to see the financial records and books, but the company refuses. In the end, the law requires the business to pay for its attorney’s fees and costs if the records are ordered to be released by a court.
What Responsibilities Do You Have To Your Shareholders As A Director Or Managing Member?
It is not suitable for an official of a company or an executive of an LLC to recklessly decline or disregard requests from shareholders to examine books and records. Considering the possibility of legal action and the upcoming burden of paying legal fees and expenses, you must adhere to all standards set forth by the state law.
