James’ explanation is great, especially the part about the rules depend on the state you’re incorporated in. Because he covered Delaware, I’ll mention the specifics in New York:
Any shareholder (SH) of record for the corporation shall make a written request to the Board to inspect the books at least five days’ in advance. The SH has the right to examine in person or by agent or attorney during usual business hours. Interestingly, a corp may condition a SHs exercise of his/her statutory right of inspection upon the submission of an affidavit attesting that they have proper cause. Proper cause in NY is a loose term, but typically SHs will state that they detect mismanagement by the Board. If a SH is denied access to the book then he/she can start a direct lawsuit (rather than derivative) against the corporation.
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