Florida Shareholder Rights: Inspection of Corporate Records
Corporations, especially private companies and closely-held firms, owe their shareholders an obligation to furnish certain business records and key information upon request. A shareholder’s right to inspect and copy corporate records is critically important. Without this right, it would be very difficult for shareholders to ensure that their financial interests are actually being protected. Here, our West Palm Beach shareholder litigation attorneys discuss corporate inspection rights in Florida.
Florida Law on Shareholder Inspection Rights
Fundamental Documents
Under Section 607.1602 of the Florida State Statutes, a procedure has been established for inspection rights. Florida shareholders must follow this procedure in order to request and obtain corporate records.
Notably, there are certain corporate records that have been deemed to be ‘core documents’. As such, shareholders are entitled to inspect these records, with no advanced warning, and corporate officers have very little ability to object. These fundamental corporate documents include:
- Articles of incorporation, along with all currently effective amendments;
- Corporate bylaws, along with all amendments that are in effect;
- Resolutions that have been adopted by directors that issue more shares;
- Minutes of all shareholders meetings, going back at least three years; and
- Personal identifying information for all active officers and directors.
As these are a Florida corporation’s core documents, these records must be properly maintained at all times. Indeed, corporations in the state have a legal duty to keep these records available at their principal office during ordinary business hours.
Financial Records
Florida shareholders also have the right to inspect the financial records of a corporation. This right is controlled by Section 607.1601 of the Florida Statutes. Under this part of the code, shareholders in Florida have a right to receive corporate financial statements within 120 days of the end of each fiscal year. If financial statements cannot be provided within this time frame, a corporation must be able to show good cause as to why the issue is ‘outside of its control’. Extensive financial information should be provided to shareholders, including income statements and an accounting of current cash flow.
Contingent Inspection Rights
A shareholder’s right to inspect core corporate documents and basic annual financial records is unquestioned. However, a shareholder’s right to get deeper into a corporation’s records is ‘contingent’. More specifically, further inspection rights are contingent upon the shareholder asserting:
- That they have a good faith reason to inspect records;
- They will use the records only for the proper purpose;
- The purpose and intent of their request for inspection is clearly articulated and reasonably grounded; and
- The inspection request is sufficiently narrow, so that the records requested are directly tied to the shareholder’s stated purpose.
Get Business Law Assistance Today
At Pike & Lustig, LLP, our shareholder rights attorneys have experience handling complex business disputes. We can help you protect your Florida shareholders’ rights. To learn more about what we can do for you, please do not hesitate to contact our team today to set up a free review of your case. We have offices in West Palm Beach, Wellington and Miami, and we represent shareholders throughout Southeastern Florida, including in Fort Lauderdale and Boca Raton.
Resource:
leg.state.fl.us/Statutes/index.cfm?App_mode=Display_Statute&URL=0600-0699/0607/Sections/0607.1602.html
