I am a minority shareholder in a privately held company. It is incorporated in Delaware but al of the company offices and business are in California. The company never provide me with any information. I have owned the stock for a couple of years but have not received any financial/ annual statements. In addition I just saw press releases that he company have appointed new members of the board of directors and new company officers. I think I should have been told about changes in corporate governance as a stockholder and not found out by coming across online press releases. Do I have any legal avenues I can pursue?
2 Answers from Attorneys
The corporation has a duty to hold an annual meeting of shareholders, and to give you the right to vote for directors (but not officers); however, this duty arises under Delaware law, and I can't tell you more except to re-ask your question as a Delaware question. A foreign corporation doing business in California must, however, file an annual statement with the California Secretary of State, and copies can be ordered via ss.ca.gov but allow plenty of time for your order to be filled.....the SS office is backlogged. Also see Corporations Code sections 2115 and 2117. There was a recent legal tug-of-war between California and Delaware over the enforceability of 2115, and I think it was resolved largely in Delaware's favor.
Generally speaking a corporation's applicable law will be governed by the law of its state of incorporation. Therefore, it seems that Delaware law will supply the answer. Also, the laws of most states have a demand feature where a minority, shareholder such as yourself will have certain rights. These laws often provide that a corporation wrongly refusing to respond to such lawful requests have to pay the minority shareholder's attorney's fees.
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