It is well settled that shareholders of New Jersey corporations have both a statutory and common-law right to inspect a corporation’s books and records under certain circumstances. N.J.S.A. 14A:5-28; Brown v. Central Home Trust Co., 129 N.J.L. 213 (1942). But, what does this mean?
New Jersey case law does not provide a lot of guidance as to the scope and breadth of a shareholder’s right to inspect books and records, and until a recent decision from the Appellate Division, Cain v. Merck, 2010 WL 3219329 (App. Div. Aug. 17, 2010), it had been almost 30 years since a New Jersey court had issued a published decision on the topic. Although often not utilized by shareholders, this right provides a powerful tool to shareholders looking to investigate claims of corporate waste and abuse prior to bringing a derivative action. It is also a useful tool to minority shareholders seeking to gather information in advance of asserting a claim under N.J.S.A. 14A:12-7(1)(c) for minority shareholder oppression.
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