Source: http://delawarechancery.foxrothschild.com/summary-proceedings/delaware-llc-books-and-records-demand/
Timestamp: 2015-08-28 05:24:52
Document Index: 653076973

Matched Legal Cases: ['§ 18', '§ 18', '§ 18', '§ 18', '§ 18', '§ 18']

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Delaware LLC “Books and Records” Demand	By
Carl Neff on February 21, 2014
Posted in Books and Records Demand, Summary Proceedings A member or manager of a Delaware limited liability company may wish to obtain access to the company’s books and records. Such information can be useful in determining, for example, the company’s financial wherewithal, or to investigate actions taken by management to ensure that the company is being run properly.
Section 18-305 of the Delaware Limited Liability Company Act (the “LLC Act”), allows any member of a Delaware limited liability company (“LLC”) to petition the Court to obtain books and records of the LLC upon “reasonable demand for any purpose reasonably related to the member’s interest as a member of the [LLC].” 6 Del. C. § 18-305(a). In addition, managers of a Delaware LLC may petition the Court to obtain LLC books and records for a “purpose reasonably related to the position as manager.” Id. at § 18-305(b).
The statute authorizes the following categories to be inspected by a member or manager who sets forth a proper purpose:
(2) Promptly after becoming available, a copy of the limited liability company’s federal, state and local income tax returns for each year;
6 Del. C. § 18-305(a).
The process for making such a demand is discussed in Section 18-305(e). Specifically, the demand “shall be in writing and shall state the purpose of such demand.” 6 Del. C. § 18-305(e). The demand must be sent to the LLC, and if no response is received within 5 business days, the member or manager may petition the Court of Chancery for an order to compel such disclosure. See 6 Del. C. § 18-305(f).
Notably, the rights of a member or manager to review the LLC’s books and records may be limited by the operating agreement of the LLC. 6 Del. C. § 18-305(g). Therefore, when making a demand to inspect an LLC’s books and records in Delaware, a party should first review the operating agreement to determine whether any such restrictions exist.
Subsequent posts will set forth additional requirements for asserting a books and records action against a Delaware LLC, including the requirement that the demand state a “proper purpose”, and that the categories of documents requested be “narrowly tailored” to such purpose.
Carl D. Neff is an attorney with the law firm of Fox Rothschild LLP. Carl is admitted in the State of Delaware and regularly practices before the Delaware Court of Chancery, with an emphasis on shareholder disputes. You can reach Carl at (302) 622-4272 or at cneff@foxrothschild.com.
Tags: 18-305, books and records, Delaware Chancery, Delaware LLC Act, llc Submission Guidelines
For more information please contact:	Carl D. Neff
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