What Corporate Records Are Shareholders Entitled To?

A limited amount for most in Georgia, unless they can show a purpose for more

By Doug Mentes, Esq. | Last updated on January 27, 2023

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There may be nothing more important for a corporate shareholder than having the ability to evaluate the financial condition of the corporation they’ve invested in. But to perform that evaluation, the shareholder needs information. Fortunately, under Georgia law, shareholders are entitled to records and other information from the corporations they invest in—within limits. If shareholders want the right of inspection to more expansive corporate information, they will have to demonstrate a need for that broader information. These rules apply to all Georgia corporations but are particularly important to close corporations and those corporations not publicly traded that therefore don’t fall under federal SEC protections.

What Records Must Georgia Corporations Permit Inspection Of?

Georgia law designates two tiers of corporate records of shareholder’s right to inspect. Under the first tier, limited information is available to any shareholder, regardless of reason. These records consist of the corporation’s:
  • Articles of incorporation
  • Updated bylaws
  • Resolutions adopted by either shareholders or the board of directors that increase or decrease the number of directors or change the classification of directors
  • Resolutions adopted by its board of directors creating one or more classes or series of shares, and fixing their relative rights, preferences, and limitations, if shares issued pursuant to those resolutions are outstanding
  • Meeting minutes of all shareholders’ meetings, executed waivers of notice of meetings, and executed consents, delivered in writing or by electronic transmission, evidencing all action taken by shareholders without a meeting, for the past three years
  • Communications in writing or by electronic transmission to shareholders generally within the past three years, including the financial statements furnished for the past three years required by Georgia law
  • Names and business addresses of its current directors and officers
  • Most recent annual registration with the Secretary of State
Of importance to most shareholders is the corporation’s annual financial statement. That statement must meet requirements under Georgia law. To satisfy that requirement, the statement must include a balance sheet showing in reasonable detail the financial condition of the corporation as of the close of its fiscal year, and a profit and loss statement showing the results of its operation during its fiscal year.

What if a Shareholder Wants Further Records?

A second tier of records is available to shareholders of Georgia corporations, but those shareholders of a corporation must demonstrate the need for that information. Those records may include:
  • Excerpts from minutes of any meeting of the board of directors
  • Records of any action of a committee of the board of directors while acting in place of the board of directors on behalf of the corporation
  • Minutes of any meeting of the shareholders, and records of action taken by the shareholders or board of directors without a meeting
  • Further accounting records of the corporation
  • A list of all shareholders
To receive this information, shareholders must make a formal written request, and be able to demonstrate the following:
  • The demand for records is made in good faith for a proper purpose that is reasonably relevant to the shareholder’s legitimate interest as a shareholder
  • The shareholder describes with reasonable particularity the shareholder’s purpose and the records desired to be inspected
  • The records are directly connected with the shareholder’s purpose
  • The records are to be used for the stated purpose
However, corporations can limit the availability of these wider range of records within their bylaws to shareholders with at least a two percent interest in the company.

What Is a Proper Purpose for Corporate Records?

Georgia case law contains some examples of what a proper purpose is to obtain these wider range of records, which include:
  • Determining the financial condition of the corporation
  • Ascertaining the legality of a shareholder’s meeting
  • Assessing whether assets were properly managed by a corporation
  • Determining the value of a decedent’s shares for estate tax purposes
Majority shareholders restricting information to minority shareholders is a common issue for corporations. If a corporation does not meet its statutory duties to allow inspection, the matter may need to be resolved in court, and often these matters uncover larger problems that result in further shareholder claims against the corporation or directors. To stave off those sorts of issues, shareholders and corporate decision-makers should consult early on with an experienced Georgia business attorney or corporate finance attorney. For more information about this area, read our securities and corporate finance law overview.

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