New Hampshire Bar Association
About the Bar
For Members
For the Public
Legal Links
Publications
Newsroom
Online Store
Vendor Directory
NH Bar Foundation
Judicial Branch
NHMCLE

Call NHLAP at any time. Your call will be personally answered, or your message promptly returned: (603) 545-8967; (877) 224-6060; info@lapnh.org.

Trust your transactions to the only payment solution recommended by over 50 bar associations.
New Hampshire Bar Association
Lawyer Referral Service Law Related Education NHBA CLE NHBA Insurance Agency

Member Login
username and password

Bar Journal - September 1, 2003

Shareholders' Inspection Rights: Current Law and Proposed Legislation

By:

House Bill 815 (HB 815), introduced in the last session of the New Hampshire legislature, would, among other things, amend RSA 293-A:16.04,1 the Business Corporation law section governing disputes over a shareholder's right to inspect corporate records.2

Under current law, a shareholder, in good faith and with a proper purpose, may demand to inspect a corporation's books and records, and, should the corporation not comply, the shareholder may bring an action in Superior Court. HB 815 would shift original jurisdiction over such disputes to the Secretary of State's office.3

This change makes sense: New Hampshire investors and corporations deserve predictability and prompt decisions by those who know the relevant business law and understand the practical effects of a decision. The Bureau of Securities Regulation, in the secretary of state's office, is uniquely qualified to serve as the arbiter for such disputes and is best suited to review these matters first.

I will, in this article, examine the requirements and burdens a shareholder faces in demanding to inspect a corporation's books and records. To do so, I will compare New Hampshire's statute and sparse case law with Delaware's statute and comparatively robust case law, and I will then comment on HB 815.

1. What Books Must a Corporation Maintain?

All states require a corporation to maintain certain books and records. Those required to be maintained under New Hampshire's statute are: 1) minutes of all shareholder and board of director meetings4; 2) all actions taken by shareholders or board of directors without a meeting5; 3) all actions taken by a board committee; 4) appropriate accounting records; 5) a list of shareholders in a form that permits preparation, after the Record Date, of a final list to be used to send notice of a shareholder meeting6; 6) all articles and restated articles of incorporation; 7) bylaws or restated bylaws and any amendments thereto; 8) resolutions adopted by the board creating different series of stock or defining directors' rights and duties; 9) written communications to shareholders7; 10) a list of directors and their addresses; and 11) the most recent annual report.8

Conflicts arise most often over inspection (originally and at times still a common law right)9 of shareholder lists and accounting records.

New Hampshire has two statutes providing for shareholder access to books and records, one for shareholder lists just prior to or during a shareholder meeting,10 and the other for all inspections (including of shareholder lists) at other times.11 Because inspection disputes often arise in situations partly governed by federal law I address federal preemption before examining the New Hampshire statutory scheme.

2. State vs. Federal Law

It is common in inspection requests that a shareholder will seek to obtain a corporation's shareholder list to "communicate with fellow shareholders." While much communication with shareholders is regulated by federal law on proxy solicitation or tender offers, state law governs acquisition and inspection of shareholder lists and is not preempted by federal law where both bodies of law can be complied with. Yet federal rules intended to aid shareholder democracy and to prevent false or misleading statements from reaching shareholders12 can complicate inspection disputes.

Under the Securities Exchange Act of 1934 (the "Exchange Act"), it "shall be unlawful for any person [in contravention of federal proxy rules] to solicit any proxy ... in respect of any security,"13 and claims of federal securities law violations fall under federal jurisdiction.14 Must a shareholder, then, who seeks access to a corporation's shareholder list follow federal proxy rules or state law? Shareholders often must follow both, selecting either federal or state procedures to access the list, but at all times assuring compliance with federal proxy rules. Wood, Walker & Co. v. Evans15 held that the proxy rules do not preempt relevant state law in access to shareholders lists16 where state law does not impede the congressional purpose and there is no conflict of policy or intent.17 The same holds true for federal statues and regulation regarding tender offers.18

The Securities and Exchange Commission similarly takes the position that a corporation's "duties regarding disclosure of the [corporation's shareholder] list are governed by the law of the state."19

In sum, a shareholder may acquire access to a corporation's shareholder lists under either state or federal law, although subsequent communication between shareholders is governed by federal law.

3. New Hampshire's Statutory Scheme

As noted earlier, New Hampshire statute provides in one section for shareholder access to shareholder lists just prior to or during a shareholder meeting, and in a more general section for inspection of books and records (including shareholder lists) at any time.20 At least under the latter provision the inspection right extends to beneficial owners whose shares may be held in a voting trust or by a nominee.21

a. Prior to an Annual Meeting: RSA 293-A:7.20

The best opportunity for a shareholder to inspect a corporation's shareholder list is prior to or during an annual meeting, when the list should be most accurate and readily available for review. Although some requirements must be complied with, they are largely mechanical and easily addressed.

A corporation is required to hold regular annual shareholder meetings at the time stated or fixed in its bylaws.22 A valid annual shareholder meeting requires notice,23 but such notice is required only for shareholders eligible to vote unless otherwise specified in the Articles of Incorporation.24 A "Record Date" must be set by the corporation to determine the identity of its shareholders and their shareholdings25 and thereby to determine which shareholders are eligible to vote.26 The Record Date can be no more then 70 days prior to a meeting.27

After setting the Record Date, the corporation prepares the shareholder list,28 which is to be available for shareholder inspection beginning two business days after notice of the annual meeting is given29 and continuing through the meeting itself.30 The list must be kept at the location of the meeting during normal business hours.31 The list may be inspected on written demand, but to copy it the shareholder must also meet the good faith and proper purpose requirements.32

The written demand and proper purpose requirements are typically not difficult to satisfy, the policy underlying such a liberal inspection regime seeming to be the advancement of communication among shareholders to discuss their mutual economic interest.

b. The Problem of the Special Meeting

A corporation must have a special meeting on the written demand of a minimum of 10 percent of the shareholders, and that demand must state the purpose of the meeting.33 Following determination that 10 percent of the shareholders as of the Record Date signed the demand, the same procedural rules apply as in the case of the annual meeting.

This procedure, however, presents a threshold obstacle. How is a shareholder to contact other shareholders to sign the demand for a special meeting when the shareholder-in all but the smallest corporations-would likely not know the required 10 percent? In reporting companies, shareholders can review the corporation's SEC filings to find shareholders who have holdings large enough to require disclosure.34 If the company is not a reporting company, however, or lacks sufficiently large shareholdings, a shareholder under New Hampshire law can still inspect and copy a shareholder list by making a demand "in good faith" and stating a "proper purpose" for the inspection.35

c. Other Inspection Demands: the Proper Purpose Requirement

Defining "proper purpose" is key to a demand for a shareholder to copy the shareholder lists or to inspect any but the most basic records.36

In the only reported New Hampshire case of a shareholder demanding access to books and records, Davey v. Unitil,37 the court sought to determine what constitutes a "proper purpose," which is not defined in the statute.38 Understanding that the term was derived from the Model Business Corporation Act, an American Bar Association model drafted to unify state corporate laws, the New Hampshire supreme court turned to other states for guidance and examined cases from Delaware,39 Ohio,40 New York,41 Connecticut,42 Massachusetts43 and Wisconsin.44

Delaware's definition of proper purpose is,

A shareholder's purpose in obtaining the list of shareholders can be his own interest, profit or advantage and can be to place before his fellow shareholders a proposition disapproved by the company management which he believes to be in their interest as well as his own. His purpose cannot be to use the list in a capricious, irresponsible or hostile way or in such a manner as to depreciate the assets of the company and the value of the stock of the other shareholders.45

The Davey v. Unitil court held that the proper focus of analysis should be on whether the requesting shareholder has an independent, proper interest in obtaining the list.46 A "proper purpose" is thus one that (1) relates to a legitimate interest of the shareholder and (2), is not harmful to the corporation or its shareholders.47 Courts may consider who had the idea to obtain the list, who drafted the demand letter, who will contact shareholders and control the information presented to them, and who will pay the costs.48 Davey v. Unitil, however, does not tell us what happens when a shareholder has more then one purpose or demands inspection of more than the shareholder list, or how detailed the demand letter must be.

4. Delaware's Approach

To gain some insight into the questions left unanswered by Davey v. Unitil and inasmuch as the New Hampshire court itself looked primarily to Delaware law to decide Davey, it seems reasonable to continue to look to Delaware's robust business case law.

a. The General Framework

Delaware's corporate books and records inspection provisions are codified under Sections 219 and 220 of the General Corporation Law.49 Section 219 gives an unqualified right to inspect and copy the shareholder list in connection with a shareholder meeting. Section 220 covers all other inspections and provides that the burden is on a corporation to establish that a shareholder has an improper purpose when the shareholder list is requested,50 but that the burden shifts when a shareholder seeks to examine any other corporate records.51 In contrast to New Hampshire, statutory inspection rights in Delaware are confined to shareholders of record.52

Delaware statute defines a proper purpose as "a purpose reasonably related to such person's interest as a stockholder,"53 and Delaware courts have held the following purposes to be proper; (1) to perform a valuation of a closely held corporation;54 (2) to launch a proxy contest to unseat a board of directors; (3) to communicate with other shareholders about a corporate concern;55 and (4) to conduct an investigation prior to filing a derivative action to uncover waste and mismanagement.56 The Chancery Court has given as other examples of proper purpose: 1) to determine the value of a corporation's stock interest; 2) to ascertain the corporation's financial condition to enable a shareholder to vote and otherwise exercise his or her rights in an informed manner; 3) to determine the reason for nonpayment of dividends; and 4) to determine whether there are sufficient funds available to pay dividends.57

When a shareholder states more than one purpose in demanding inspection, or when he or she seeks to inspect books and records other than the corporate stock ledger or the shareholder list, the focus will be on the shareholder's primary purpose, and any secondary purpose, whether proper or not, is usually irrelevant.58

b. Communications with Other Shareholders

Communication with other shareholders must concern a corporate matter. In the Vietnam-era Minnesota case of Pillsbury v. Honeywell,59 a shareholder objected that Honeywell was manufacturing materiel for the war effort. He demanded the shareholder list with the purpose of communicating the propriety of munitions manufacturing, but Honeywell prevailed in denying his request on the ground that communicating his political or social beliefs was not germane to the economic interest of either the shareholders or the corporation. The shareholder might more successfully have argued that munitions production would harm long term good will, that reliance on war production as the war was winding up was an unsound policy, or that the better policy would be to concentrate on other products.60

Arguments so framed have become successful in Delaware. In Conservative Caucus Research, Analysis & Educ. Foundation, Inc. v. Chevron,61 the demanding shareholder's proper purpose was to communicate with other shareholders about the economic risks of doing business in Angola. The shareholder's purpose to seek support for a resolution that proposed the corporation terminate all business in Angola unless the government "abandons the communist system, initiates unconditional negotiations with certain political organizations which oppose the current government of Angola and do other similar political acts"62 was determined by the Chancery Court to be proper. The shareholder's argument demonstrated the unsound economics of doing business in an unstable country and the likely long term outcome of a continued presence in Angola. In so holding, the Delaware court found Pillsbury unpersuasive.

c. Mismanagement and Waste

To commence a derivative action against a Delaware corporation for mismanagement or waste, a plaintiff shareholder must plead his or her case with particularity and demonstrate "some evidence of possible mismanagement as would warrant further investigation of the matter."63 A subjective belief that mismanagement has occurred is not enough to compel inspection of corporate records,64 nor can the shareholder be engaged in a "witch hunt" or "fishing expedition."65 The heightened pleading requirement, then, will not be satisfied by conclusory statements or mere notice pleading,66 but must be based on, for example, media reports67 or inspection of the corporation's books and records.68

d. Confidential Information

A Delaware shareholder may demand inspection of confidential information such as client, supplier, or employee lists, though he or she may be required to sign a confidentiality agreement.69 Documents covered by the attorney-client privilege and work-product doctrine where the corporation is the client do not, however, fall within the inspection right.70

The names of those holding shares through a fiduciary, for example in a trust or with a broker in "street name," are confidential for many purposes, but they are usually know to the corporation. Delaware provides a mechanism for allowing such non-record shareholders to participate in corporate communications through a Non-objecting shareholder list, or "NOBO." A NOBO "is a list of beneficial owners of a corporation's stock who do not object to the disclosure of their name and address by the registered owner of the stock to the corporation itself for the limited purpose of facilitating direct communication on corporate matters."71 Use of a NOBO must be for the exclusive purposes of corporate communication.72 The NOBO list is subject to inspection because a demanding shareholder is "entitled to the same lists ... available to the corporation."73

5. New Hampshire and Delaware Compared

New Hampshire takes a more liberal view than Delaware of who has standing as a shareholder for an inspection demand. A shareholder in New Hampshire is defined as "the person in whose name shares are registered in the records of a corporation or the beneficial owner of shares to the extent of the rights granted by a nominee certificate on file with a corporation."74

Both states give a qualified shareholder the right of access to the shareholder list in connection with a meeting. In Delaware this right is unqualified, but in New Hampshire the list may not be copied (as opposed to inspected) without a proper purpose.75 Delaware's 219 has no special provision for judicial enforcement, but if access is denied in New Hampshire the Superior Court may postpone the meeting and "summarily order inspection and copying at the corporations' expense."76 A postponement may be crucial as unavailability of the shareholders' list "does not affect the validity of action taken at the meeting."77 In contrast Delaware's 219(c) provides that directors who willfully neglect or refuse to produce the list are ineligible for election to any office at that meeting.

New Hampshire affords shareholders the absolute right to inspect some of a corporation's basic books and records: articles of incorporation, bylaws, resolutions creating multiple classes of stock, minutes of shareholder meetings,78 written communications to shareholders,79 names and business addresses of current directors and officers, and the most recent annual report.80 These records are listed in RSA 293-A:16.01(e) of the New Hampshire Act, and according to 16.02(a) must be made available on 5 business days' notice without regard to the shareholder's purpose. If items on this list are not made available, the Superior Court "may summarily order inspection and copying of the records demanded at the corporation's expense."81 Delaware's 220has no such category-proper purpose is required for all inspections except of shareholder lists in connection with a meeting. While the Delaware Chancery Court has jurisdiction to summarily compel inspection, there is no mention in 220 of it doing so at the corporation's expense.

In New Hampshire directors or shareholders minutes, accounting records, or the record of shareholders (other than in connection with a meeting) are in a separate class under 16.02(b). With respect to these a shareholder must describe "with reasonable particularity his purpose and the records he wishes to inspect," and those records must be directly connected to his purpose.82 The Delaware law has no express particularity requirement.83 For demands in this category the New Hampshire Superior Court must allow the corporation "a reasonable time," is not specially authorized to make summary orders, and must presumably operate according to ordinary rules, albeit "on an expedited basis."84 Delaware would require corporate action within 5 days and applies its summary jurisdiction to all inspection requests.

The remaining difference between the states is, of course, the depth of case law. New Hampshire has one case on proper purpose, Delaware has many. We lack a decision regarding multiple purposes, Delaware does not. We have never ruled on access to NOBO lists. We have no decisions about key terms qualifying the right to inspect or copy some of the most sensitive records-reasonable particularity, directly connected, reasonable time. Nor are we likely to develop such case law because, in contrast with Delaware, the most controversial matters in New Hampshire are outside the court's summary jurisdiction. Only a rare inspection dispute will be worth taking the relatively slow path marked out in Davey v. Unitil. In Davey the demand was made in May of 1989, the first ruling on a request for a preliminary injunction was on July 21, 1989, and the Plaintiff obtained his first relief after the Supreme Court's decision on January 28, 1991.85 The precipitating tender offer was presumably long past.

6. Conclusion

New Hampshire has a more complex statute on inspection rights than Delaware, with essentially no judicial gloss. Our courts are not equipped for quick response to corporate records inspection disputes. To remedy this, House Bill 815 would vest initial jurisdiction in the Secretary of State's office while enabling subsequent judicial review.86 The Secretary of State's office is well positioned, through the Bureau of Securities Regulations, to inform investors and corporations efficiently of requirements and to provide consistent and timely decisions. The Bureau has daily communication with New Hampshire's business community and thus would be able to refine and disseminate a definition of "proper purpose," permitting shareholders and corporations to structure their affairs accordingly.

The Bureau of Securities Regulation would be able to issue an opinion, a no-action letter, or an administrative order quickly as the need arises, and such quick turn around time is an element the business community especially requires and appreciates. Indeed, in most inspection disputes speedy decision by a sophisticated, specialized fact finder may be the only practical way to afford shareholders or management meaningful justice.

Having corporate records inspection disputes heard in the first instance by the Bureau of Securities Regulation is a good idea, and the part of House Bill 815 so providing should be adopted.

APPENDIX

House Bill 815

AN ACT relative to the duties of corporate directors and the procedure for shareholder inspection of records under the New Hampshire Business Corporation Act.

Be it Enacted by the Senate and House of Representatives in General Court convened:

  1. New Hampshire Business Corporation Act; Standards of Conduct for Directors; Consideration of Best Interests of Corporation and Shareholders. Amend RSA 293-A:8.30 (d) to read as follows: [Omitted]
  2. New Hampshire Business Corporation Act; Shareholder Inspection of Records; Ordered by Secretary of State. Amend RSA 283-A:16.04 to read as follows:
  3. 293-A:16.04 Inspection Ordered by Secretary of State.

    1. If a corporation does not allow a shareholder who complies with RSA 293-A:16.02(a) to inspect and copy any records required by that subsection to be available for inspection, the secretary of state or any person designated by the secretary of state may summarily order inspection and copying of the records demanded at the corporation's expense upon application of the shareholder.
    2. If a corporation does not within a reasonable time allow a shareholder to inspect and copy any other record, the shareholder who complies with RSA 293-A:16.02(b) and
    3. may apply to the secretary of state or any person designated by the secretary of state for an order to permit inspection and copying of the records demanded. The secretary of state shall dispose of an application under this subsection on an expedited basis.
    4. If the secretary of state orders inspection and copying of the records demanded, he or she shall also order the corporation to pay the shareholder's costs, including reasonable counsel fees, incurred to obtain the order unless the corporation proves that it refused inspection in good faith because it had a reasonable basis for doubt about the right of the shareholder to inspect the records demanded.
    5. If the secretary of state orders inspection and copying of the records demanded, he or she may impose reasonable restrictions on the use or distribution of the records by the demanding shareholder.
    6. Any order or refusal to grant an order by the secretary of state under this subsection may be appealed to the superior court of the county where the corporation's principal office, or, if none in this state, its registered office, is located.

ENDNOTES

1.

See Appendix for full text.

2.

The bill would also amend directors' duties under RSA 293-A:8:30, a topic beyond the scope of this article.

3.

Perhaps by oversight, HB 815 does not transfer the Superior Court's jurisdiction under RSA 293-A:7.20 over disputes about inspection and copying of shareholder lists in connection with a meeting. The similarity to cases under 16.04 suggests these cases should also go to the Bureau of Securities.

4.

RSA 293-A:16.01 (2002) governs all these record requirements except as noted.

5.

Records for actions taken by shareholders without a meeting must be maintained for three years. See RSA 293-A:16.01(e)(4) (2002).

6.

RSA 293-A:7.20 (2002).

7.

Written communications with shareholders must be maintained for 3 years. See RSA 293-A:16.01(e)(5)(2002).

8.

RSA 293-A16.01(e)(7) (2002)

9.

See Scattered Corp. v. Chicago Stock Exch., Inc., 671 A.2d 874 (Del. Ch. 1994) (members of nonstock corporations must resort to the antiquated common law procedure that was largely (but not entirely) supplanted by section 220.)

10.

RSA 293-A:7.20 (2002).

11.

RSA 293-A:16.02 (2002).

12.

For example, 17 C.F.R. 240.14a-9(2002) on proxies.

13.

15 U.S.C. 78n(a) (2002).

14.

See Hass v. Weiboldt Stores, Inc., 725 F.2d 71 (7th Cir, 1984).

15.

300 F.Supp 171, 172 (D.Col. 1969), aff'd 461 F.2d 852 (10th Cir. 1972).

16.

Id. at 172-173.

17.

Id. at 173.

18.

Burlington Industries Inc. v. C.H. Masland & Sons, 1986 U.S. Dist. LEXIS 24291 (E.D.Pa. June 12, 1986) (Williams Act and regulations thereunder do not preempt Pennsylvania books and records statue); Baron v. Strawbridge & Clothier, 1986 U.S. Dist. LEXIS 26018 (E.D. Pa. May 1, 1986)

19.

Wood, Walker & Co. v. Evans, 300 F.Supp 171, 172 (D.Col. 1969), aff'd 461 F.2d 852 (10th Cir. 1972).

20.

Supra notes 10-11.

21.

RSA 293-A:16.02(f) (2002).

22.

RSA 293-A:7.01(a) (2002).

23.

RSA 293-A:7.05(a) (2002) (The corporation must notify the shareholders eligible to vote no fewer then ten and no greater then sixty days before the meeting date, detailing when and where the meeting is to be held. Notice of an annual meeting need not contain a description of the meeting purpose. See RSA 293-A:7.05(b)(2002))

24.

RSA 293-A:7.05(a) (2002).

25.

RSA 293-A:1.40(19) (2002).

26.

RSA 293-A:7.07(a) (2002).

27.

RSA 293-A:7.07(b) (2002).

28.

RSA 293-A:7:20(a) (2002).

29.

RSA 293-A:7.20(b) (2002).

30.

RSA 293-A:7.20(c) (2002).

31.

Id.

32.

RSA 293-A:7.20(b) (2002), incorporating by reference the requirements of RSA 293-A:16.02(c)(1).

33.

RSA 293-A:7.02(a)(2) (2002). The Record Date for determining which shareholders may be included in this ten percent is the date the first shareholder signs the demand. RSA 293-A:7.02(b).

34.

Form 13D discloses beneficial ownership of certain registered equity securities. Any person or group of persons who acquire a beneficial ownership of more than 5% of a class of registered equity securities of certain issuers must file a Schedule13D reporting such acquisition together with certain other information within ten days after such acquisition.

35.

RSA 293-A:16.01 (2002).

36.

RSA 29a-A:16.02(c)(1) (2002).

37.

Davey v. Unitil, 133 N.H. 833 (1991). The case was decided under a previous version of the shareholder inspection statute which required either one be a shareholder of record for greater then six months or own greater then five percent of the company. RSA 293-A:52 (1991) (see complete text in Attachment A).

38.

See RSA 293-A:1.40 (2002).

39.

CM & M Group, Inc. v. Carroll, 453 A.2d 788 (Del. 1982).

40.

Celian Mut. Ins. Co. v. American Druggist Ins. Co., 52 Ohio App.2d 304, 969 N.E.2d 1066 (Ct. App. 1977).

41.

See Crane Co. v. Anaconda Co. , 39 N.Y.2d 14, 382 N.Y.S.2d 707, 346 N.E.2d 507 (1976).

42.

DeRosa v. Terry Steam Turbine Co., 214 A.2d 684 (Conn. Super. St. 1965).

43.

Hanrahan v. Puget Sound Power & Light Co., 332 Mass. 586, 126 N.E.2d 499 (1955).

44.

White v. Jacobsen Manufacturing Co., 293 F.Supp 1358 (E.D. Wis. 1968).

45.

Davey v. Unitil, 133 N.H. 833, 837 (1991).(Quoting CM & M Group v. Carroll, 453 A.2d 788, 792 (Del. 1982).

46.

Id. at 840.

47.

Id.

48.

Id. at 839.

49.

Del Corp. Code 219, 220 (2002).

50.

Del. Corp. Code 220(c) (2002). See Mite Corp. v. Hel-col,. Del. Ch. 256 A.2d 855 (1969) ("Once the plaintiff has complied with form and manner of making demand for inspection, then under this section the burden of proof is upon the defendant to establish that the inspection sought is for an improper purpose").

51.

Id.

52.

Rainbow Nav., Inc v. Pan Ocean Nav. Inc. Del., 535 A.2d 1357 (1987); State ex rel. Crowder v. Sperry Corp., 41 Del. 84, 15 A.2d 661 (De.l Super. 1940)(holding a stockholder who placed his stock into a voting trust was beneficial owner, not holder of record, and not entitled to exercise inspection rights).

53.

Del. Corp. Code 220(c) (2002).

54.

State ex rel. Waldmand v. Miller-Wohl Co., 28 A.2d 148 (Del. 1942); But See BBC Acquisition Corp. v. Durr-Fillauer Medical Inc., 623 A.2d 85 (Del. Ch. 1992)(denying inspection since the shareholder bought only a nominal amount of stock to use as a legal vehicle in its quest for nonpublic information.)

55.

Conservative Caucus Research, Analysis 7 Educ. Foundation, Inc. v. Chevron Corp., Del Ch. 525 A.2d 569 (1987).

56.

Nodana Petroleum Corp. v. State, Del Supr., 123 A.2d 243, 246 (1956).

57.

Helnsmand Mgt Servs., Inc. v. A & S Consultants, Inc., Del Ch., 525 A.2d 160 (1987).

58.

CM & M Group, Inc. v. Carroll, Del.Supr., 453 A.2d 788, 792 (1982) Helmsman Management Services, Inc. v. A & S Consultants, Inc., Del.Ch., 525 A.2d 160, 164 (1987) (emphasis supplied). See also Ostrow v. Bonney Forge Corp., Del.Ch., C.A. No. 13270, Allen, C., mem. op., 1994 WL 114807 (April 6, 1994) ("Once a shareholder has established a proper purpose for the demanded inspection, any secondary purpose he or she may have is generally considered to be irrelevant.... The primary purpose may not, however, be adverse to the corporation's best interests." (emphasis supplied) (citing CM & M Group, Inc. v. Carroll, Del. Supr., 453 A.2d 788, 792 (1982); Skoglund v. Ormand Indus., Inc., Del.Ch., 372 A.2d 204, 207 (1976)).

59.

State ex rel. Pillsbury v. Honeywell, Inc., 291 Minn. 322, 191 N.W.2d 406 (1971).

60.

Note, Corporations-Shareholder Suits-Shareholder May Inspect Corporate Records Only for Proper Purpose Germane to His Economic Interest as Shareholder, Not Merely to Further His own Social and Political Beliefs, 25 Vand. L. Rev. 425, 432 (March 1972).

61.

Corp., Del Ch. 525 A.2d 569 (1987).

62.

Id. at 571.

63.

Helmsman Management Servs., Inc. v. A & S Consultants, Inc., Del.Ch., 525 A.2d 160, 166 (1987).

64.

See Thomas & Betts Corp. v. Leviton Mfg. Co., Del Supr., 681 A.2d 1026 (1996)(when the stated purpose is investigation of investigation is waste and mismanagement the shareholder has a greater then normal burden.). See also Everett v. Hollywood Park, Inc., Del.Ch., C.A. No. 14556, Jacobs, V.C., mem. op., 1996 WL 32171 (Jan. 19, 1996) ("Where, ...the plaintiff's purpose is to investigate possible waste or mismanagement, she must also adduce evidence of potential mismanagement sufficient to support her suspicions and to warrant going forward").

65.

Miller v. Loft, Inc., 34 Del. 538, 156 A 170 (1931).

66.

Chancery Court Rule 23.1

67.

See Rales v. Blasband, Del Supr., 634 A.2d 927, 935 n.10 (1993).

68.

Find a better case then Grimes v. Donald, 673 A.2d 1207, 1217 (1996)(overruled on other grounds)

69.

Stroud v. Grace, Del Supr., 606 A.2d 75 (1992). Delaware 220 refers only to "books and records." NH RSA 293-A:16.02 lists categories of records, none of which clearly includes such items, but they are perhaps accessible under the common law. See 16.02(e)(2).

70.

Saito v. McKesson HBOC, Inc., Del Ch., 2002 WL 31657622 (2002) (holding that work product protected documents produced for the audit committee by an investing law firm).

71.

RB Associates of New Jersey L.P. v. Gillette Company, 1988 Del. Ch. LEXIS 40.

72.

17 C.F.R. 240.14a-13(b)(2) (2003)

73.

Hatleigh Copr. v. Lane Bryant,Inc., Del. Ch. 428 A.2d 350, 354-355 (1981).

74.

See RSA 293-A:1.40(21)(2002) and RSA 293-A:16.02(f)(2002) (emphasis added).

75.

RSA 293-A:7.20(b)(2002), incorporating by reference the requirements of RSA 293-A:16.02(c)(1).

76.

RSA 293-A:7.20(d) (2002).

77.

RSA 293-A:7.20(e) (2002).

78.

For the past three years

79.

For the past three years including financial statements furnished.

80.

See RSA 293-A:16.01(2002).

81.

RSA 293-A:16.04(a) (2002).

82.

RSA 293-A:16.02(c)(2002).

83.

Del. Corp. Code 220(b)(2002).

84.

RSA 293-A:16.04(b)(2002).

85.

133 N.H. 833 (1991).

86.

Judicial oversight is built into HB 815. However, the court will not set aside the Bureau's order except for errors of law, Appeal of Fred Fuller Oil Co., 144 N.H. 607, 609, 744 A.2d 1141 (2000), or if the court determined by a preponderance of the evidence that such an order is unjust or unreasonable. Appeal of Vijay Basani, 817 A.2d 957 (2002). The Bureau's findings of fact in determinations of proper purpose will be deemed prima facie lawful and reasonable, RSA 541:13 (2002), although the presumption may be overcome by a showing that there was no evidence from which the agency could conclude as it did. Fred Fuller Oil Co., at 609.

The Author

Jonas Cutler received his J.D. degree from Franklin Pierce Law Center in 2003. He served as a student intern with the New Hampshire Bureau of Securities Regulation. The views expressed in this article, however, are his own and do not represent those of the Bureau or of the Office of the Secretary of State.

NHLAP: A confidential Independent Resource

Home | About the Bar | For Members | For the Public | Legal Links | Publications | Online Store
Lawyer Referral Service | Law-Related Education | NHBA•CLE | NHBA Insurance Agency | NHMCLE
Search | Calendar

New Hampshire Bar Association
2 Pillsbury Street, Suite 300, Concord NH 03301
phone: (603) 224-6942 fax: (603) 224-2910
email: NHBAinfo@nhbar.org
© NH Bar Association Disclaimer