Q: Can a chamber of Commerce charge an hourly rate or fee to produce docs and records under Section 1602 of the CA Corp

A: Under Section 1602 of the California Corporations Code, nonprofit corporations are required to make their records available for inspection and copying by any director or member of the corporation, subject to certain limitations. This section does not explicitly address the issue of whether a nonprofit corporation may charge a fee for producing documents requested under this section.

However, it is generally permissible for a nonprofit corporation to charge a reasonable fee for copying and producing records requested under Section 1602. The fee should be based on the actual cost of reproduction, which includes the cost of materials and labor. The corporation should also be prepared to provide a breakdown of the costs upon request.

It is important to note that Section 1602 only requires the nonprofit corporation to make its records available for inspection and copying. It does not require the corporation to provide copies of all requested documents. Therefore, the corporation may have the discretion to limit the scope of the request and may refuse to produce documents that are not relevant to the requesting party's interests.

In the situation you described, if the disgruntled board member's request is overly burdensome and distracting from the chamber's mission, the chamber may consider negotiating a reasonable fee or requesting that the requesting party narrow the scope of their request. However, if the requested documents are relevant and necessary, the chamber should comply with the request in accordance with Section 1602.

A: This is a nuanced question. But to summarize the following: (a) he probably does not have a right to inspect and copy under Section 1602; (b) but he does have a right to inspect and copy under a different section (Section 6334); (c) you probably are not required to make copies for him, and can either charge a reasonable fee if you want to accommodate that request or make him do the copying himself; and (d) his inspection and copying rights are subject to some restrictions.

First, his request under Section 1602 is probably misplaced. The California Corporations Code is divided into "divisions." Division 1 applies to general corporations. Division 2 applies to nonprofit corporations. As a chamber of commerce, it is likely that your organization is set up as a California Nonprofit Mutual Benefit Corporation, which is governed by Division 2. This matters because Section 1602 is part of Division 1, and the law says that "this division [1] applies to corporations organized under [division 1] and to domestic corporations that are not subject to ... Division 2." So, the section that he is invoking, as part of Division 1, likely would not be held to apply to your mutual benefit corporation which was created under and "subject to" Division 2.

However, the right that is present in Section 1602 is repeated elsewhere, including in Division 2. So, again assuming that you are a mutual benefit nonprofit corporation, his inspection rights are contained in Section 8334, which says, "Every director shall have the absolute right at any reasonable time to inspect and copy all books, records and documents of every kind and to inspect the physical properties of the corporation of which such person is a director." Which is almost exactly the wording used in Section 1602. So, he's on the right track, but he just didn't know which section applied to the nonprofit corporation as opposed to a general corporation.

But notice that the law says that the director has a right to "inspect and copy." That does not mean that he has the right to inspect and demand that you make copies for him. If he wants an exorbitant list of documents copied, the corporation can require that he bring (at his expense) a copying service to make those copies. And he does not have the right to remove corporate records from the place of business of the corporation.

Finally, his right to inspect takes a back seat to some other rights. For example, because the right of inspection is a statutory right, it will have to yield if it is in conflict with a constitutional right. And certain records might be privileged in a way that prevents a corporation from disclosing them to a particular director. And he, as a director, is always required to act in the best interests of the organization. See Corporations Code Section 7231(a). If giving the director access to a particular item will result in a conflict of interest or is in conflict with the director's fiduciary duty to the organization, you might want to talk to an attorney to see if the organization should refuse.