How can a shareholder access the books to protect their interests in San Diego and Southern California? What rights does a shareholder have and what is the best way to protect and assert those rights?
California Law Provides Shareholders With Strong Protections
Shareholders have many rights under California law. For example, as a shareholder you have the right to inspect your company’s articles of incorporation (sometimes called the “corporate charter”), bylaws and shareholders’ agreement. Shareholders with 5% or more of the stock in a company have the right to access and review lists of shareholders and quarterly financial information.
Can a shareholder access the books of the company? A shareholder who possesses a “voting rights certificate” has the legal right in most cases to inspect the financial records and accounting (books) during normal business hours. This right also usually extends to any other businesses or companies owned by their corporate entity. In most cases California law forbids these rights to be denied or limited within the corporate documents of an entity.
Usually, the shareholder is required to provide a written request to inspect their corporation’s accounting records. This letter must contain specific, reasonable reasons for the request as well as the relative nature of their interest with regard to their interest as a shareholder.
Protecting Your Rights as a Shareholder for More than 40 Years
Shareholders have rights. Asserting those rights often meets resistance, often substantial resistance. This is why it is important to seek the advice and counsel of the shareholders’ rights attorneys at the Watkins Firm. We have more than 40 years of proven experience protecting the rights and interests of majority and minority shareholders and investors here in San Diego and throughout Southern California.
If you suspect your rights or financial interests a shareholder or investor are at risk you need to take immediate action. It doesn’t cost you anything to have an initial consultation with one of our experienced attorneys. We can help you to quantify the issue(s) at hand and answer the question: are your rights or financial interests being violated?
“Off by a Penny, Off by a Million!”
Dan Watkins often tells our clients “off by a penny, off by a million.” Simply put, if a number is off, even by a little, something is usually afoot. In a recent podcast, Episode 25 – Unfair Business Practice Overview, Dan shares a story of a client who came to him with a small question the client just couldn’t figure out. The numbers were off by a few thousand dollars each year. While this was a seemingly small amount compared to the business income, he asked for our help. We investigated. Turns out a CPA for the parent company was stealing money from the 9 subsidiaries by taking a legitimate expense which should have been divided between the nine entities and charging each of the 9 the full amount. The resulting settlement not only restored the financial stake at hand, the Watkins Firm negotiated a major share in the parent company for clients.
Can A Shareholder Access the Books in San Diego and Southern California?
Can a shareholder access the books of their corporation in San Diego and Southern California? Yes, in most cases a shareholder with voting rights or a substantial percentage of ownership should be able to gain access to the books in order to protect their investment and rights as a shareholder. However, the same laws which protect your rights as a shareholder also establish a process to reasonably request and gain access to financial records.
Majority stakeholders often deny the rights of other shareholders, especially when they become defensive over the distribution of dividends, corporate decision making or questions regarding the books. This is part human nature, part red flag warning signal.
If you are concerned about protecting your rights and financial interests as a shareholder, have been denied access to inspect the accounting, financial reports or corporate documents of your company we invite you to review our podcast Episode 14 – Shareholders’ Rights and Disputes, the strong recommendations of our clients and contact the Watkins Firm or call 858-535-1511 for a complimentary consultation today.
