Trepanier MacGillis Battina P.A. 8000 Flour Exchange Building 310 Fourth Avenue South Minneapolis, MN 55415 612.455.0500
Trepanier MacGillis Battina P.A. 8000 Flour Exchange Building 310 Fourth Avenue South Minneapolis, MN 55415 612.455.0500

Which Corporate Documents are Shareholders Entitled to Examine?

Shareholders often want access to information about the corporations in which they own shares, especially in the context of closely held or family-owned businesses. In many situations, however, those in control of the corporation do not want to provide minority shareholders with unfettered access to corporate records such as financial statements, tax returns, business plans, or other sensitive documents. Disputes regarding the right of minority shareholders to obtain such information can poison the relationship between the business owners and eventually lead to litigation if not handled properly.

Fortunately, the Minnesota Business Corporation Act explicitly addresses the right of shareholders of Minnesota corporations to obtain various categories of information. Under Minn. Stat. 302A.461, shareholders of Minnesota corporations are entitled to examine certain corporate documents under certain circumstances. To ensure compliance with the law and minimize the risk of minority shareholder disputes, the officers, directors, and shareholders of Minnesota corporations should become familiar with these requirements.

The Right of Shareholders in Publicly Held Corporations to Examine Documents
The Minnesota Business Corporation Act provides different rights of access to shareholders depending upon whether the corporation is publicly or privately held.
If a shareholder of a publicly held Minnesota corporation wishes to examine documents, that shareholder must make a written demand to the corporation. The demand must state a particular proper purpose, be acknowledged or verified (notarized), and sent to the corporation’s registered office in Minnesota or its principal place of business. “A ‘proper purpose’ is one reasonably related to the person’s interest as a shareholder, beneficial owner, or holder of a voting trust certificate of the corporation.” Minn. Stat. § 302A.461, subd. 4(d). If the written demand meets the above requirements, the shareholder may examine and copy the following documents at any reasonable time:

  • the share register; and
  • other corporate records reasonably related to the proper purpose stated in the written demand.

Minn. Stat. § 302A.461, subd. 4(c).

The Right of Shareholders in Privately Held Corporations to Examine Documents
Privately held Minnesota corporations are required to provide more corporate documents to their shareholders than publicly held corporations, and often without the requirement of a proper purpose.

A shareholder of a privately held Minnesota corporation has the right, upon written demand, to examine and copy the following corporate documents, which the corporation must make available within ten days of receipt of the shareholder’s written demand:

  • the share register;
  • records of all proceedings of shareholders for the last three years;
  • records of all proceedings of the board for the last three years;
  • corporate articles of incorporation and all amendments currently in effect;
  • corporate bylaws and all amendments currently in effect;
  • financial statements required by law and the financial statement for the most recent interim period prepared in the course of the operation of the corporation for distribution to the shareholders or to a governmental agency as a matter of public record;
  • reports made to shareholders generally within the last three years;
  • a statement of the names and the usual business addresses of all directors and principal officers;
  • voting trust agreements;
  • shareholder control agreements;
  • a copy of agreements, contracts, or other arrangements or portions of them incorporated by reference in the articles of incorporation; and
  • other corporate records if the shareholder demonstrates a proper purpose.

Minn. Stat. § 302A.461, subd. 4(a)(1),(2).

Costs of Furnishing Corporate Documents
If copies of the share register or documents stated above are required to be furnished, they must be furnished at the expense of the corporation. Minn. Stat. § 302A.461, subd. 5. In all other cases, the corporation may charge the requesting party a reasonable fee to cover the expenses of providing the copy. If the records are kept on illegible storage medium (such as magnetic tape or punched holes) and require conversion to a legible format, the costs of conversion are borne by the same party who would bear the cost of copying the records. Minn. Stat. § 302A.461, subd. 6.

The Right of the Corporation to Seek a Protective Order
To protect against the premature disclosure of confidential information which may cause competitive harm to the corporation, the corporation may petition the court for a protective order permitting the corporation to withhold portions of the records of proceedings of the board. The term of the order is not to exceed twelve months initially, but this term may be extended in additional twelve month terms, not to exceed 36 months in total, for good cause. Minnesota courts have the right to grant other protective orders or impose other reasonable restrictions on the copying of corporate records as they see fit. Minn. Stat. § 302A.461, subd. 4a.

A shareholder, beneficial owner, or holder of a voting trust certificate who has gained access … to any corporate record including the share register may not use or furnish to another for use the corporate record or a portion of the contents for any purpose other than a proper purpose. Upon application of the corporation, a court may issue a protective order or order other relief as may be necessary to enforce [this rule].
Minn. Stat. § 302A.461, subd. 4(b).

As noted previously, “a ‘proper purpose’ is one reasonably related to the person’s interest as a shareholder, beneficial owner, or holder of a voting trust certificate of the corporation.” Minn. Stat. § 302A.461, subd. 4(d). The courts have held that a proper purpose does not include merely to improve one’s position in a potential lawsuit. See Bergmann v. Lee Data Corp., 467 N.W.2d 636, 640 (Minn. Ct. App. 1991) (requesting documents for purely personal purpose, such as improving one’s position in a lawsuit, is not a proper purpose).

Conclusion
Shareholders of Minnesota corporations have the right to examine certain corporate documents as set forth in the Minnesota Business Corporation Act. Likewise, Minnesota corporations have the duty to furnish corporate documents to their shareholders under certain circumstances. The failure of corporations to comply with these requirements, especially in response to a request for information from a minority shareholder of a closely held corporation or family owned business, may result in litigation for breach of the Act as well as accusations that those in control of the corporation have breached fiduciary duties to the shareholder.

If you or your company have questions about what corporate documents shareholders are entitled to examine, the Minnesota corporate attorneys of Trepanier MacGillis Battina are available to consult with you.
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About the Authors:
Minnesota corporate law attorneys Craig W. Trepanier and Kelly M. Dougherty represent both minority shareholders and corporations in corporate matters including disputes involving breach of fiduciary duty, unfairly prejudicial conduct, shareholder oppression, minority shareholder rights, and violation of the Minnesota Business Corporation Act. Craig may be reached at 612.455.0502 or by e-mail at craig@trepanierlaw.com. Kelly may be reached at 612.455.0504 or by e-mail at kdougherty@trepanierlaw.com. Trepanier MacGillis Battina P.A. is a Minnesota minority shareholder rights law firm located in Minneapolis, Minnesota.

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