Over the next few weeks you may notice some changes to this blog as it expands to cover topics related to Texas business breakups. This will cover shareholder disputes, partnership disputes, and other disputes involving Texas business entities. We begin with a shareholder’s right to review the books and records of a Texas corporation.
Disputes arising in the context of a close corporation in many cases involve a situation where one shareholder is keeping another shareholder in the dark about the status of the company. Texas Business Corporation Act Article 2.44 provides shareholders with the statutory right to review the books records of the company:
Any person who shall have been a shareholder for at least six (6)
months immediately preceding his demand, or shall be the holder of
at least five per cent (5%) of all the outstanding shares of a
corporation, upon written demand stating the purpose thereof, shall
have the right to examine, in person or by agent, accountant, or
attorney, at any reasonable time or times, for any proper purpose,
its relevant books and records of account, minutes, and share
transfer records, and to make extracts therefrom.
Other states have similar statutes. There may be a fight over what exactly books and records entail but there is no denying a shareholders’ rights to see the records. The shareholder can sue the company to compel production of the documents and is entitled to reasonable attorneys’ fees if they prevail.