What is required for a common law shareholder inspection right?

What is required for a common law shareholder inspection right?

• A. Reasonable notice, proper time and place, proper purpose
• B. Court order mandatory
• C. Board approval required
• D. Only for large shareholders

Answer: (A)

A shareholder’s common-law right to inspect the corporation’s books and records is conditioned on three elements: a proper purpose, reasonable notice, and a proper time and place. The purpose must be related to the shareholder’s interest in the corporation (for example, investigating management, valuing the company, or assessing a potential transaction). The request must be made with reasonable notice and the inspection should occur at a reasonable time and place so the company can prepare and accommodate the demand. Court orders, board approval, or the size of the shareholder aren’t required components of this right. A court order may be sought if a dispute arises, but it isn’t the default requirement. Similarly, board approval isn’t needed, and the right isn’t limited to large shareholders.

A shareholder’s common-law right to inspect the corporation’s books and records is conditioned on three elements: a proper purpose, reasonable notice, and a proper time and place. The purpose must be related to the shareholder’s interest in the corporation (for example, investigating management, valuing the company, or assessing a potential transaction). The request must be made with reasonable notice and the inspection should occur at a reasonable time and place so the company can prepare and accommodate the demand.

Court orders, board approval, or the size of the shareholder aren’t required components of this right. A court order may be sought if a dispute arises, but it isn’t the default requirement. Similarly, board approval isn’t needed, and the right isn’t limited to large shareholders.