Shareholders have common law and statutory rights to inspect and copy the records and books of corporations and limited liability companies (LLCs). These rights exist so that shareholders are able to ascertain whether corporate management is being properly conducted and so that they have accurate information when voting on corporate issues.
These rights don’t often need to be exercised in public corporations, which are required by law to disclose their financial information regularly. But for privately held corporations, the right of inspection is a vital way for shareholders to keep tabs on management and finances.
Under Kentucky law, a shareholder may inspect and copy any of the following documents by providing the corporation with five business days’ written notice:
- Articles of incorporation and all amendments to them
- The company’s bylaws and all amendments to them
- Resolutions adopted by the board of directors creating a class or series of shares
- Minutes of all shareholders’ meetings for the last three years
- Records of all action taken by shareholders without a meeting for the last three years
- All written communications to shareholders within the last three years, including financial statements
- A list of all the names and business addresses of the company’s current officers and directors
- The company’s most recent annual report
Shareholders also have the right, upon five days’ notice, to inspect and copy accounting records and shareholder records, but only if all of these conditions are met:
- The shareholder’s demand is made in good faith and for a proper purpose.
- The shareholder describes the purpose and the records sought with reasonable particularity.
- The records requested are directly connected to the stated purpose.
If a corporation refuses to allow a requested inspection, the shareholder can file a lawsuit in the court of the county where the corporation’s principle office is located. If the court rules in favor of the shareholder, the corporation may be required to pay the shareholder’s costs and attorney’s fees.
The business law attorneys of Hemmer DeFrank Wessels PLLC, are experienced in advising companies regarding requested records inspections and we also represent shareholders seeking to exercise their inspection rights. To speak with one of our business lawyers, please call our Fort Mitchell office at 859-344-1188 or contact us online.
