Inspection of a closely held company’s books and records is typically extremely important to a minority shareholder to make sure that the company is being operated properly and fairly. Thankfully, subject to reasonable limitations, both members and shareholders are generally able to obtain and review financial and other important corporate documents.
Shareholders in a closely held New Jersey corporation are generally permitted to inspect the books and records of the corporation. Upon the written request of any shareholder, the corporation is required to mail to the requesting shareholder its balance sheet at the end of the preceding fiscal year along with its profit and loss and surplus statement for such fiscal year. N.J.S.A. 14A:5-28(2). Additional documentation may be requested provided the requesting shareholder has a “proper purpose” in examining the same. N.J.S.A. 14A:5-28(4) gives the Court great discretion in prescribing limitations or conditions relating to the inspection of additional corporate records.
Members in a New Jersey Limited Liability Company (“LLC”) are also afforded the right, subject to reasonable standards as may be set forth in an operating agreement or established by the manager to obtain from the LLC from time to time to receive or review:
- information regarding the status and financial condition of the LLC;
- the LLC’s state, federal and local income tax returns;
- a list of the name and last known addresses of each member;
- a copy of the governing operating agreement (along with any amendments); and
- information regarding the amount of cash and a description and statement of the agreed to value of any other property or services contributed by each member and what each member promised to contribute in the future. N.J.S.A. 42:2B-25(a)(1)-(5).