Code of Virginia

Code of Virginia
Title 13.1. Corporations
5/31/2020

Article 18. Records and Reports.

§ 13.1-770. Corporate records.

A. A corporation shall keep as permanent records minutes of all meetings of its shareholders and board of directors, a record of all actions taken by the shareholders or board of directors without a meeting, and a record of all actions taken by a committee of the board of directors in place of the board of directors on behalf of the corporation.

B. A corporation shall maintain accounting records in a form that permits preparation of its financial statements.

C. A corporation shall maintain a record of its current shareholders in alphabetical order by class and series, if any, of shares showing the address of, and the number and class and series, if any, of shares held by each shareholder. The foregoing shall not require the corporation to maintain, as part of such record of shareholders, beneficial owners whose shares are held by a nominee on the shareholder's behalf except to the extent that the corporation has established and maintains a procedure for registration of such rights under § 13.1-664. Nothing contained in this subsection shall require the corporation to include in such record the electronic mail address or other electronic contact information of a shareholder.

D. A corporation shall maintain its records in the form of a document, including an electronic record, or in another form capable of conversion into paper form within a reasonable time.

E. A corporation shall maintain the following records:

1. A copy of its articles of incorporation as currently in effect, and any notices to shareholders referred to in subdivision L 5 of § 13.1-604 specifying facts on which a filed document is dependent if those facts are not included in the articles of incorporation or otherwise available as specified in subdivision L 5 of § 13.1-604;

2. Its bylaws as currently in effect;

3. Resolutions adopted by its board of directors creating one or more classes or series of shares, and fixing their relative rights, preferences, and limitations, if shares issued pursuant to those resolutions are outstanding;

4. The minutes of all shareholders' meetings, and records of all action taken by shareholders without a meeting, for the past three years;

5. All written communications within the past three years to shareholders generally, including the financial statements furnished for the past three years under § 13.1-774;

6. A list of the names and business addresses of its current directors and officers; and

7. A copy of its most recent annual report filed with the Commission under § 13.1-775.

Code 1950, § 13.1-47; 1956, c. 428; 1975, c. 500; 1985, c. 522; 2005, c. 765; 2008, c. 91; 2010, c. 782; 2019, c. 734.

§ 13.1-771. Inspection of records by shareholders.

A. Subject to subsection D of § 13.1-772, a shareholder is entitled to inspect and copy, during regular business hours at the corporation's principal office, any of the records of the corporation described in subsection E of § 13.1-770 if the shareholder delivers a signed written notice to the corporation's secretary of the shareholder's demand at least 10 business days before the date on which the shareholder wishes to inspect and copy.

B. For any meeting of shareholders for which the record date for determining shareholders entitled to vote at the meeting is different than the record date for notice of the meeting, any person who becomes a shareholder subsequent to the record date for notice of the meeting and is entitled to vote at the meeting is entitled to obtain from the corporation upon request the notice and any other information provided by the corporation to shareholders in connection with the meeting, unless the corporation has made such information generally available to shareholders by posting it on its website or by other generally recognized means. Failure of a corporation to provide such information does not affect the validity of action taken at the meeting.

C. A shareholder is entitled to inspect and copy, during regular business hours at a reasonable location specified by the corporation, any of the following records of the corporation if the shareholder meets the requirements of subsection D and delivers a signed written notice to the corporation's secretary of the shareholder's demand at least 10 business days before the date on which the shareholder wishes to inspect and copy:

1. Excerpts from minutes of any meeting of, or records of any actions taken without a meeting by, the board of directors or a committee of the board of director while acting in place of the board of directors on behalf of the corporation;

2. Accounting ledgers and related work papers used in the preparation of the corporation's most recent annual financial statements; and

3. The record of shareholders of record maintained in accordance with subsection C of § 13.1-770.

D. A shareholder may inspect and copy the records described in subsection C only if:

1. The shareholder (i) has been a shareholder for at least six months immediately preceding delivery of the shareholder's demand or (ii) is the holder of record or beneficial owner of at least five percent of the outstanding shares entitled to vote generally in the election of directors;

2. The shareholder's demand is made in good faith and for a proper purpose;

3. The shareholder's demand describes with reasonable particularity the shareholder's purpose and the records the shareholder desires to inspect and copy; and

4. The records are directly connected with the shareholder's purpose.

E. The corporation may enforce reasonable restrictions on the confidentiality, use, or distribution of records described in subsection C.

F. The right of inspection granted by this section may not be abolished or limited by a corporation's articles of incorporation or bylaws.

G. This section does not affect:

1. The right of a shareholder to inspect records under § 13.1-661 or, if the shareholder is in litigation with the corporation, to the same extent as any other litigant; or

2. For any corporation that is not a public corporation, the power of a court, independently of this chapter, to compel the production of such records as the court shall order after finding that the shareholder has established that the shareholder has satisfied the requirements of subsection D and that (i) the records that the shareholder seeks are material to the protection of the shareholder's rights as a shareholder and (ii) the disclosure of the records will not adversely affect the corporation's interest.

H. For purposes of this section, other than subdivision C 3, "shareholder" includes a beneficial owner whose shares are held in a voting trust or by a nominee on the shareholder's behalf.

Code 1950, § 13.1-47; 1956, c. 428; 1975, c. 500; 1985, c. 522; 2005, c. 765; 2008, c. 91; 2010, c. 782; 2019, c. 734.

§ 13.1-772. Scope of inspection right.

A. A shareholder may appoint an agent or attorney to exercise the shareholder's inspection and copying rights under § 13.1-771.

B. The corporation may, if reasonable, satisfy the right of a shareholder to copy records by furnishing the shareholder copies by photocopy or other means chosen by the corporation, including furnishing copies through an electronic transmission.

C. The corporation may comply with a shareholder's demand to inspect the record of shareholders under subdivision C 3 of § 13.1-771 by providing the shareholder with a list of its shareholders that was compiled no earlier than the date of delivery of the shareholder's demand.

D. The corporation may impose a reasonable charge to cover the costs of providing copies of documents to the shareholder, which may be based on an estimate of such costs.

Code 1950, § 13.1-47; 1956, c. 428; 1975, c. 500; 1985, c. 522; 2005, c. 765; 2010, c. 782; 2019, c. 734.

§ 13.1-773. Court-ordered inspection.

A. If a corporation does not allow a shareholder who complies with subsection A of § 13.1-771 to inspect and copy any records required by that subsection to be available for inspection, the circuit court in the city or county where the corporation's principal office is located, or, if none in the Commonwealth, where its registered office is located, may summarily order inspection and copying of the records demanded at the corporation's expense upon application of the shareholder.

B. If a corporation does not within a reasonable time allow a shareholder who complies with subsections C and D of § 13.1-771 to inspect and copy the records required by subsection C, the shareholder may apply to the circuit court in the city or county where the corporation's principal office is located, or, if none in the Commonwealth, where its registered office is located, for an order to permit inspection and copying of the records demanded. The court shall dispose of an application under this subsection on an expedited basis.

C. If the court orders inspection and copying of the records demanded, it may impose reasonable restrictions on their confidentiality, use, or distribution by the demanding shareholder. If the court orders inspection and copying of the records demanded, it may also order the corporation to pay the shareholder's expenses incurred to obtain the order if the shareholder proves that the corporation (i) refused inspection without a reasonable basis for doubt about the right of the shareholder to inspect the records demanded or (ii) imposed unreasonable restrictions on the confidentiality, use, or distribution of the records demanded.

1985, c. 522; 2010, c. 782; 2019, c. 734.

§ 13.1-773.1. Inspection of records by directors.

A. A director of a corporation is entitled to inspect and copy the books, records and documents of the corporation at any reasonable time to the extent reasonably related to the performance of the director's duties as a director, including duties as a member of a committee of the board of directors, but not for any other purpose or in any manner that would violate any duty to the corporation.

B. The circuit court of the city or county where the corporation's principal office, or if none in the Commonwealth, its registered office, is located may order inspection and copying of the books, records and documents at the corporation's expense upon application of a director who has been refused such inspection rights, unless the corporation establishes that the director is not entitled to such inspection rights. The court shall dispose of an application under this subsection on an expedited basis.

C. If an order is issued, the court may include provisions protecting the corporation from undue burden or expense, and prohibiting the director from using information obtained upon exercise of the inspection rights in a manner that would violate a duty to the corporation, and may also order the corporation to reimburse the director for the director's expenses incurred in connection with the application if the director proves that the corporation refused inspection without a reasonable basis for doubt about the director's right to inspect the books, records, and documents demanded.

2005, c. 765; 2019, c. 734.

§ 13.1-774. Financial statements for shareholders.

A. Upon the written request of a shareholder, a corporation shall deliver or make available to the requesting shareholder by posting on its website or by other generally recognized means financial statements for the most recent fiscal year for which annual financial statements have been prepared for the corporation. The financial statements may be consolidated or combined statements of the corporation and one or more of its subsidiaries, as appropriate, that include a balance sheet as of the end of the corporation's fiscal year, an income statement for that year, and a statement of changes in shareholders' equity for the year unless that information appears elsewhere in the financial statements. If financial statements for the specified period have been prepared for the corporation on the basis of generally accepted accounting principles, the corporation shall deliver or make available such financial statements to the requesting shareholder.

B. If the annual financial statements are audited or otherwise reported upon by a public accountant, the accountant's report must accompany them. If the annual financial statements are not reported upon by a public accountant, the president or the person responsible for the corporation's accounting records shall provide the shareholder with a statement of the basis of accounting used in preparation of the annual financial statements and a description of any respects in which the statements were not prepared on a basis of accounting consistent with the statements prepared for the preceding year.

C. A public corporation may fulfill its responsibilities under this section by delivering the specified financial statements, or otherwise making them available, in any manner permitted by the applicable rules and regulations of the U.S. Securities and Exchange Commission.

D. Notwithstanding the provisions of subsections A and B:

1. As a condition to delivering or making available financial statements to a requesting shareholder, the corporation may require the requesting shareholder to agree to reasonable restrictions on the confidentiality, use, and distribution of such financial statements; and

2. The corporation may, if it reasonably determines that the shareholder's request is not made in good faith or for a proper purpose, decline to deliver or make available such financial statements to that shareholder.

E. If a corporation does not respond to a shareholder's request for financial statements pursuant to subsection A within 30 days of delivery of such request to the corporation's secretary:

1. The requesting shareholder may apply to the circuit court in the city or county where the corporation's principal office is located, or, if none in the Commonwealth, where its registered office is located for an order requiring delivery of or access to the requested financial statements. The court shall dispose of an application under this subsection on an expedited basis.

2. If the court orders delivery or access to the requested financial statements, it may impose reasonable restrictions on their confidentiality, use, or distribution.

3. In such proceeding, if the corporation has declined to deliver or make available such financial statements because the requesting shareholder had been unwilling to agree to restrictions proposed by the corporation on the confidentiality, use, or distribution of such financial statements, the corporation shall have the burden of demonstrating that the restrictions proposed by the corporation were reasonable.

4. In such proceeding, if the corporation has declined to deliver or make available such financial statements pursuant to subdivision D 2 of § 13.1-774, the corporation shall have the burden of demonstrating that it had reasonably determined that the shareholder's request was not made in good faith or for a proper purpose.

5. If the court orders delivery or access to the requested financial statements, it may order the corporation to pay the shareholder's expenses incurred to obtain such order unless the corporation establishes that it had refused delivery or access to the requested financial statements because the shareholder had refused to agree to reasonable restrictions on the confidentiality, use, or distribution of the financial statements or that the corporation had reasonably determined that the shareholder's request was not made in good faith or for a proper purpose.

Code 1950, § 13.1-47; 1956, c. 428; 1975, c. 500; 1985, c. 522; 2005, c. 765; 2010, c. 782; 2019, c. 734.

§ 13.1-775. Annual report of domestic and foreign corporations.

A. Each domestic corporation, and each foreign corporation authorized to transact business in the Commonwealth, shall file, within the time prescribed by this section, an annual report setting forth:

1. The name of the corporation, the address of its principal office, and the jurisdiction of its formation;

2. The address of the registered office of the corporation in the Commonwealth, including both (i) the post office address with street and number, if any, and (ii) the name of the county or city in which it is located, and the name of its registered agent in the Commonwealth at such address;

3. The names and post office addresses of the directors and the principal officers of the corporation; and

4. A statement of the aggregate number of shares that the corporation has authority to issue.

B. The report shall be made on a form prescribed and furnished by the Commission and shall supply the information as of the date of the report.

C. Except as otherwise provided in this subsection, the annual report of a domestic or foreign corporation shall be filed with the Commission on or before the last day of the twelfth month next succeeding the month in which it was incorporated or authorized to transact business in the Commonwealth, and on or before such date in each year thereafter. The report shall be filed no earlier than three months prior to its due date each year. If the report appears to be incomplete or inaccurate, the Commission shall return it for correction or explanation. Otherwise the Commission shall file it in the clerk's office. At the discretion of the Commission, the annual report due date for a corporation may be extended, on a monthly basis for a period of not less than one month nor more than 11 months, at the request of its registered agent of record or as may be necessary to distribute annual report due dates of corporations as equally as practicable throughout the year on a monthly basis.

Code 1950, §§ 13-9, 13-11, 13-32, 13-213, 13.1-120, 13.1-121; 1956, c. 428; 1958, c. 564; 1975, c. 500; 1981, c. 523; 1985, c. 522; 1986, c. 233; 1987, c. 2; 1997, c. 216; 2005, c. 765; 2010, c. 753; 2018, c. 132; 2019, c. 734.

§ 13.1-775.1. Annual registration fees to be paid by domestic and foreign corporations; penalty for failure to pay timely.

A. Every domestic corporation and every foreign corporation authorized to transact business in the Commonwealth shall pay into the state treasury on or before the last day of the twelfth month next succeeding the month in which it was incorporated or authorized to transact business in the Commonwealth, and by such date in each year thereafter, an annual registration fee as prescribed by this section, provided that the initial annual registration fee to be paid by a domestic corporation created by entity conversion shall be due in the year after the calendar year in which it converted. At the discretion of the Commission, the annual registration fee due date for a corporation may be extended, on a monthly basis for a period of not less than one month nor more than 11 months, at the request of its registered agent of record or as may be necessary to distribute annual registration fee due dates of corporations as equally as practicable throughout the year on a monthly basis.

Any such corporation whose number of authorized shares is 5,000 or less shall pay an annual registration fee of $50. Any such corporation whose number of authorized shares is more than 5,000 shall pay an annual registration fee of $50 plus $15 for each 5,000 shares or fraction thereof in excess of 5,000 shares, up to a maximum of $850.

The annual registration fee shall be irrespective of any specific license tax or other tax or fee imposed by law upon the corporation for the privilege of carrying on its business in the Commonwealth or upon its franchise, property or receipts.

B. Each year, the Commission shall ascertain from its records the number of authorized shares of each domestic corporation and each foreign corporation authorized to transact business in the Commonwealth, as of the first day of the second month next preceding the month in which it was incorporated or authorized to transact business in the Commonwealth and, except as provided in subsection A, shall assess against each such corporation the annual registration fee herein imposed. In any year in which a corporation's annual registration fee due date is extended pursuant to subsection A, the annual registration fee assessment shall be increased by a prorated amount to cover the period of extension. A statement of the assessment, when made, shall be forwarded by the clerk of the Commission to the Comptroller and to each such corporation.

C. Any domestic or foreign corporation that fails to pay the annual registration fee herein imposed within the time prescribed shall incur a penalty of 10 percent of the annual registration fee, or $10, whichever is greater, which shall be added to the amount of the annual registration fee due. The penalty shall be in addition to any other penalty or liability imposed by law.

D. (Effective until October 1, 2019) The fees paid into the state treasury under this section shall be set aside as a special fund to be used only by the Commission as it deems necessary to defray all costs of staffing, maintaining and operating the office of the clerk of the Commission, together with all other costs incurred by the Commission in supervising, implementing and administering the provisions of Part 5 (§ 8.9A-501 et seq.) of Title 8.9A, this title, except for Chapters 5 (§ 13.1-501 et seq.) and 8 (§ 13.1-557 et seq.) and Article 6 (§ 55-142.1 et seq.) of Chapter 6 of Title 55, provided that one-half of the fees collected shall be credited to the general fund. The excess of fees collected over the projected costs of administration in the next fiscal year shall be paid into the general fund prior to the close of the fiscal year.

D. (Effective October 1, 2019) The fees paid into the state treasury under this section shall be set aside as a special fund to be used only by the Commission as it deems necessary to defray all costs of staffing, maintaining and operating the office of the clerk of the Commission, together with all other costs incurred by the Commission in supervising, implementing and administering the provisions of Part 5 (§ 8.9A-501 et seq.) of Title 8.9A, this title, except for Chapters 5 (§ 13.1-501 et seq.) and 8 (§ 13.1-557 et seq.) and Article 7 (§ 55.1-653 et seq.) of Chapter 6 of Title 55.1, provided that one-half of the fees collected shall be credited to the general fund. The excess of fees collected over the projected costs of administration in the next fiscal year shall be paid into the general fund prior to the close of the fiscal year.

1988, c. 405; 1991, c. 311; 1997, c. 216; 2005, c. 765; 2010, c. 753.

§ 13.1-775.2. Collection of unpaid bills for registration fees.

The registration fee with penalty and interest shall be enforceable, in addition to existing remedies for the collection of taxes, levies and fees, by action in equity, in the name of the Commonwealth, in the appropriate circuit court. Venue shall be in accordance with § 8.01-261.

1988, c. 405.

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