In general, shareholders are usually granted permission to inspect corporate books and records based upon individual state laws. The shareholder must simply state a “proper purpose” for making such a request. However, this right can be restricted in some states. For example, at least one state only allow shareholders who have owned stock for certain periods of time to inspect all of the financial records – and a state may also choose to limit inspection to those who hold a set percentage of the shares of any stock class.

Other Specific Rules Governing Corporate Record Inspections

  • When a shareholder simply wants to evaluate his ownership status. It’s usually considered legitimate if a qualified shareholder just wants to evaluate the basic value of his/her ownership interests;

  • Reviewing the records in order to contact other shareholders. It’s normally fine for shareholders to inspect records in order to obtain the names of all other shareholders in hopes that he/she can convince others to take specific action together or to vote in a set way on a particular matter;

  • Any personal reasons stated should not be solely based upon the shareholder’s political views. While it is desirable for people to state the real reasons they want to review corporate records/ledgers if they’re shareholders – requests will usually be turned down if the person is wanting to do so because the corporation is supposedly about to negotiate transactions that the shareholder views as politically objectionable;

  • When there’s a desire to review a new financial report. Since most state laws don't usually require corporations to send out copies of all annual reports to shareholders, it's usually fine if one of them simply wants to see such reports (or new ledger information) so s/he can remain fully knowledgeable about the value of his/her investment.

Parties That Do Have Unlimited Rights to Inspect the Records

As might be expected, all senior corporate officers and board members are usually granted full rights to inspect corporate records as they see fit. Likewise, if it's a publicly-held corporation, the Securities and Exchange Commission (SEC), only has broad rights to inspect all corporate books and records. And nearly any branch of the federal government can inspect such records at any time.

Finally, appropriate state government agencies can inspect and review all corporate records to make sure that taxes are being promptly and properly paid by the corporation.

To obtain help with handling all of your Georgia business planning needs, please contact Shane Smith Law today.  You can schedule your free initial consultation with a knowledgeable Peachtree City estate planning attorney by calling: (770) 487-8999.


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Advocate for the Seriously Injured in Georgia

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