Virginia Code 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.
Terms Used In Virginia Code 13.1-774
- City: means an independent incorporated community which became a city as provided by law before noon on July 1, 1971, or which has within defined boundaries a population of 5,000 or more and which has become a city as provided by law. See Virginia Code 1-208
- Commission: means the State Corporation Commission of Virginia. See Virginia Code 13.1-603
- Corporation: A legal entity owned by the holders of shares of stock that have been issued, and that can own, receive, and transfer property, and carry on business in its own name.
- delivery: means any method of delivery used in conventional commercial practice, including delivery by hand, mail, commercial delivery, and, if authorized in accordance with § Virginia Code 13.1-603
- Distribution: means a direct or indirect transfer of cash or other property, except the corporation's own shares, or incurrence of indebtedness by a corporation to or for the benefit of its shareholders in respect of any of its shares. See Virginia Code 13.1-603
- Expenses: means reasonable expenses of any kind that are incurred in connection with a matter. See Virginia Code 13.1-603
- Fiscal year: The fiscal year is the accounting period for the government. For the federal government, this begins on October 1 and ends on September 30. The fiscal year is designated by the calendar year in which it ends; for example, fiscal year 2006 begins on October 1, 2005 and ends on September 30, 2006.
- Person: includes an individual and an entity. See Virginia Code 13.1-603
- Principal office: means the office, in or out of the Commonwealth, where the principal executive offices of a domestic or foreign corporation are located, or, if there are no such offices, the office, in or out of the Commonwealth, so designated by the board of directors. See Virginia Code 13.1-603
- Proceeding: includes civil suit and criminal, administrative, and investigatory action. See Virginia Code 13.1-603
- Public corporation: means a corporation that has shares listed on a national securities exchange or regularly traded in a market maintained by one or more members of a national or affiliated securities association. See Virginia Code 13.1-603
- Secretary: means the corporate officer or other individual to whom the board of directors has delegated responsibility under subsection C of § Virginia Code 13.1-603
- Shareholder: means a record shareholder. See Virginia Code 13.1-603
- written: means any information in the form of a document. See Virginia Code 13.1-603
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.