CO Code § 7-116-103 (2021)
2021 Colorado Code|Title 7 - Corporations and Associations|Article 116 - Records, Information, and Reports|§ 7-116-103. Scope of Shareholder's Inspection Right

  A shareholder's agent or attorney has the same inspection and copying rights as the shareholder.    The right to copy records under section 7-116-102 includes, if reasonable, the right to receive copies made by photographic, xerographic, or other means.    Except as provided in section 7-116-106, the corporation may impose a reasonable charge, covering the costs of labor and material, for copies of any documents provided to the shareholder. The charge may not exceed the estimated cost of production and reproduction of the records.    The corporation may comply with a shareholder's demand to inspect the record of shareholders under section 7-116-102 (2)(c) by furnishing to the shareholder a list of shareholders that complies with section 7-116-101 (3) and was compiled no earlier than the date of the shareholder's demand.     History. Source: L. 93: Entire article added, p. 846, § 1, effective July 1, 1994.    ANNOTATION   Analysis     I. GENERAL CONSIDERATION.    II. SHAREHOLDERS' RIGHT TO INSPECT CORPORATE RECORDS.    III. PENALTIES.     I. GENERAL CONSIDERATION.   Law reviews. For note, “The Right to Inspect Corporate Books”, see 4 Rocky Mt. L. Rev. 64 (1931).   Annotator's note. Since § 7-116-103 is similar to § 7-5-117 as it existed prior to the 1993 recodification of the “Colorado Business Corporation Act”, articles 101 to 117 of title 7, cases construing that provision and its predecessors have been included in the annotations to this section.   Legislature intended to require officers and directors to act responsibly. This statute elucidates the intent of the general assembly that officers and directors of corporations be required to act responsibly toward shareholders. Beebe v. Star-Stop, Inc., 32 Colo. App. 345, 513 P.2d 743 (1973), aff'd in part and rev'd in part sub nom. Beebe v. Pierce, 185 Colo. 34 , 521 P.2d 1263 (1974).   Applicability of section to foreign corporations. Since nothing in the language of this section indicates an intent by the general assembly to limit its effect to domestic corporations, this section also applies to foreign corporations as provided by § 7-9-104 . Jefferson Indus. Bank v. First Golden Bancorp., 762 P.2d 768 (Colo. App. 1988).   Shareholder should not be burdened by corporation's failure to produce records. Although it is true that the burden of proving the value of stock is upon the shareholder [now shareholder or holder of voting trust certificates therefor], it is not reasonable that the general assembly intended that a shareholder [now shareholder or holder of voting trust certificates therefor] suing under this statute to compel production of records should be further burdened by the corporation's failure to produce the records. Beebe v. Star-Stop, Inc., 32 Colo. App. 345, 513 P.2d 743 (1973), aff'd in part and rev'd in part sub nom. Beebe v. Pierce, 185 Colo. 34 , 521 P.2d 1263 (1974).   A mutual ditch company should not be treated differently from any other type of corporation in matters of general corporate governance. Hill v. Behrmann, 911 P.2d 679 (Colo. App. 1995), aff'd on other grounds, 933 P.2d 1 (Colo. 1997).   II. SHAREHOLDERS' RIGHT TO INSPECT CORPORATE RECORDS.   This section gives stockholders a statutory right to inspect corporate records. Rulon v. Silverman, 79 Colo. 525 , 246 P. 788 (1926); D.F. Blackmer Furn. & Carpet Co. v. Blackmer, 92 Colo. 419 , 21 P.2d 181 (1933); Bell v. Arnold, 175 Colo. 277 , 487 P.2d 545 (1971).   Which right was afforded by prior statutes. This section was adopted in the year 1929, and for many years prior thereto, there were statutory provisions authorizing the examination of corporate books and records by stockholders. Weck v. District Court, 158 Colo. 521 , 408 P.2d 987 (1965).   This section is complete in itself, and a party seeking to inspect corporate books was not obliged to conform to, or to seek relief, under any other statute. Rulon v. Silverman, 79 Colo. 525 , 246 P. 788 (1926).   And it should be liberally construed in favor of stockholders, and their rights should be zealously guarded. Dines v. Harris, 88 Colo. 22 , 291 P. 1024 (1930).   But inspection is limited to “complete books and records”. In 1958 significant changes were made in this section. Prior thereto it provided for examination by stockholders of “all the books, accounts and papers” of a corporation. The amendment of 1958, however, restricted the right of inspection to “complete books and records of account”. Weck v. District Court, 158 Colo. 521 , 408 P.2d 987 (1965).   And a court may refuse inspection of corporate books when the person is not acting in good faith. Dines v. Harris, 88 Colo. 22 , 291 P. 1024 (1930).   For the indiscriminate examination by stockholders of corporate records is not favored. Weck v. District Court, 158 Colo. 521 , 408 P.2d 987 (1965).   Burden of proving bad faith. Mere allegations of improper motives or bad faith on the part of one seeking to inspect the corporate books are not enough, and the burden of proof is on those who desire to deny inspection. Dines v. Harris, 88 Colo. 22 , 291 P. 1024 (1930).   Shareholders lists are a part of corporate books and records. Bell v. Arnold, 175 Colo. 277 , 487 P.2d 545 (1971).   And federal securities laws do not preempt access to shareholders lists. The federal securities laws and proxy rules, which provide that management must mail the proxy materials of an opposing security holder or provide a shareholders list when making a solicitation, do not preempt the field of access to shareholders lists, and this section is properly available to shareholders to allow their inspection and copying of the shareholders list of equity; they are not required to elect one of the procedures. Wood, Walker & Co. v. Evans, 300 F. Supp. 171 (D. Colo. 1969 ), aff'd, 461 F.2d 852 (10th Cir. 1972).   But this section does not nullify statute protecting privileged communications. The fact that this section provides that a corporation shall keep complete books and records of account, shall keep minutes of the proceedings of its shareholders and board of directors, shall keep a record of its shareholders, and the further fact that a qualified shareholder shall have the right to examine its books and records of account, minutes and record of shareholders, and make extracts therefrom does not operate to nullify the provisions of § 13-90-107 , the witness statute, which protects privileged communications. Rather a waiver of the protection of the witness statute can only be brought about by those duly constituted officers who are charged with the responsibilities of managing the affairs of the corporate entity. Weck v. District Court, 158 Colo. 521 , 408 P.2d 987 (1965).   Officer, not corporation, is necessary party in mandamus for inspection. In order to enforce the right of inspection by mandamus, it is not necessary to make the corporation a party respondent, but merely its officer upon whom the statutory duty is devolved. Merrill v. Suffa, 42 Colo. 195 , 93 P. 1099 (1908).   III. PENALTIES.   The main purpose of this section is to emphasize that the right to the list of shareholders is clear and unequivocal. Wood, Walker & Co. v. Evans, 461 F.2d 852 (10th Cir. 1972).   However, as an aid in the enforcement of this section a penalty is authorized, but this is a secondary and not a primary aspect and purpose. Wood, Walker & Co. v. Evans, 461 F.2d 852 (10th Cir. 1972).   Officers denying shareholder access to records properly held liable with corporation. Under this statute enumerating those liable for refusing to allow a shareholder [now shareholder or holder of voting trust certificates therefor] to examine corporate records, and upon evidence showing that corporate officers acted independently, as well as jointly, in denying access to the records, officers who concurred in the denial of the statutory rights of the shareholder [now shareholder or holder of voting trust certificates therefor] could properly be held liable as well as the corporation even though written demand for the examination had been made only upon the corporation. Beebe v. Star-Stop, Inc., 32 Colo. App. 345, 513 P.2d 743 (1973), aff'd in part and rev'd in part sub nom. Beebe v. Pierce, 185 Colo. 34 , 521 P.2d 1263 (1974).   “Shall” means only that liability, not amount, is mandatory. Although this section declares that the corporation and/or its officers “shall” be liable for the penalty, the courts which have directly considered the issue have held that use of the word “shall” in this context does not mean that the amount is mandatory, but rather means that the corporation and its officers are thereby mandatorily subjected to liability. Wood, Walker & Co. v. Evans, 461 F.2d 852 (10th Cir. 1972).   Thus court does not have to automatically award full penalty. Upon making a finding of the existence of the basic conditions required for corporate liability under this section, the court does not have to proceed automatically and mechanically to award the full penalty, for the courts have always been guarded about imposing liability based on failure to comply with a duty imposed by a statute such as this section where the amount of the damage is fixed on a somewhat liquidated measure without regard to injury suffered and, consequently, to construe this section so that the full amount of the prescribed penalty is to be granted on a kind of push button basis would be irrational and inequitable. Wood, Walker & Co. v. Evans, 461 F.2d 852 (10th Cir. 1972).   A court is at liberty to withhold the award of the penalty if in view of all the circumstances the award of such damages would not serve the ends of justice. Wood, Walker & Co. v. Evans, 461 F.2d 852 (10th Cir. 1972).