Books and Records
Corporate documents, accounts, and communications a Texas corporation must maintain and that shareholders may inspect on written demand. Scope substantially narrowed by SB 29 effective May 14, 2025.
"Books and records" refers to the corporate documents, accounts, and communications that a Texas corporation is required to maintain and that shareholders have a statutory right to inspect on written demand. The scope of what counts as "books and records", and the circumstances under which inspection may be denied, was substantially narrowed by SB 29 effective May 14, 2025.
Records the corporation must keep
Under § 3.151, every Texas corporation must keep: (1) books and records of accounts; (2) minutes of meetings of shareholders, the board, and committees; (3) a record of shareholders giving names, addresses, and number of shares held; and (4) the certificate of formation and bylaws.
Inspection right
Under § 21.218(b), a shareholder of record for at least six months immediately preceding the demand or holding at least 5% of all outstanding shares may, on written demand stating a proper purpose, examine and copy specified records of the corporation at a reasonable time.
SB 29 narrowing of scope (eff. May 14, 2025)
Amended § 21.218 specifies that the records of the corporation do not include emails, text messages, or similar electronic communications, or information from social media accounts, unless the particular communication effectuates an action by the corporation. This change responds to a trend of broad e-discovery-style inspection demands. It applies to all Texas corporations, not solely publicly-traded or opt-in corporations.
Additional restriction for opt-in corporations (§ 21.218(b-2))
A corporation that is publicly traded or that has opted into the codified business judgment rule under § 21.419 may deny an inspection demand if the corporation reasonably determines that the demand is in connection with (1) a derivative proceeding instituted or expected to be instituted by the demanding holder, or (2) an active or pending civil lawsuit in which the holder is or is expected to be an adversarial named party. The right to obtain records through ordinary discovery in pending litigation is preserved.
SB 29's narrowing of § 21.218 is one of the most consequential SB 29 changes for ordinary corporate operations. Pre-suit "fishing expeditions" through books-and-records demands are now substantially harder to maintain.
Practice guide: Shareholder Disputes in Texas