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Ely
Ely, Attorney
Category: Business Law
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Experience:  Counselor at Law.
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I co-own a PA based "C" Corporation. Can a shareholder

Customer Question

I co-own a PA based "C" Corporation. Can a shareholder request a copy of the stock ledger that shows him/her as a stockholder? Why would they request this as they already have a copy if the issued share certificate?
Submitted: 1 year ago.
Category: Business Law
Expert:  Ely replied 1 year ago.

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Shareholders in PA have a number of rights. One of these rights states that upon written demand, the shareholder can - during regular business hours - examine and copy the share register, books and records of account and the records of proceedings of corporation. 15 Pa. Stat. Ann. § 1508.

Specifically:

§ 1508. Corporate records; inspection by shareholders.

(a) Required records.--Every business corporation shall keep complete and accurate books and records of account, minutes of the proceedings of the incorporators, shareholders and directors and a share register giving the names and addresses of all shareholders and the number and class of shares held by each. The share register shall be kept at any of the following locations:

(1) the registered office of the corporation in this Commonwealth;

(2) the principal place of business of the corporation wherever situated;

(3) any actual business office of the corporation; or

(4) the office of the registrar or transfer agent of the corporation.

(b) Right of inspection by a shareholder.--Every shareholder shall, upon written verified demand stating the purpose thereof, have a right to examine, in person or by agent or attorney, during the usual hours for business for any proper purpose, the share register, books and records of account, and records of the proceedings of the incorporators, shareholders and directors and to make copies or extracts therefrom. A proper purpose shall mean a purpose reasonably related to the interest of the person as a shareholder. In every instance where an attorney or other agent is the person who seeks the right of inspection, the demand shall be accompanied by a verified power of attorney or other writing that authorizes the attorney or other agent to so act on behalf of the shareholder. The demand shall be directed to the corporation:

(1) at its registered office in this Commonwealth;

(2) at its principal place of business wherever situated; or

(3) in care of the person in charge of an actual business office of the corporation.

Failure of the corporation to provide said records can have the shareholder file in Court for relief:

(c) Proceedings for the enforcement of inspection by a shareholder.--If the corporation, or an officer or agent thereof, refuses to permit an inspection sought by a shareholder or attorney or other agent acting for the shareholder pursuant to subsection (b) or does not reply to the demand within five business days after the demand has been made, the shareholder may apply to the court for an order to compel the inspection. The court shall determine whether or not the person seeking inspection is entitled to the inspection sought. The court may summarily order the corporation to permit the shareholder to inspect the share register and the other books and records of the corporation and to make copies or extracts therefrom, or the court may order the corporation to furnish to the shareholder a list of its shareholders as of a specific date on condition that the shareholder first pay to the corporation the reasonable cost of obtaining and furnishing the list and on such other conditions as the court deems appropriate. Where the shareholder seeks to inspect the books and records of the corporation, other than its share register or list of shareholders, he shall first establish:

(1) That he has complied with the provisions of this section respecting the form and manner of making demand for inspection of the document.

(2) That the inspection he seeks is for a proper purpose.

Where the shareholder seeks to inspect the share register or list of shareholders of the corporation and he has complied with the provisions of this section respecting the form and manner of making demand for inspection of the documents, the burden of proof shall be upon the corporation to establish that the inspection he seeks is for an improper purpose. The court may, in its discretion, prescribe any limitations or conditions with reference to the inspection or award such other or further relief as the court deems just and proper. The court may order books, documents and records, pertinent extracts therefrom, or duly authenticated copies thereof, to be brought into this Commonwealth and kept in this Commonwealth upon such terms and conditions as the order may prescribe.

It does not matter why the shareholder wants to see the stock ledger. Per the above, they can request to review the records if they want to, which includes the stock ledger, even if they have a copy of the issued share certificate.

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