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11 Cards in this Set

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What are the two views regarding the SH's demand for corporate information?
1) Common Law View

2) Statutory View
What are the elements of the Common Law view?
SH (P)of a Corp has B of P to show by the preponderance of the evidence, w/a formal, written request;
(1)A Proper Purpose(profit)
(2)Essential to the Proper Purpose (for each item requested)
(3) A Credible Basis of
finding probable corporate wrongdoing.
Common Law:

Define Proper Purpose
It is reasonably related to the Plaintiff’s interest as a shareholder, which means profit.
a) Mixed Purpose: When the shareholder has both a proper and improper purpose, but the proper purpose is primary, the improper purpose is irrelevant. .
Common Law:


Define Essential to the Proper Purpose
For each item wanted, the shareholder must show that the item is essential to the proper purpose (rel to corp finances)
Is a Shareholder list fall within a Proper Purpose?
Yes, Re: Sholder lists under the Common Law: There is an automatic right to get a list of SH, even to unseat directors; it is a Proper Purpose, b/c SH democracy is a proper purpose.
Common Law:
Define Credible Basis
There must be credible basis to find probable corporate wrongdoing that is satisfied through documents, logic, testimony, or otherwise.
a)Neither mere curiosity
b)or a desire for a fishing expedition will suffice.
c)SH does not need to prove the wrongdoing itself (is only going to court to get the documents)
What is the key element of the Statutory view?
Shift in B of P for SH list, only. D (corp mgmnt) has B of P that P has improper purpose. Therefore, similar to common law except:
The Statutory view is similar to the Common Law view except:
1) Usually has duration or amount of ownership requirement for SH. E.g, you have to have owned the stock for six months. (or 1000.00 worth or 1% of stock, which ever is lower for a year is typical requirement)
2) Shareholder Lists: shifts B of P in C/L from P to D for SH list, only. (P will still get SH list unless D can show improper purpose.) P still has the B of P for all other records
3)Court can impose conditions on release of documents.
Shareholder list:

What is a Cede list?
A Cede list is list of owners of stock behind the depositories (usually names the brokerage firms)
Shareholder list:

What is a NOBO list?
Non-objecting beneficial owners (NOBO) list has the names of the actual people that vote (the real owners, voluntarily on list), P gets NOBO list from the corp.
What is the split in j/regarding NOBO lists?
Some j/say that the SH can have whatever NOBO list the corp has (even if old), and some (modernly) say that the corp must generate only new NOBO lists.