§ 6.03 SHAREHOLDER RIGHT TO INSPECT BOOKS AND RECORDS
The WBCA requires that a corporation keep specified permanent records of shareholder and director meetings and corporate actions, as well as accounting records and shareholder lists. RCW 23B.16.010(1), (2) & (3). The Act also provides a statutory mechanism that grants shareholders limited access to specified corporate records if certain conditions are met. RCW 23B.16.010 et seq.
RCW 23B.16.020 provides shareholders a statutory right to inspect specified corporate records upon not less than five days' written notice. It does not authorize any claim for relief against a corporation, and it does not permit the wide-ranging production of categories of documents that can be sought in discovery in civil litigation.
Practice Tip: In practice, shareholders and corporations typically negotiate to extend the time to permit inspection beyond the five days for response specified in the statute, and rather than requiring inspection and copying of paper records during regular business hours at corporate offices, the corporation produces copies of the records in electronic form, subject to confidentiality and non-disclosure agreements (see below). Corporations also routinely insist that the putative shareholder provide documentary evidence of the requesting party's status as a current shareholder of the corporation, such as a declaration or affidavit, often accompanied by the shareholder's most recent brokerage statement evidencing a current beneficial interest in the corporation's shares.
Shareholders are generally able to inspect the seven categories articulated in RCW 23B.16.010(5). If they meet the good faith and proper purpose requirements discussed in the subsections below, shareholders are entitled to inspect three additional categories in RCW 23B.16.020(2):
(a) Excerpts from minutes of any meeting of the board of directors, or of any meeting of a committee of the board of directors while exercising the authority of the board of directors, minutes of any meeting of the shareholders, and records of corporate actions approved by the shareholders or board of directors or a committee thereof without a meeting, to the extent not subject to inspection under subsection (1) of this section;
(b) Accounting records of the corporation; and
(c) The record of shareholders.
Practice Tip: Before allowing inspection, the corporation and the shareholder typically enter into an agreement to maintain the confidentiality of the records to be copied. Among the terms parties often consider are provisions for exclusive venue for any filed litigation, incorporation of records by reference in motions to dismiss future claims, ensuring that shareholders and third-party consultants are obligated to maintain confidentiality, restricting use of confidential information except in derivative lawsuits on the same subject matter, prohibiting dissemination of confidential information, and requiring that confidential information be filed under seal in litigation and that documents are returned or destroyed when the matter terminates. See RCW 23B.16.040(4) (superior court "may impose reasonable restrictions on the use or distribution of the records by the demanding shareholder"); cf. Costello v. Tanner Elec. Coop., No. 73060-6-I, 2016 Wash. App. LEXIS 652, 192 Wn. App. 1062 (Wash. Ct. App. Mar. 7, 2016) (unpublished) (upholding protective order restricting cooperative member's access to highly confidential information produced under RCW 24.06.160).
A shareholder's agent or attorney has the same inspection rights as the shareholder, and the request may be satisfied by furnishing copies of the records by means chosen by the corporation, including electronic transmission. RCW 23B.16.030(1), (2). The corporation...
