Cengage Advantage Books: Fundamentals of Business Law 9th Edition by Roger LeRoy Miller

Exercise 13

Rights of Shareholders. Stanka Woods was the manager and sole member of Hair Ventures, LLC, which owned 3 million shares of stock in Biolustre, Inc. For several years, Woods and other Biolustre shareholders did not receive notices of shareholders' meetings or financial reports. Nevertheless, Woods learned that Biolustre planned to issue more stock, and her boyfriend, Daniel Davila, proposed that they meet with other shareholders to discuss the company's operations and oppose the issue. To obtain information regarding what was going on at Biolustre, Woods, through Hair Ventures, sent Biolustre a demand to examine its books and records. Biolustre did not respond. Hair Ventures filed a suit in a Texas state court against the corporation, seeking an order to compel it to comply. Biolustre asserted that Hair Ventures' request was not for a proper purpose. Does a shareholder have a right to inspect corporate books and records? If so, what are the limits? Do any of those limits apply in this case? Explain. [ Biolustré Inc. v. Hair Ventures, LLC, __ S.W.3d __ (Tex.App.-San Antonio 2011)]