A Shareholder's Right to Inspect Corporate Records in Texas

Who qualifies to demand records

Section 21.218(b) of the Texas Business Organizations Code sets two alternative gates. You qualify if you have been a holder of shares for at least six months immediately before the demand, or if you hold at least five percent of all outstanding shares. A holder of a beneficial interest in a voting trust counts as a holder of the underlying shares. Meet either test and you are entitled, on written demand stating a proper purpose, to examine and copy at a reasonable time, at the corporation's principal place of business or another agreed location, the corporation's books, records of account, minutes, share transfer records and other records that are reasonably related to and appropriate for that purpose.

You do not have to go yourself. Section 21.218(b-1) lets an agent, accountant or attorney conduct the examination, subject to the same obligations you have regarding the records. For most owners that means a CPA reads the ledger and a lawyer reads the minutes.

What if you fail both thresholds?

You can still get the records, but through a judge. Section 21.218(c) preserves the power of a court, on presentation of proof of proper purpose by a beneficial or record holder, to compel production of the books and records of account, minutes, share transfer records and other records, regardless of how long the holder has owned shares and regardless of how many. The difference is procedural: a qualifying shareholder is entitled to the records on demand and sues only if refused; a non-qualifying shareholder must persuade the court first and bears the cost of production.

What is a proper purpose?

The statute uses the phrase without defining it, so courts give it its ordinary meaning: a purpose reasonably related to your interest as a shareholder. Determining the value of your shares, confirming that dividends or compensation were handled properly, investigating suspected mismanagement or self-dealing, communicating with other shareholders about a meeting, and deciding how to vote all qualify. Purposes hostile to the corporation, such as feeding a competitor, do not. The records you may examine are limited to those reasonably related to the purpose you state, so a specific purpose supports a specific list.

For corporations with shares listed on a national exchange, or that elected into section 21.419, a 2025 amendment (section 21.218(b-2)) lets the corporation treat a demand as improper if it is made in connection with a pending or expected derivative suit or adversarial lawsuit involving the shareholder, pushing those requests into discovery instead. That limit does not apply to ordinary closely held corporations, which is where most Dallas shareholder disputes live.

What records are excluded?

Section 21.218(b) now says corporate records do not include emails, text messages or similar electronic communications, or social media information, unless the particular message effectuates an action by the corporation. A board consent circulated by email is a corporate record; the CEO's exchange with a vendor about pricing generally is not. Those messages may be reachable in discovery once a suit is filed, but not through an inspection demand.

Example

Suppose three siblings each hold one third of a Dallas commercial printing corporation founded by their late father. One sibling is president and sets his own salary. The other two have not seen financials in two years and suspect the salary has tripled. Each holds well over five percent, so each qualifies under section 21.218(b). They send a written demand stating two purposes: valuing their shares and reviewing officer compensation and related-party transactions. They list the general ledger, bank statements, payroll records for officers and board minutes for 2024 and 2025, and name their CPA as examiner. The president refuses, citing confidentiality. They sue to compel. If the court finds the demand proper, section 21.222 makes the corporation liable for their attorney's fees in addition to any other remedy.

Annual statements on request

Separate from inspection, section 21.219 requires a corporation, on a shareholder's written request, to mail the annual statements for the last fiscal year showing in reasonable detail the corporation's assets, liabilities and results of operations, plus any interim statements filed in a public record. There is no six-month or five-percent threshold for this request; any shareholder can make it. The corporation is allowed a reasonable time to prepare the statements. For a shareholder who only wants to know whether the company made money, this is the cheapest first step.

What refusal costs the corporation

Section 21.222(a) makes a corporation that refuses to allow a qualifying shareholder to examine and copy account records, minutes and share transfer records liable for any cost or expense, including attorney's fees, incurred in enforcing the shareholder's rights, in addition to any other damages or remedy. The corporation has four defenses: that within the prior two years the shareholder sold or offered to sell a shareholder list, that the shareholder aided someone in procuring a list for that purpose, that the shareholder improperly used information from a prior examination, or that the shareholder was not acting in good faith or for a proper purpose. In a closely held company the last defense is the one that gets argued, which is why the stated purpose and the record of your conduct matter.

Directors have their own, broader right

If you also sit on the board, section 3.152 gives a governing person the right to examine the entity's books and records for a purpose reasonably related to that service, and lets a court award attorney's fees when a good-faith demand is refused. A director's purpose is presumed to be oversight, so the scope is wider than a shareholder's. Use both sections if you hold both roles.

How to make the demand

In writing, to the corporation at its principal office, signed by the record holder (or with proof of beneficial ownership). State how long you have held shares or your percentage, state the proper purpose, list the records by category and date range, propose a reasonable time, and identify any agent, accountant or attorney who will attend. Keep proof of delivery. A clean demand removes the procedural objections and leaves the corporation only the good-faith defense. If the corporation is an LLC rather than a corporation, the rules differ; see an LLC member's right to records in Texas.

What the records usually lead to

An inspection is rarely the end. It confirms or dispels the suspicion that prompted it, and it supplies the exhibits for whatever comes next: a negotiation over a buyout, a claim that officers breached duties to the corporation, or a request for a receiver. Those paths are covered in shareholder disputes in a closely held Texas corporation and minority shareholder protection in Texas. A litigator's role at the inspection stage is to draft a demand the court will enforce, read the records with the later claim in mind, and keep the fee claim alive. Tina Wysk represents shareholders and corporations in these disputes in Dallas state and federal courts.