Shareholders and Records & Corporate Books
Shareholders in closely held companies have the right to access the company’s information, records, and financial statements. These are critical rights which, when exercised, can forestall potential problems – the kind of problems that can destroy your equity and years of work.
These rights are yours as a shareholder. When they are denied to you by the majority shareholders you may have a cause of action to compel them to act. Not doing so may well lead to future, serious, problems.
Protections for shareholders are critical, as the majority will otherwise have full, unfetted control of a closely held corporation.
Closely Held Company Shareholder Rights to Records
Shareholders in a closely held corporation have certain rights to access company information, records, and financial statements. Key aspects of a shareholder's right to information include:
Access to financial statements - Shareholders are entitled to review a company's financial statements, such as annual and quarterly income statements, balance sheets, cash flow statements, and stockholder equity statements.
Accounting records - Shareholders have a right to inspect general accounting ledgers, journal entries, invoices, bank statements, and other accounting records and supporting documents.
Corporate documents - Shareholders can access governing documents like the articles of incorporation and bylaws, along with board meeting minutes and resolutions.
Shareholder lists - Shareholders have a right to obtain shareholder lists and records reflecting share ownership and transfers.
Reasonable notice - Shareholders typically must provide reasonable advance notice of their intent to inspect the records.
Proper purpose - Inspection rights are usually limited to purposes reasonably related to the shareholder's interests.
Time and place - Companies can impose reasonable restrictions on when and where documents can be reviewed.
Fees - Reasonable fees associated with gathering and reproducing requested documents may apply.
Confidentiality - Trade secrets and privileged information can be kept confidential.
If the company refuses inspection or imposes unreasonable conditions on document access, do not wait. Call us as soon as possible.
Restrictions on Shareholder’s Rights to Inspect
IThere are some reasonable limitations that companies can place on a shareholder's right to inspect books and records:
Notice Requirement - Requiring the shareholder provide advance written notice of their intent to inspect records.
Time and Place - Restricting inspections to regular business hours at the company's office.
Frequency - Limiting inspections to certain intervals, such as quarterly or annually.
Verification - Requiring the shareholder provide proof of identity and ownership status.
Improper Purpose - Denying access for purposes harmful to the company's best interest.
Confidentiality - Protecting trade secrets, attorney-client communications, and sensitive personal information.
Fees - Charging reasonable fees to cover labor and copying costs associated with the inspection.
Time Frame - Specifying a reasonable time frame for producing requested documents.
Retaining Copies - Prohibiting shareholders from retaining copies of inspected documents.
Use of Information - Limiting the shareholder's use and disclosure of information obtained.
Representative Inspection - Requiring shareholders inspect through an attorney or CPA if needed.
Hopkins Centrich, Your Shareholder Oppression Law Firm
Hopkins Centrich PLLC provides cutting-edge, high-quality, creative legal solutions for minority shareholders in Texas Closely Held Corporations when their rights have been abused by the majority owners. Our attorneys and staff have decades of experience in virtually every aspect of business law in The Woodlands and Texas. We have designed and incorporated businesses, managed their every legal concern, engaged in litigation on their behalf, aided with mergers and acquisitions, managed mergers, acquisitions, and sales.
Hopkins Centrich knows Texas business law. We are uniquely positioned to help shareholders when they have ample cause to believe their rights are being violated. When we work with a client, our sole focus is on them. We take advantage of everything technology has to offer in order to optimize how we work. That gives us more time to spend with you, more time to understand the issues, and more time to negotiate and prepare for trial.
We get that no one wants to contact a law firm unless they feel they absolutely have to. When they do, it almost always means that ‘things have reached a head.’ The attorneys and staff of Hopkins Centrich understand what you are going through. We will make the process understandable; you will know what is happening with your case every step of the way, and you will never have to track us down for answers.
Hopkins Centrich, Your Shareholder Oppression Law Firm For Fraud and Misrepresentation Claims
Hopkins Centrich PLLC provides cutting edge, high quality, creative legal solutions for minority shareholders in Texas closely held corporations when their rights have been abused by the majority owners. Our attorneys and staff have decades of experience in virtually every aspect of business law in The Woodlands and Texas. We have designed and incorporated businesses, managed their every legal concern, engaged in litigation on their behalf, aided with mergers and acquisitions, as well as having managed mergers, acquisitions, and sales.
Hopkins Centrich knows Texas business law. We are uniquely positioned to help shareholders when they have amble cause to believe their rights are being violated. When we work with a client, our sole focus is on them. We take advantage of everything technology has to offer in order to optimize how we work. That gives us more time to spend with clients, more time to understand the issues, more time to negotiate and prepare for trial. We get that no one wants to contact a law firm unless they feel they absolutely must. When they do, it almost always means that ‘things have reached a head.’
The attorneys and staff of Hopkins Centrich understand what you are going through. We will make the process understandable; you will know what is happening with your case every step of the way and you will never have to track us down for answers.
What to Do If You Think Your Minority Rights are Being Violated
First, do not believe anything you read online, or listen to someone who tells you that the Texas Supreme Court did away with Shareholder Oppression lawsuits. The Court merely limited some of the basis for bringing a Shareholder Oppression action. There are still many avenues to relief still available, particularly where the majority shareholders have made decisions that are not In the best interests of the business.
Don’t wait. If you think your shareholder rights have been trampled on don’t hesitate to call. Don’t hope that things change, don’t let a matter fester, don’t try to solve the problem yourself through emails and letters and not-so-calm-conversations. Contact us. The earlier you so, the better, there are deadlines for every legal action.The longer you wait, The longer you wait, the fewer your legal options.
How We Work
Hopkins Centrich is a team with a deep bench. All our attorneys have extensive litigation experience which they fully use when necessary.
Hopkins Centrich’s attorneys also have ‘big firm’ backgrounds. They formed our firm with the goal of retaining the best and most talented lawyers who would provide a greater and more personal experience for our clients.
We do this by using technology to its fullest. We utilize cutting-edge business processes and methodologies to assure that we can continue to deliver the highest quality legal services to our clients. This, in turn, allows us to respond promptly and efficiently to client needs, exceed project requirements, operate effortlessly with narrow timeframes, and develop innovative yet flexible legal solutions at competitive fees.
We are creative. We are agile. We quickly adapt to rapidly changing circumstances, including changes in the law.
Hopkins Centrich is dedicated to upholding the rights of minority shareholders. If you feel you are not being treated right and you are invested in a closely held company – money, time, labor, experience, intellectual property, etc. – please call us as soon as possible.
Our vision statement may sum it up best. We deliver highly skilled, ethical and aggressive legal representation to every client by:
- Responding promptly to our clients’ needs.
- Anticipating business and legal trends that may affect our clients.
- Managing our clients’ matters in an efficient, caring and proactive manner.
- Communicating regularly and clearly with our clients.
