A corporation must keep minutes of the proceedings of its shareholders, board of directors, and committees of directors. The minutes should be in writing. Some states allow minutes to be kept in forms other than writing, provided they can be converted into written form within a reasonable time. However, it is always best to keep a duplicate copy or at least one written copy. Accidents can easily erase other types of media.
Records of Shareholders
The corporation must also keep a record of its shareholders, including their names and addresses, and the number, class and series of shares owned. This can be kept at the registered office, principal place of business, or office of its stock transfer agent (if any).
Examination of Records
Any shareholder of a corporation has the right to examine and copy the corporation's books and records, after giving proper notice before the date on which he or she wishes to inspect and copy. The shareholder must have a good faith reason to inspect. He or she must describe his or her purpose, the records he or she wishes to inspect, and how the purpose is related to the records.
The shareholder may have his or her attorney or agent examine the records, and may receive photocopies of the records. The corporation may charge a reasonable fee for making photocopies. If the records are not in written form, the corporation must convert them to written form. Customarily, the corporation must bear the cost of converting all of the following to written form:
- The articles of incorporation and any amendments
- The bylaws and any amendments
- Resolutions by the board of directors creating different rights in the stock
- Minutes of all shareholders' meetings
- Records of any action taken by the shareholders without a meeting for the past three years
- Written communications to all shareholders
- Names and addresses of all officers and directors
- The most recent report filed with the state corporate office.
The shareholder may be required to pay for converting any other records to writing.
If the corporation refuses to allow a shareholder to examine the records, most states allow the shareholder to seek an order from the appropriate state court. In such a case, the corporation would normally have to pay the shareholder's costs and attorney's fees.
Most states require a corporation to furnish its shareholders with financial statements. This includes an end-of-the-year balance sheet and yearly income and cash flow statements, unless exempted by shareholder resolution.