I continue to be surprised by the number of clients that inquire about a shareholder or owner’s right to information and thus, this article is intended to answer questions about an owner’s basic rights to information.
Private Minnesota corporations and limited liability companies have a statutory obligation to provide certain information to its shareholders or members upon request and that right is deemed an important right that can cause negative consequences to a company if denied or limited unnecessarily, such as unwanted shareholder litigation.
A shareholder in a private Minnesota corporation has an “absolute right, upon written demand, to examine and copy” the share register and all documents corporations are required to maintain. Minn. Stat. § 302A.461. Thus, a shareholder is always entitled, upon a written demand, to inspect and copy:
(a) records of all proceedings of shareholders for the last three years;
(b) records of all proceedings of the board for the last three years;
(c) the corporation’s articles and all amendments currently in effect;
(d) the corporation’s bylaws and all amendments currently in effect;
(e) certain financial statements;
(f) reports made to shareholders generally within the last three years;
(g) a statement of the names and usual business addresses of its directors and principal officers;
(h) voting trust agreements;
(i) shareholder control agreements;
(j) the share register; and
(k) a copy of agreements, contracts, or other arrangements or portions of them incorporated in the Articles of Incorporation. Minn. Stat. § 302A.461, subds. 2, 4.
In addition to the absolute right to inspect and receive copies of the statutorily identified documents, upon a showing of “proper purpose,” a shareholder of a private corporation is entitled to inspect and copy other documents as well. Minn. Stat. § 302A.461, subd. 4. 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.
A “proper purpose” may include determining an “accurate value on their shares of stock, and to evaluate the conduct and affairs of the corporation’s officers and majority shareholders so as to determine the effects on the financial condition [of the company].” See Fownes v. Hubbard Broadcasting, Inc., 225 N.W.2d 534, 536 (Minn. 1975); Uldrich v. Datasport Inc., 349 N.W.2d 286, 289 (Minn. Ct. App. 1984).