QUESTION
As a minority shareholder, do I have to sue to force majority shareholders to give me documents containing bylaws?
Asked on Feb 13th, 2013 on Business Law - California
More details to this question:
I own 30% while the other two own a combined 70% in an S Corp. Due to drama, they are very hostile and have aggressively been harassing me in many ways including saying I don't own "sh*t" in the company. I don't know my rights and they will not give me the original documents containing the bylaws. Is there any legal way to force them to provide them? A lawyer says I need to sue and in the discovery, I will request them. Sue? For what? You can leave the reason blank in a lawsuit now?
1 ANSWER
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A shareholder has a right under California law to see the corporate books of the corporation, including bylaws. Failure to give you access is a breach of fiduciary duty. That is what you sue for. It is very serious when the 70% owners tell you you are not a shareholder. You would also sue for a declaration that you are a shareholder. Are you invited to annual shareholder meetings? Are you getting a K-1 for your annual tax returns? By the way, the identity of shareholders would not be located in the bylaws, but probably in the first minutes of the corporation. I am currently litigating for a client whose partners announced one day that he was not a shareholder. These are not simple cases.
Answered on Feb 19th, 2013 at 6:03 PM