Commercial Division Blog
Posted: January 2, 2016 / Categories Commercial, Corporations
Court Will Not Order Inspection of Books When Shareholder Did Not Make Statutory Demand
On December 21, 2015, Justice Platkin of the Albany County Commercial Division issued a decision in Heller v. Lewis, 2015 NY Slip Op. 51867(U), declining to order a corporate books and records inspection, explaining:
Under New York law, shareholders have both statutory and common-law rights to inspect a corporation's books and records so long as the shareholders seek the inspection in good faith and for a valid purpose. Thus, Business Corporation Law § 624 allows a shareholder, upon at least five days' written demand, access to certain corporate books and records, including meeting meetings, annual balance sheets and profit and loss statements. Investigating alleged misconduct and obtaining information that may aid in legitimate litigation are proper bases for a Business Corporation Law § 624 request.
Even assuming that plaintiff's application under Business Corporation Law § 624 properly is directed at defendants, rather than the non-party corporation itself, the motion must be denied due to plaintiff's failure to make a proper written demand under Business Corporation Law § 624(b). Plaintiff has failed to demonstrate that such a demand would be futile.
(Internal quotations and citations omitted) (emphasis added).