#11698 - Shareholder Information Rights And Record Of Ownership - Business Association (Duke Cox)

Shareholders have a right of access to inspect corporation’s books and records if they allege a proper purpose

1. SH must be factually capable of having the alleged purpose

2. The right is restricted to the corporation in which the SH holds shares

§ 16.02

1. NOTICE ONLY—NO ARTICULATION OF PURPOSE NECESSARY.

   1. (a) A shareholder of a corporation is entitled to inspect and copy, during regular business hours at the corporation’s principle office, any of the records of the corporation described in section 16.01(e) if he gives the corporation written notice of his demand at least five business days before the date on which he wishes to inspect and copy:

   2. § 16.01(e) (1) articles of incorporation, amendments, notices to shareholders, (2) bylaws and amendments, (3) board resolutions creating shares or modifying shareholder rights, (4) minutes of shareholder meetings, (5) all written communications to shareholders, (6) a list of directors and officers, (7) most recent annual report.

2. Requires Notice + AN ARTICULATION OF PURPOSE

   1. (c) A shareholder of a corporation is entitled to inspect and copy, during regular business hours at a reasonable location specified by the corporation, any of the following records of the corporation if the shareholder meets the requirements of subsection (d) and gives the corporation written notice of his demand at least five business days before the date on which he wishes to inspect and copy:

   2. (1) excerpts from minutes of any meeting of the board of directors or shareholders, records of board committee action, records of shareholder or board action without a meeting (to extent not subject to 160.2(a) inspection), (2) accounting records of the corporation, (3) the record of shareholders.

   3. § 16.02(d) A Shareholder may inspect and copy the records described in subsection (c) only if: (10 his demand is made in good faith and for a proper purpose; (2) he describes with reasonable particularity his purpose and the records; and (3) the records are directly connected with his purpose

Del.

1. Pillsbury: SH list can be obtained without articulation of purpose, so long as the court can come with a hypothetical purpose (need to communicate with SH)

2. However, the corporation is not required to manufacture such items for the convenience of the stockholder if the corporation does not already have access to them.

   1. A corporation can choose not to keep a NOBO list

Nomenclature

1. Beneficial owners, or “Street name” holders are those shareholders who hold their shares through a broker or bank custodian. The shares are technically “owned” by the broker, bank or other intermediary

2. Registered owners (or record holders), refer to the banks or brokers above who technically “owned” the shares.

3. An objecting beneficial owner (OBO) instructs the financial intermediary who holds the securities to not provide the owner's name and personal information to the company that issued the securities.

4. Non objecting beneficial owner (NOBO) is a beneficial ("street") security holder who has not objected to his or her name being released to the Corporation, if the Corporation so requests.

Distributing Proxy Materials to Beneficial Owners: Depository Trust Company (DTC)

1. Most broker-dealers and banks deposit securities with, and hold those securities through, DTC

2. DTC’s nominee, Cede & Co., appears in an issuer’s stock records as the sole registered owner of all securities deposited at DTC

3. Issuer establishes date of shareholder meeting and announces it to DTC

4. DTC executes an “omnibus proxy” and transfers its right to vote the shares held on deposit to its depositors

5. Broker dealer and bank participants in DTC obtain the right to vote on the shares they hold through DTC

Broadridge

1. A firm that distributes proxy materials and voting instructions for clients

2. Banks and brokers first transfer to Broadridge the proxy authority they receive from DTC via the Omnibus Proxy

3. On behalf of the...