Q: Can a corporation denies shareholders to examine books?
A medical group with doctors as owners (PC). I am a recent shareholder, upon asking to examine the books I was denied that, stating that only managing members are allowed to see the books. The company doesn’t make distributions so I wanted to know what happens to the profits. Is that legit? What should be be my next step?
A: In New York, any shareholder can see the books, unless that right is restricted by agreement.
David H. Relkin agrees with this answer
1 user found this answer helpful
Corporations have shareholders; LLCs have members. You have a right to the information.
A: Even in the absence of the by-laws or a shareholder agreement, which I assume you have already reviewed, the New York Business Corporation Law provides for a shareholder's right to inspect the books and records of a corporation. BCL 624 provides that any shareholder of record of a corporation may demand to review the books and records upon at least five days written demand during usual business hours. You can review minutes of the proceedings, a record of all shareholders, and make copies related to your interest as a shareholder.
Daniel Michael Luisi agrees with this answer
A: If the corporation prevents you from reviewing the books after a properly drafted and served 5 day notice, you may apply to a NY Supreme Court judge for an Order to Show Cause to enforce your rights to examine the books pursuant to BCL Sec. 624(d). Consider retaining an experienced attorney if you intend to seriously pursue this, as your application can easily be defeated by experienced defense counsel using a variety of techniques with which a lay person would be hard pressed to cope.
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