- The Informational Rights Of Minority Shareholders In Virginia
- March 29, 2018 | Author: Richard S. Guy
- Law Firm: Vandeventer Black LLP - Norfolk Office
Although minority shareholders of Virginia stock corporations have little power to elect directors or sway corporate policy, they—or their attorneys or agents—do have some basic informational rights, set out in Sections 13.1-770 through 13.1-773 of the Code of Virginia, to “inspect and copy” certain documents if they give at least 5 business days’ notice to the corporation and pay a reasonable charge for copies of the requested documents. The right to copy records includes, if reasonable, the right to receive copies, including through an electronic transmission if available and requested by the shareholder. Therefore, it may be easier for all concerned if the shareholder asks for scans of the requested documents to be e-mailed to the shareholder or the shareholder’s attorney.
Since a corporation’s annual reports and copies of the corporation’s articles of incorporation and any amendments can be obtained from the State Corporation Commission, it may not make sense to put them on the requested documents list, even though the statutes allow such a request. Otherwise, the following business records can be requested by any shareholder:
1. The corporation’s bylaws or restated bylaws and all amendments currently in effect.
2. The minutes of all shareholders’ meetings, and records of all actions taken by shareholders without a meeting, for the past three years.
3. All written communications to shareholders within the past three years.
4. Financial statements for the past three years.
5. A list of the names and addresses of the corporation’s current directors and officers.
Shareholders meeting certain other requirements and having good reasons for wanting the records may also request:
6. Excerpts from minutes of any meetings of directors or shareholders, or records of actions taken by shareholders or directors without a meeting, to the extent that such records are older than 3 years.
7. Accounting records of the corporation.
8. The historical record of shareholders.
If a corporation does not allow the shareholder to inspect and copy the above-referenced records, the circuit court in the city or county where the corporation’s principal office is located (or the registered office, if the principal office is outside Virginia) may, upon application of the shareholder, order the corporation to furnish such records or permit inspection and copying of the records demanded. And if a court issues such an order, it may also order the corporation to pay the shareholder’s costs, including reasonable counsel fees, incurred to obtain the order if the shareholder proves that the corporation refused inspection without a reasonable basis. The court may also impose reasonable restrictions on the use or distribution of the records by the demanding shareholder.
The statutory information rights do not affect the right of a shareholder in litigation with the corporation to demand, or the power of a court to compel, the production of corporate records for examination. These information rights may not be abolished or limited by a corporation’s articles of incorporation or bylaws.