South-Western Legal Studies in Business

Shareholders of Non-Profit Corporations Have the Right to Inspect the Books
Description Appeals court held that a shareholder in a non-profit corporation has the right to inspect the books of the organization at a reasonable time and place. The corporation cannot avoid the inspection by revoking the shareholder's membership in the organization.
Topic Business Organization
Key Words Non-profit; Shareholder; Accounting Records; Inspection
C A S E   S U M M A R Y
Facts Leary is a shareholder in The Tally Ho Club, a non-profit corporation organized as a hunting and fishing club. Leary paid $100 for a share of stock, as did other members. He requested to inspect the financial books of the Club. The Club responded that he could see the books, but he had to sign a confidentiality agreement regarding the books. Leary refused and sued to see the books. The trial court ordered the Club to produce the books for Leary's inspection. The Club then revoked Leary's membership and contended that eliminated his right to see the books. The court again ordered that the books to be produced; the Club appealed.
Decision

Affirmed. The shareholders of non-profit corporations have the right to inspect the records so long as the request is made in a reasonable time for the books to be produced in a reasonable location and time. The trial court has the right, based on its review of the facts, to order Leary to have access to the books.

Citation Leary v. Foley, --- So.2d --- (2004 WL 2112137, Ct. App., La., 2004)

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