Texas law states that a shareholder has the right to examine corporate books and records. The Texas Business Organizations Code defines the terms under which shareholders are entitled to examine and copy the corporation’s books and records. The Business Organizations Code also includes a statutory right of examination for corporate directors.
Texas law states that any person who has held shares in the corporation for at least six months immediately preceding the demand to examine and copy corporate books and records, or who holds at least 5 percent of all of the outstanding shares of the corporation, is entitled to examine and copy, at a reasonable time, the corporation’s relevant books, records of account, minutes, and share transfer records. The examination may be conducted by the shareholder in person or through an agent.
Pursuant to Texas law, a shareholder must make a written demand for examination and copying, which states a proper purpose. If the corporation refuses to comply with the demand, the shareholder may file suit to enforce the shareholder’s right of examination. A shareholder who prevails in the action is entitled to recover attorney’s fees and costs from the corporation. The corporation’s liability for these fees and costs is in addition to other damages or remedies afforded to the shareholder by law.
Texas law states that it is a defense to an action for failure to allow examination that the person suing: (1) has, within the two years preceding the date the action is brought, sold or offered for sale a list of shareholders or of holders of voting trust certificates for shares of the corporation or any other corporation; (2) has aided or abetted a person in procuring a list of shareholders or of holders of voting trust certificates for the purpose described by part (1) above; (3) has improperly used information obtained through a prior examination of the books and account records, minutes, or share transfer records of the corporation or any other corporation; or (4) was not acting in good faith or for a proper purpose in making the person’s request for examination.