MBE Rules · Business Associations
Shareholder Inspection Rights
Cal. Corp. Code §§ 1600-1604
The rule
A shareholder holding at least 5% of the voting shares (or 1% and having filed a Schedule 14A) has the right to inspect and copy the accounting books, records, and minutes for a purpose reasonably related to the shareholder's interests. Any shareholder may inspect the shareholder list on written demand.
In plain English
Shareholders who own a significant percentage of shares have the right to look at the company's financial records and meeting minutes if they have a legitimate reason related to their interests. Additionally, any shareholder can request to see the list of other shareholders by making a written request.
Worked example
Jane owns 6% of the voting shares in XYZ Corp and wants to inspect the company's financial records to assess its performance before voting on a merger. She submits a written request citing her interest as a shareholder. Jane is granted access to the records.
Memory hook
If you own 5%, you can dive into the books!
The trap
Exams may present scenarios where a shareholder requests inspection without a valid purpose, leading students to mistakenly believe they have rights regardless of their reason.
How examiners test it
Questions often involve a fact pattern where a shareholder's request for inspection is challenged, testing the legitimacy of their purpose and ownership percentage.
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