Shareholder and LLC member access to books and records

 

An interest holder in an entity—a shareholder of a corporation or member of an LLC—has a right to inspect the entity’s books and records.  This right exists by law and, usually, as a matter of the entity’s governing documents.  Governing documents are often bylaws or a shareholder agreement for a corporation or an operating agreement for an LLC.  A corporate shareholder must have a “proper purpose” for the inspection. 

If an interest holder is in the middle of a dispute with other interest holders or officers of the entity, the demand to inspect books and records might be refused.  Those wrongfully denying access often hope that the interest holder will be unaware of these rights or think that it is too expensive to go to court and do anything about it.

The law provides the right to file a lawsuit to compel the inspection.  Those who wrongfully deny such a right might be liable for money damages of 10% of the value of a shareholder’s shares in the case of a corporation, and the attorney fees for having to go to court.  This makes this remedy affordable. 

If you need advice as to what a “proper purpose” is or any of your other rights as a shareholder of a corporation or a member of an LLC, get in touch with us at (312)-223-1699 or tpatterson@pattersonlawfirm.com.

 
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