It is not uncommon for corporate directors to act in their own self-interest or for a corporation to mismanage funds. Other times a corporation may be trying to oust a shareholder without any particular reason. In any event, shareholders should be able to inspect and copy certain corporate documents to use in potential lawsuits or to merely monitor and determine whether there is any mismanagement within the corporation. States vary in the laws that govern the rights of shareholders and in Florida, shareholders are entitled to inspect and copy corporate documents.
Scope and Procedure of Inspection
While shareholders in Florida are entitled to inspect and copy certain corporate records there are still procedures and limits they must adhere to. Under Florida Statute 607.1602, a shareholder is entitled to inspect and copy corporate records during regular business hours at the corporation’s principal office if the shareholder gives the corporation written notice of the shareholder’s demand at least five business days before the date on which the shareholder wishes to inspect and copy. This section includes excludes minutes of meetings, and records of actions taken without a meeting by, the corporation’s board of directors and any board committees of the corporation.
Florida also requires for a shareholder’s demand to be made in good faith and for a proper purpose when inspecting:
- Excerpts from minutes of any meeting of, or records of any actions taken without a meeting by, the corporation’s board of directors and board committees of the corporation;
- The financial statements of the corporation;
- Accounting records of the corporation;
- The record of shareholders maintained; and
- Any other books and records.
A Florida corporation may impose reasonable restrictions when the shareholder is inspecting and copying the corporation’s books and records.
Court Ordered Inspections
There are times when a corporation may try to make it difficult for a shareholder to inspect records or the corporation may deny the demand altogether. Under 607.1604, if the company does not comply with the shareholder’s request to inspect corporate documents the circuit court in the applicable county may summarily order inspection and copying of the records demanded at the corporation’s expense upon application of the shareholder. If the court orders inspection and copying of the records demanded, it shall also order the corporation to pay the shareholder’s expenses, including reasonable attorney fees, incurred to obtain the order and enforce its rights under this section. In these cases, the shareholder will likely have to sue for a writ of mandamus to compel the inspection. It would be in the shareholder’s best interest to use an attorney and if the shareholder prevails, the corporation will be liable for the attorney’s fees and costs.