Source: https://trepanierlaw.com/which-corporate-documents-are-shareholders-entitled-to-examine/
Timestamp: 2019-04-19 06:49:35+00:00

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Shareholders often want access to information about the corporations in which they own shares, especially in the context of closely held or family-owned businesses. In many situations, however, those in control of the corporation do not want to provide minority shareholders with unfettered access to corporate records such as financial statements, tax returns, business plans, or other sensitive documents. Disputes regarding the right of minority shareholders to obtain such information can poison the relationship between the business owners and eventually lead to litigation if not handled properly.
Fortunately, the Minnesota Business Corporation Act explicitly addresses the right of shareholders of Minnesota corporations to obtain various categories of information. Under Minn. Stat. 302A.461, shareholders of Minnesota corporations are entitled to examine certain corporate documents under certain circumstances. To ensure compliance with the law and minimize the risk of minority shareholder disputes, the officers, directors, and shareholders of Minnesota corporations should become familiar with these requirements.
The Minnesota Business Corporation Act provides different rights of access to shareholders depending upon whether the corporation is publicly or privately held.
other corporate records reasonably related to the proper purpose stated in the written demand.
Minn. Stat. § 302A.461, subd. 4(c).
Privately held Minnesota corporations are required to provide more corporate documents to their shareholders than publicly held corporations, and often without the requirement of a proper purpose.
Minn. Stat. § 302A.461, subd. 4(a)(1),(2).
If copies of the share register or documents stated above are required to be furnished, they must be furnished at the expense of the corporation. Minn. Stat. § 302A.461, subd. 5. In all other cases, the corporation may charge the requesting party a reasonable fee to cover the expenses of providing the copy. If the records are kept on illegible storage medium (such as magnetic tape or punched holes) and require conversion to a legible format, the costs of conversion are borne by the same party who would bear the cost of copying the records. Minn. Stat. § 302A.461, subd. 6.
To protect against the premature disclosure of confidential information which may cause competitive harm to the corporation, the corporation may petition the court for a protective order permitting the corporation to withhold portions of the records of proceedings of the board. The term of the order is not to exceed twelve months initially, but this term may be extended in additional twelve month terms, not to exceed 36 months in total, for good cause. Minnesota courts have the right to grant other protective orders or impose other reasonable restrictions on the copying of corporate records as they see fit. Minn. Stat. § 302A.461, subd. 4a.
A shareholder, beneficial owner, or holder of a voting trust certificate who has gained access … to any corporate record including the share register may not use or furnish to another for use the corporate record or a portion of the contents for any purpose other than a proper purpose. Upon application of the corporation, a court may issue a protective order or order other relief as may be necessary to enforce [this rule].
Minn. Stat. § 302A.461, subd. 4(b).
As noted previously, “a ‘proper purpose’ is one reasonably related to the person’s interest as a shareholder, beneficial owner, or holder of a voting trust certificate of the corporation.” Minn. Stat. § 302A.461, subd. 4(d). The courts have held that a proper purpose does not include merely to improve one’s position in a potential lawsuit. See Bergmann v. Lee Data Corp., 467 N.W.2d 636, 640 (Minn. Ct. App. 1991) (requesting documents for purely personal purpose, such as improving one’s position in a lawsuit, is not a proper purpose).
Shareholders of Minnesota corporations have the right to examine certain corporate documents as set forth in the Minnesota Business Corporation Act. Likewise, Minnesota corporations have the duty to furnish corporate documents to their shareholders under certain circumstances. The failure of corporations to comply with these requirements, especially in response to a request for information from a minority shareholder of a closely held corporation or family owned business, may result in litigation for breach of the Act as well as accusations that those in control of the corporation have breached fiduciary duties to the shareholder.
If you or your company have questions about what corporate documents shareholders are entitled to examine, the Minnesota corporate attorneys of Trepanier MacGillis Battina are available to consult with you.
Minnesota corporate law attorneys Craig W. Trepanier and Kelly M. Dougherty represent both minority shareholders and corporations in corporate matters including disputes involving breach of fiduciary duty, unfairly prejudicial conduct, shareholder oppression, minority shareholder rights, and violation of the Minnesota Business Corporation Act. Craig may be reached at 612.455.0502 or by e-mail at craig@trepanierlaw.com. Kelly may be reached at 612.455.0504 or by e-mail at kdougherty@trepanierlaw.com. Trepanier MacGillis Battina P.A. is a Minnesota minority shareholder rights law firm located in Minneapolis, Minnesota.

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