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Archive for for October, 2015

Shareholders’ Right To Inspect Corporate Books and Records (Part 4)

October 15, 2015

New York: Proper Purposes.

 The New York statute provides that a shareholder has the right to examine corporate books and records upon at least five (5) days’ written demand for any purpose reasonably related to such person’s interest as a shareholder.[1]  Inspection, however, may be denied if the shareholder refuses to furnish an affidavit to the corporation that such inspection is not desired for a purpose which is in the interest of a business or object other than the business of the corporation and that he has not within five (5) years sold or offered for sale any list of shareholders of any corporation of any type or kind.… Read the rest

Can I Be Held Liable as Partner When in Fact I Am Not? (Part 1)

October 13, 2015

Partnership by Estoppel.

We often hear the word “partner” thrown around to refer to a variety of business relationships—co-owners, collaborators, coworkers, business associates, and even suppliers and customers . . . you name it.  As we explained in our previous blog series on general partnership (available here), it is not the label, but the intent to do what in law constitutes a partnership (e.g., agreement to share profits, right to participate in control of the business, etc.), that controls the question of whether there is a general partnership. … Read the rest

Shareholders’ Right To Inspect Corporate Books and Records (Part 3)

October 10, 2015

Delaware: Reasonable Restrictions.

In Delaware, any stockholder is entitled to inspect the corporation’s books and records upon written demand, for any proper purpose.[1]  The statute defines a proper purpose as a purpose reasonably related to such person’s interest as a stockholder.[2]  Additionally, the statute grants the Court of Chancery the authority to “prescribe any limitations or conditions with reference to the inspection . . . as the court may deem just and proper.”[3]

In United Techs. Corp. v.Read the rest

Shareholders’ Right To Inspect Corporate Books and Records (Part 2)

October 8, 2015

Maryland: Hogans v. Hogans Agency, Inc.

In Hogans v. Hogans Agency, Inc., Hogans was a 37.5% stockholder of Hogans Agency, Inc., an insurance and real estate brokerage company, and an owner of a competing business.[1] In December 2013, Hogans sent a letter to the corporation requesting inspection of corporate records; the corporation responded by providing copies of the bylaws, minutes of the proceedings of stockholders, an annual statement of affairs for the most recent tax year available, and the name, address, and shares of each stockholder.… Read the rest

Shareholders’ Right To Inspect Corporate Books and Records (Part 1)

October 6, 2015

We have covered several aspects of shareholder rights in our blogs, including the rights of minority shareholders in the context of oppression by the majority (available here and here) and, more recently, the right to bring a derivative action on behalf of a wholly owned subsidiary (available here). The fundamental principle underlying all these claims is that shareholders own the corporation. Thus, it is important for shareholders to have access to information regarding the business and management of the corporation in order to protect their interests as shareholders.… Read the rest

Real Estate Securities Fraud Targeting Immigrant Investors (Part 2)

October 3, 2015

SEC v. Path America, LLC.

In SEC v. Path America, LLC, the SEC alleged that Dargey, the individual defendant, set up a series of entities in Everett, Washington, purportedly to offer limited partnership interests priced at $500,000 each, plus an administrative fee of $45,000 per investor.[1] The SEC says that the private placement memoranda (“PPMs”) for the offerings contained statements that an investment in the project was intended to qualify under the EB-5 program and that the proceeds of the offerings were to be used for the construction of a 40-story tower in Seattle and for a real estate development project in Everett.… Read the rest

The SEC Issues an Interpretive Release on Whistleblower Status for Purposes of Anti-Retaliation Protections

October 1, 2015

On August 4, 2015, the SEC issued an interpretive release to clarify that, for purposes of the employment retaliation protections provided under the Securities Exchange Act of 1934 (the “Exchange Act”), an individual’s status as a whistleblower does not depend on adherence to the reporting procedures specified therein.[1]

In our previous blog post on aiding and abetting securities violations (available here), we wrote that the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (the “Dodd-Frank Act”) amended the Exchange Act to permit the SEC to bring an action for aiding and abetting a securities law violation. … Read the rest

All postings are intended to be planning tools to familiarize readers with some of the high-level issues discussed therein. No posting is intended to be a comprehensive discussion and additional details should be discussed with your transaction planners including attorneys, accountants, consultants, bankers and other business planners who can provide advice for your circumstances. This article should not be treated as legal advice to any person or entity.