COMMENT

Source: Model Act, § 7.20. This replaces former § 14-2-115.

Subsection (a) requires the preparation of a list of shareholders entitled to notice of a meeting.

Subsection (b) departs from the Model Act, which required the shareholder list to be available two days after the notice of the meeting, and returns to the approach of § 14-2-115, which required the list to be available at the time and place of the meeting. Shareholders seeking copies of lists may still request them under Section14-2-1602. Access to shareholders, their agents, and attorneys, is made explicit in subsection (b), where former § 14-2-115 was silent on the rights of agents and attorneys.

Subsection (b) permits shareholders to "inspect" the list without limitation, but implicitly permits the shareholder to "copy" the list only if the shareholder complies with the requirement of Section 14-2-1602(c), that the demand be "made in good faith and for a proper purpose." This departs from the Model Act approach, which contemplated copying of the list made available over a longer period.

Section 14-2-720 does not require the list of shareholders to be in any particular form. It may be maintained, for example, in electronic form. If the list is maintained in other than written form, however, suitable equipment must be provided so that a comprehensible list may be inspected by a shareholder as permitted by this section.

If the corporation fails to prepare the list or refuses to permit a shareholder to inspect it, a shareholder may apply to the appropriate court under subsection (c) for a summary order permitting inspection of the list; the court may further order the meeting to be postponed for a reasonable time. These powers were not expressly granted in former § 14-2-115.

This judicial remedy is the only sanction for violation of Section14-2-720, since Section14-2-720(d) provides that the failure to prepare, maintain, or produce the list does not affect the validity of any action taken at the meeting. Former § 14-2-115(b) provided that if the requirements of making a shareholder list available were not met, the meeting should be adjourned at the demand of any shareholder until the requirements are complied with. No comparable provision exists in the Code; indeed, subsection (d) states explicitly that violations do not affect the validity of action taken at the meeting.

Note to 2004 Amendment The 2004 amendments permit a corporation to make a shareholders' list available for inspection on a reasonably accessible electronic network, provided that the corporation takes reasonable steps to ensure that such information is available only to the shareholders of the corporation.

Cross-References Annual meeting, see § 14-2-701. Charge for providing copy, see § 14-2-1603. Effective date of notice, see § 14-2-141. Inspection of corporate records generally, see Article 16, Part 1. "Notice" defined, see § 14-2-141. Notice of meeting, see § 14-2-705. "Principal office": defined, see § 14-2-140; designated in annual registration, see § 14-2-1622. Proper purpose for copying, see § 14-2-1602. Record date, see § 14-2-707. Record of shareholders, see § 14-2-1601. Registered office: designated in annual registration, see § 14-2-1622; required, see §§ 14-2-202 &14-2-501. "Shareholder" defined, see § 14-2-140. Special meeting, see § 14-2-702. Voting entitlement generally, see § 14-2-721. "Voting group" defined, see § 14-2-140.

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