Court Denies Common Law Inspection Rights To Beneficial Owners
Yesterday's post discussed the Court of Appeal's holding in Ramirez v. Gilead Sciences, Inc., 2021 Cal. App. LEXIS 558, that a beneficial owner has no right to inspect corporate records under California Corporations Code Section 1601. The petitioner in that case also argued that the common law right of inspection extends to beneficial owners as well as record holders of shares. The Court of Appeal, however, rejected this argument, finding that the "clear and unequivocal" language in Section 1601 demonstrates a legislative intent to modify the broader common law rule.
In reaching this conclusion, the Court of Appeal did not address whether Section 1601 displaces entirely common law rights of inspection. The California Supreme Court recognized a shareholder's common law rights to inspection in Hobbs v. Tom Reed Gold Mining Co., 164 Cal. 497, 129 P. 781 (1913), a case which quite obviously predates the current statute and actually involved an Arizona corporation.