Brief survey of Kansas shareholder law.
Kansas Shareholder Law Survey
Books and Records
Right to Inspect Books and Records
Kansas stockholders have the right to inspect corporate books and records. The written request must state a proper purpose and be under oath. KAN. STAT. ANN. § 17-6510(b)(2005). If a stockholder wishes to inspect corporate records and is not a record holder of stock, or is a member of a non-stock corporation, the demand under oath must state the person’s status as a stockholder and must include documents proving stock ownership § 17-6510(b)(2)(B). The oath must also state that the accompanying documents are true and correct copies of what they purport to be.
The inspection must take place during normal business hours. Stockholders have the right to inspect and make copies of the corporation’s stock ledger, 755 (Kan.1983).of a corporate subsidiary if the corporation has actual possession of the records or could obtain the records “through the exercise of control” over the subsidiary. § 17-6510(b)(1)-(2).
If a demand that meets the above requirements is refused, or the stockholder does not receive a response to the demand within five days, the stockholder may apply with the district court to compel an inspection. § 17-6510(c). The court may then order the corporation to allow the inspection, or may order the corporation to provide copies of the records at the stockholder’s expense. § 17-6510(c).
Kansas does not provide for involuntary dissolution unless the close corporation has only two shareholders who each have half ownership. See KAN. STAT. ANN. § 17-6804(d) (2005). In that situation, either stockholder may file a petition with the district court.
Shareholder Derivative Suits
Kansas shareholders may bring a derivative suit if the corporation fails to assert rights that properly belong to the corporation. § 60-223a. The plaintiff must show that he was a shareholder at the time the event complained of occurred and the efforts the plaintiff made to get the directors of the corporation to take the action sought. The plaintiff must be able to adequately represent the interests of the corporation. A derivative action may only be dismissed with court approval.
Kansas shareholders my file a derivative action or a direct action if an officer or director breaches his fiduciary duty to the corporation.. Richards v. Bryan, 879 P.2d 638, 646 (Kan. App. 1994, modified on denial of reh’g)reholders may only pursue a direct claim if the wrong to the corporation injures the shareholder involves a contractual right or “inflicts a distinct and disproportionate injury on the shareholder." Id. A derivative action involving a closely held corporation may be treated as direct action if: 1) no unfair exposure corporation to numerous of actions would result; 2) interests of creditors in the corporation would not be materially prejudiced; and 3) no unfair recovery would occur among interested parties. KAN STAT. ANN. § 60-223a; Richards, 879 P.2d at 644.
Directors and officers are liable to the corporation and the stockholders for losses resulting from their malfeasance, misfeasance or their failure or neglect to discharge the duties imposed by their offices. Sampson v. Hunt, 665 P.2d 743 (Kan. 1983).