Cite as 2017 Ark. App. 598

ARKANSAS COURT OF APPEALS 

DIVISION IV 

No. CV-16-657

ASHLEY BANCSTOCK COMPANY

APPELLANT

V.

PAUL MEREDITH, RICHARD 

MEREDITH, AND JOHN POSEY

APPELLEES

Opinion Delivered: November 8, 2017

APPEAL FROM THE ASHLEY

COUNTY CIRCUIT COURT

[NO. 02CV-14-175] 

HONORABLE DON GLOVER, JUDGE 

AFFIRMED

DAVID M. GLOVER, Judge

This is an appeal from a declaratory-judgment action. Paul Meredith, Richard 

Meredith, and John Posey (shareholders) are shareholders of Ashley Bancstock Company

(ABC). These shareholders demanded to inspect and copy certain records of ABC pursuant 

to Arkansas Code Annotated section 4-26-715 (Repl. 2016). Instead of providing the 

requested records, ABC sued them in Ashley County Circuit Court seeking declaratory 

relief regarding the nature and extent of the records the shareholders were entitled to inspect 

and copy pursuant to the statute. The circuit court found the shareholders were entitled to 

all the records they sought, and ABC appealed. We affirm. 

I. Background

The proper interpretation of Arkansas Code Annotated section 4-26-715 is the crux 

of this appeal. The pertinent language of this statutory section provides: 

(b) Any person who shall have been a shareholder of record for at least 

six (6) months immediately preceding his or her demand, upon written 

demand stating the purpose thereof, shall have the right to examine, in 
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2 

person or by agent or attorney, at any reasonable time, for any proper 

purpose, its books and records of account, minutes, and record of 

shareholders and to make extracts therefrom. 

(c)(1) Upon refusal by the corporation or by an officer or agent of the 

corporation to permit an inspection of the corporation’s books, records 

of account, minutes, or record of shareholders, the person making 

demand for inspection may file a civil action in the circuit court of the 

county in which the corporation maintains either its principal place of 

business or its registered office for the purpose of securing an order of 

the court directing the corporation, its officers, and agents to permit 

the requested inspection. 

(2) The proceeding shall be advanced upon the docket of the 

court; and the court shall hear the parties summarily, by affidavit 

or otherwise. 

(3) If the applicant establishes that he or she is qualified and 

entitled to the inspection, the court shall grant an order 

permitting the inspection, subject to any limitations which the 

court may prescribe; and the court may grant such other relief 

as to the court may seem just and proper.

(4) The court may deny or restrict inspection if it finds that the 

shareholder has improperly used information secured through 

any prior examination of the books and records of accounts or 

minutes or record of shareholders of the corporation or of any 

other corporation, or that he or she was not acting in good faith 

or for a proper purpose in making his or her demand. 

On November 6, 2014, attorney Richard Griffin sent a demand letter to ABC on 

behalf of the shareholders seeking certain records of ABC; its subsidiary, First National Bank 

of Crossett (FNBC); and its former subsidiary, First Community Bank of Crawford County 

(FCBCC) pursuant to Arkansas Code Annotated section 4-26-715. The shareholders 

sought to inspect records from January 1, 2006, to November 6, 2014. The demand letter 

stated ABC had reported significant losses and incurred substantial expenses since 2006 that 

the shareholders believed were attributable to the acquisition, operation, and sale of FCBCC 
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3 

and significant loan write-offs by FNBC. The shareholders’ stated purpose for inspection

of the records was to review the actions of the respective directors and officers of ABC, 

FNBC, FCBCC, and others to determine if those directors and officers and/or others may 

have breached the duties they owed, and continue to owe, to ABC and its shareholders, 

and whether legal action against those directors and officers and/or others is warranted to 

recover assets of ABC that have been written off and lost by ABC. 

ABC did not release the requested records. Instead, on November 17, 2014, it filed 

a lawsuit seeking declaratory relief to determine the rights of the parties under Arkansas 

Code Annotated section 4-26-715. In its complaint, ABC alleged the shareholders 

requested highly sensitive, confidential, and proprietary information. It asked the circuit 

court to consider whether the shareholders sought to inspect records for a proper purpose 

and to determine the extent of information it was required to provide. In addition, ABC 

sought a protective order to enjoin the shareholders and their counsel from disseminating 

the information they received to third parties. 

Shortly thereafter, on December 8, 2014, ABC offered to tender certain records to 

the shareholders if they signed a confidentiality agreement. The shareholders refused to sign 

the confidentiality agreement because it imposed severe monetary penalties for violation. 

On December 9, 2014, the shareholders propounded interrogatories and requests for 

production on ABC. ABC objected and sought a protective order because the information 

the shareholders requested in discovery mirrored the information requested in the demand 

letter that served as the basis of the declaratory-judgment action. 
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The shareholders answered ABC’s declaratory-judgment complaint on January 14, 

2015. In their answer, the shareholders asserted their demand was proper in all respects 

and requested that ABC be required to make all requested information and documents 

available for inspection and copying. 

Later, on May 26, 2015, the shareholders filed a notice of deposition duces tecum 

seeking discovery of essentially the same records. ABC filed a motion for protective order 

from the deposition. In response, the shareholders filed their own motion for protective 

order seeking to have ABC enter into a confidentiality agreement and provide the requested 

documents. The shareholders also filed a motion to compel ABC to answer discovery. 

The circuit court held a motion hearing on July 14, 2015. It considered the various 

motions for protective orders and the shareholders’ motion to compel. The hearing was 

adjourned without a ruling. 

The circuit court held a trial on the merits of ABC’s declaratory-judgment complaint 

on November 12, 2015. The trial took place in the judge’s chambers, and no witnesses 

were allowed to testify. During the trial, the circuit court orally granted the shareholders’ 

motion to compel. At the conclusion of the trial, the circuit court found the shareholders 

were entitled to all the records that they had requested. The circuit court instructed counsel 

for the shareholders to prepare a proposed judgment. 

On January 7, 2016, ABC filed a motion objecting to the entry of the proposed 

judgment and requesting that the court make findings of fact and conclusions of law pursuant 

to Arkansas Rule of Civil Procedure 52. The motion was denied. 
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A judgment was entered on January 28, 2016. The circuit court found the 

shareholders had a proper purpose for inspecting the requested records and that their demand 

was made in good faith. The circuit court ordered ABC to produce for inspection all 

documents requested by the shareholders. ABC timely filed its notice of appeal of the 

judgment on February 1, 2016. Thereafter, ABC filed an amended notice of appeal on 

February 19, 2016, from the order denying its motion for findings of fact and conclusions 

of law pursuant to Rule 52.

On appeal, ABC advances several arguments in support of reversal. ABC argues 

generally that the circuit court erred by finding that Arkansas Code Annotated section 4-

26-715 required it to produce all the records the shareholders requested and by committing 

several errors during the proceedings. 

II. The Statute 

This appeal requires us to interpret Arkansas Code Annotated section 4-26-715. 

ABC contends the circuit court erroneously found that Arkansas Code Annotated section 

4-26-715 required it to produce the records the shareholders requested. Particularly, ABC 

argues the circuit court erred in finding the statute (1) required it to produce sensitive 

financial records that spanned a nine-year period; (2) entitled the shareholders to inspect and 

copy the records of FNBC and FCBCC; and (3) entitled the shareholders to copies of 

liability-insurance policies for ABC, FNBC, and FCBCC. 

Issues of statutory interpretation are reviewed de novo. Holbrook v. Healthport, Inc., 

2014 Ark. 146, 432 S.W.3d 593. The basic rule of statutory construction is to give effect 

to the intent of the legislature. Id. When interpreting a statute, we must construe it just as 
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6 

it reads, giving the words their ordinary and usually accepted meaning in common language. 

Gerber Prods. Co. v. Hewitt, 2016 Ark. 222, 492 S.W.3d 856. Words cannot be inserted, 

under the guise of interpretation, to add a significant additional qualification to the law 

enacted by the General Assembly. Brandt v. Willhite, 98 Ark. App. 350, 255 S.W.3d 491 

(2007). If the language in a statute is clear and unambiguous and conveys a clear and definite 

meaning, it is unnecessary to resort to the rules of statutory interpretation. Holbrook, supra.

As a preliminary matter, we acknowledge that a fundamental issue presented in this 

appeal is whether ABC or the shareholders had the burden of proof. ABC argues that the 

shareholders had the burden of proof because the statute requires the applicant seeking to 

inspect records to establish that he or she is qualified and entitled to the inspection by 

demonstrating, among other things, a proper purpose for inspection. Ark. Code Ann. § 4-

26-715(b) & (c)(3). The shareholders argue that because ABC filed the lawsuit, it had the 

burden of proving that they sought the records for an improper purpose. We agree with 

ABC. The statute clearly and unambiguously provides that the shareholders bear the burden 

of proving entitlement to inspection. 

With the burden of proof established, we consider ABC’s argument that the 

shareholders failed to prove a proper purpose to inspect ABC’s records. Any shareholder 

“shall have the right to examine” the records of a corporation “for any proper purpose.” 

Ark. Code Ann. § 4-26-715(b). The circuit court found, based on the joint trial stipulations, 

the shareholders had proved a proper purpose to inspect the requested records.1

 

 1

ABC emphasizes that in remarks from the bench, the circuit court admitted that it 

had not read the stipulations. However, the circuit court’s judgment provides that it relied 
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7 

The joint stipulations included the shareholders’ demand letter that explained their 

purpose for the request. That letter provided that ABC had reported significant losses and 

incurred substantial expenses since 2006 that the shareholders believed were the result of 

the acquisition, operation, and sale of FCBCC and significant loan write-offs by FNBC. 

The shareholders stated their demand was made in good faith and that they were entitled to 

review the actions of the respective directors and officers of ABC, FNBC, FCBCC, and 

others to determine if those directors and officers and/or others may have breached the 

duties they owed, and continue to owe, to ABC and its shareholders, and whether legal 

action against those directors and officers and/or others was warranted. 

ABC argues that the shareholders’ stated purpose is insufficient to demonstrate a 

proper purpose for examination of the requested records pursuant to Arkansas Code 

Annotated section 4-26-715. In support of its argument, ABC relies on case law from 

other jurisdictions. Specifically, ABC cites cases that require shareholders to prove credible 

evidence of wrongdoing to warrant investigation. See Cain v. Merck & Co., Inc., 1 A.3d 834 

(N.J. Super. 2009); W. Coast Mgmt. & Capital, LLC v. Carrier Access Corp., 914 A.2d 636 

(Del. 2006). Additionally, ABC urges our court to consider the scope of the requested 

examination and the inconvenience and financial burden it could place on a corporation 

and hold that a court should exercise its power with great care to safeguard the interest of 

the corporation and all of its shareholders. See Abdalla v. Qadorh-Zidan, 913 N.E.2d 280 

(Ind. Ct. App. 2009).

 

on the joint stipulations, and a circuit court’s written order controls over its oral 

pronouncements. See Nat’l Home Ctrs. v. Coleman, 370 Ark. 119, 257 S.W.3d 862 (2007). 
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As the shareholders emphasize, other jurisdictions do not impose these stringent 

requirements. Other jurisdictions merely impose on shareholders a requirement that they 

have a good-faith belief in mismanagement to establish a proper purpose for inspection. See 

Meyer v. Bd. of Managers of Harbor House Condo. Ass’n, 583 N.E.2d 14 (Ill. App. Ct. 1991).

We are convinced the shareholders’ interpretation is the proper one. To interpret 

Arkansas Code Annotated section 4-26-715 in the way in which ABC suggests would be 

contrary to our rules of statutory construction. Again, when interpreting a statute, we must 

construe it just as it reads, giving the words their ordinary and usually accepted meaning in 

common language. Gerber Prods. Co., supra. Words cannot be inserted, under the guise of 

interpretation, to add a significant additional qualification to the law enacted by the General 

Assembly. Brandt, supra. This statute includes no language requiring a shareholder to 

include specific allegations of wrongdoing in order to be entitled to records. Only a proper 

purpose must be established. Accordingly, the circuit court did not err in finding the 

shareholders’ stated purpose complied with the statute. 

In addition, ABC challenges the nine-year time frame for which the circuit court 

required it to produce records for inspection. ABC argues that the shareholders should not 

have been allowed to inspect nine years of records because they alleged a breach of fiduciary 

duty, which carries a three-year statute of limitations. They further contend the nine-year 

time frame placed an overwhelming burden on it.2

 

 2 We acknowledge the circuit court’s order found ABC would bear only the burden 

of costs associated with copying documents dated November 6, 2011, to present, and the 

shareholders would bear the costs associated with copying all documents dated prior to 

November 6, 2011.
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The shareholders respond by referring to the statute itself. Arkansas Code Annotated 

section 4-26-715 imposes no time limit on the inspection of records. The rules of statutory 

construction require that a time limit cannot be assumed. See Gerber Prods. Co., supra. The 

shareholders further mention that allowing shareholders to obtain records dating back only 

to the relevant statute of limitations would be improper because a statute of limitations can 

be tolled in some instances and that shareholders do not necessarily seek to inspect records 

for litigation. We agree that the statute authorized the shareholders to seek the nine years 

of records they requested. 

Next, ABC challenges the circuit court’s decision requiring it to produce records of 

FNBC, its subsidiary, and FCBCC, its former subsidiary. 

We first consider whether Arkansas Code Annotated section 4-26-715 requires a 

corporation to produce records of its subsidiaries. ABC argues that it should not have to 

provide records of its subsidiaries because they were not parties to the litigation. ABC

highlights caselaw that requires a showing of fraud to entitle a shareholder to inspect a 

subsidiary’s books. Saito v. McKesson HBOC, Inc., 806 A.2d 113 (Del. 2002). By contrast,

other jurisdictions require a corporation to produce records of its subsidiaries because they 

are assets of the corporation. See Danzinger v. Luse, 815 N.E.2d 658 (Ohio 2004); Meyer v. 

Ford Indus., Inc., 538 P.2d 353 (Or. 1975). 

Again, we are persuaded that the shareholders’ interpretation is proper. Because 

subsidiaries are assets of a corporation, their books and records are corporate records. By 

the plain language of the statute, they are subject to inspection. We hold the statute 

authorizes a shareholder to inspect records of a corporation’s subsidiaries. 
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ABC also argues that the circuit court erred by requiring it to produce nine years of 

records of its former subsidiary, FCBCC. ABC reminds our court that the parties stipulated 

that ABC owned FCBCC from October 31, 2006, to January 31, 2014, but that the 

shareholders requested records from January 1, 2006, to November 6, 2014. It contends, 

for the time that it did not own FCBCC, it could not have control over FCBCC’s records; 

thus, the circuit court erred when it required ABC to produce books and records for this 

period. We are not influenced by this argument. A corporation is required to produce “its 

books and records of account” after a proper demand from a shareholder. Ark. Code. Ann. 

§ 4-26-715(b). We interpret this provision to mean that a corporation must provide to 

shareholders only the books and records it possesses. 

Finally, ABC argues that Arkansas Code Annotated section 4-26-715 does not 

authorize the shareholders to inspect copies of its liability-insurance policies and that the 

circuit court erred by finding that it did. ABC contends liability-insurance policies are not 

books and records of account within the meaning of the statute, and the shareholders failed 

to prove a proper purpose for the request of the insurance policies. 

We begin by considering whether liability-insurance policies are books and records

of account. ABC looked to other jurisdictions for guidance on the meaning of books and 

records of account. In Pederson v. Arctic Slope Regional Corporation, Alaska’s supreme court 

held that books and records of account “encompasses monthly financial statements, records 

of receipts, disbursements and payments, accounting ledgers, and other financial accounting 

documents.” 331 P.3d 384, 386–87 (Alaska 2014). ABC utilizes the Pederson case to attempt 

to demonstrate that insurance policies are not books and records because they are not 
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financial documents, and ABC cautions against a definition of books and records that is 

overly broad because it could lead to harassing fishing expeditions. 

Our reading of the Pederson case leads us to a different conclusion. The items 

catalogued as books and records of account in Pederson are not an exhaustive list, and notably, 

the inspection of liability-insurance policies was not at issue. Moreover, the language of the 

Pederson case provides that a “shareholder’s right is an important method for monitoring 

agent performance and enhancing principal control over corporate agents.” Id. at 393. We

interpret the Pederson case to impose a broad definition of books and records to protect 

shareholders’ interests. 

The shareholders direct our court to other jurisdictions that have similarly adopted a 

broad definition of books and records of account. The Oregon Supreme Court in Meyer v. 

Ford Industries, Inc., held that the term “‘books and records of account’ should be the subject 

of a broad and liberal construction so as to extend to all records, contracts, papers and 

correspondence to which the common law right of inspection of a stockholder may properly 

apply.” 538 P.2d 353, 355 (Or. 1975).

We conclude that a broad definition of the term books and records of account is 

proper. Courts tend to broadly define the term so that shareholders’ rights are protected. 

Adopting this approach, we hold liability-insurance policies are books and records of 

account within the meaning of the statute. Insurance policies are contracts. Lumbermen’s 

Mut. Cas. Co. v. Moses, 224 Ark. 67, 271 S.W.2d 780 (1954). And contracts are business 

records pertinent to the operations of a corporation. 
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ABC further argues that if liability-insurance policies are books and records of 

account, the shareholders failed to prove their proper purpose for inspecting them as 

required by the statute. 

ABC contends the statements in the shareholders’ demand letter were insufficient to 

show a proper purpose for the inspection of liability-insurance policies. ABC offers that 

liability-insurance policies are normally disclosed only in cases in which a judgment must 

be satisfied, and this is a declaratory-judgment action in which no money damages are 

sought. In response, the shareholders assert that a review of the insurance policies as well as 

the other records requested are pertinent to an investigation of corporation management, 

specifically whether ABC breached its fiduciary duties. 

We previously concluded that shareholders need not present evidence of 

mismanagement to establish proper purpose. They must demonstrate only a good faith 

belief in mismanagement. The presence or absence of a liability-insurance policy may be 

pertinent to issues of fiduciary duty. Accordingly, we hold the liability-insurance policies 

are subject to inspection and copying by the shareholders. 

III. Error in the Proceedings

ABC also advances several arguments in favor of reversal that stem from the 

proceedings themselves. Specifically, ABC argues that the circuit court abused its discretion 

by (1) conducting the trial in chambers, (2) refusing to allow witnesses to testify, (3) granting 

the shareholders’ motion to compel during the trial, and (4) refusing its request for findings 

of fact and conclusion of law pursuant to Arkansas Rule of Civil Procedure 52. As was 

discussed in oral argument, an overarching question regarding these procedural issues is 
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whether ABC was denied the right to a fair trial. We conclude it was not and hold that 

there is no meritorious, procedural ground for reversal. 

First, we consider whether the circuit court abused its discretion by refusing to allow 

ABC to call G. Gerald Crawford as a witness. When ABC’s request to call Crawford was 

denied, it proffered his testimony. The circuit court’s judgment included a finding that, had 

the proffered testimony been admitted, it would not have affected the ruling. Our court 

will not reverse a circuit court’s evidentiary ruling absent an abuse of discretion and a 

showing of prejudice. Dodson v. Allstate Ins. Co., 345 Ark. 430, 47 S.W.3d 866 (2001).

Because ABC cannot demonstrate any prejudice that stemmed from the exclusion of 

Crawford’s testimony, we affirm on this point. Furthermore, we acknowledge the statute 

contemplates that a court faced with determining whether shareholders are entitled to 

records “shall hear the parties summarily, by affidavit or otherwise.” Ark. Code Ann. 4-

26-715(c)(2). Thus, by the plain language of the statute, the circuit court was not required 

to allow testimony. 

Next, we direct our attention to the circuit court’s decision to hold the trial in 

chambers over ABC’s objection. All trials must be conducted in public. Ark. Code Ann. 

§ 16-10-105 (Repl. 2010). Furthermore, “the public has every right to ascertain by personal 

observation whether its officials are properly carrying out their duties responsibly and 

capably administering justice.” Commercial Printing Co. v. Lee, 262 Ark. 87, 95, 553 S.W.2d 

270, 274 (1977). 

The shareholders contend the public was not excluded from attending the inchambers trial and that anyone could have entered and observed the proceedings. We are 
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not particularly persuaded by the shareholders’ argument. Nevertheless, we acknowledge 

that the trial was transcribed by a court reporter, and accordingly, the public has access to 

the proceedings so that it may ascertain whether the court was properly carrying out its

duties responsibly. In addition, counsel for ABC admitted in oral argument that he could 

not say whether the in-chambers trial affected the outcome of the case. We conclude no 

prejudice resulted from the in-chambers trial and affirm on this point.

ABC also argues that the circuit court erred by granting the shareholders’ motion to 

compel during the trial. This issue is not preserved for our review. Although ABC 

accurately represents the circuit court’s oral ruling on the shareholders’ motion to compel, 

it was never reduced to writing. An oral order announced from the bench does not become 

effective until reduced to writing and filed. Nat’l Home Ctrs., Inc. v. Coleman, 370 Ark. 119, 

257 S.W.3d 862 (2007). 

Finally, ABC contends the circuit court erred by denying its request for findings of 

fact and conclusions of law pursuant to Arkansas Rule of Civil Procedure 52. Compliance 

with Rule 52 is mandatory, and findings and conclusions pursuant to Rule 52 “should be 

specific enough to enable an appellate court to understand the factual and analytical process 

by which the trial court reached its decision.” CenterPoint Energy Gas Transmission Co. v. 

Green, 2012 Ark. App. 326, at 5, 413 S.W.3d 867, 871. However, “the rule does not place 

a severe burden upon the trial judge, for the judge needs only to make brief, definite, and 

pertinent findings of fact and conclusions upon the contested matters.” Id.

The circuit court’s judgment included findings of fact and conclusions of law. It 

provided that the shareholders had a proper purpose for their demand and that they made 
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the demand in good faith. The judgment further stated that the shareholders were qualified 

and entitled to inspect and make copies of all requested documents. These findings are 

sufficient to comply with Rule 52, and we affirm on this basis. 

 Affirmed. 

 VIRDEN and BROWN, JJ., agree.

Streetman, Meeks & Gibson, PLLC, by: Thomas S. Streetman and Robert B. Gibson III, 

for appellant.

Jackson Walker, L.L.P., by: Richard E. Griffin; and Hopkins Law Firm, A Professional 

Association, by: Gregory M. Hopkins and Ryan J. Caststeel, for appellees.