This post is part of a series of posts related to Minnesota minority shareholder rights. The following posts cover specific issues related to minority shareholder rights:
- Introduction to minority shareholder rights
- Employment issues
- Accessing Corporate records
- Corporate Governance
This specific right is addressed via a separate statute: Minn. Stat. § 302A.461, subd. 4 grants “absolute right, upon written demand, to examine and copy” corporate records. Despite the clearly delineated right, challenges with compliance still arise.
A telling example of non-compliance with unambiguous statutory authority came to light in Blohm v. Kelly, 765 N.W.2d 147 (2009). The defendant in that action was a majority shareholder in a two person corporation, while the plaintiff was in the minority position. Id. at 151. Kelly spearheaded the sale of their business and accomplished his goal, following which Blohm received $2,400. Id. Blohm had grounds to believe that Kelly was paying himself in excess of his salary and was co-mingling the corporation’s funds with his own. Id. To confirm his suspicions, and before suing Kelly, a request for records was made by Blohm, but Kelly complied only partially. Id. at 157. During the deposition, the Kelly confirmed not permitting Blohm access to all of the available records, and after being given a chance to comply with the request by the court, his response to inquiry into compliance was: “Apparently not.” Id. at 157-58.
The court in Blohm identified two important points, beyond confirming the “absolute” right shareholders have to access corporate records. First point noted was that this right may be enforced in a proceeding under Minn. Stat. § 302A.467. Id. at 158. Building on the statutory authority, the court made a second point, the presence of authority to award “any equitable relief it deems just and reasonable in the circumstances.” Id. The availability of equitable relief as a remedy is of supreme importance. Having this option opens the door to seeking recovery for violation, without knowing the exact specifics of entitled recovery. In affect, if a shareholder is denied access to records, the shareholder can petition the court to correct the wrong, as long as proof of denial to records is available. Id.
In summary, the shareholders of a corporation have a statutory right to view corporate records. Upon denial of this access, the shareholders can seek “equitable relief” from the court, without proving damages.