Pederson v. Arctic Slope Regional Corp.

A shareholder of Arctic Slope Regional Corporation sought to exercise his statutory right to inspect books and records of account and minutes of board and committee meetings relating to executive compensation and an alleged transfer of equity in corporate subsidiaries to executives. The Corporation claimed that the materials were confidential and sought to negotiate a confidentiality agreement prior to release of any documents. When the shareholder ultimately rejected the proposed confidentiality agreement, the Corporation released to the shareholder only the annual reports and proxy statements of the Corporation and the minutes describing the subjects discussed and actions taken at the meetings. The shareholder did not receive the detailed, individualized compensation information he sought. The shareholder sued, claiming that the Corporation withheld information that statutorily it was required to release, and that the Corporation improperly insisted on a confidentiality agreement prior to releasing any of the requested documents. The superior court ruled that electronically maintained accounting records were not within the statutory category of "books and records of account"; that the Corporation satisfied the requirement to disclose "books and records of account" when it disclosed only annual reports and proxy statements; and that the Corporation satisfied the requirement to disclose meeting minutes. Furthermore, the court concluded that the Corporation could demand a confidentiality agreement prior to release of any information, and that the terms of the particular confidentiality agreement offered in this case were reasonable. The shareholder appealed, arguing that the statutory right of inspection encompasses more than what the Corporation provided and that the Corporation had no right to demand the confidentiality agreement in this case. This appeal presented several issues of first impression in Alaska. Upon review, the Supreme Court held: (1) the statutory phrase "books and records of account" includes electronically maintained books and records of account; (2) the statutory phrase also goes beyond mere annual reports and proxy statements; and (3) the statutory phrase at least encompasses monthly financial statements, records of receipts, disbursements and payments, accounting ledgers, and other financial accounting documents, including records of individual executive compensation and transfers of corporate assets or interests to executives; (4) the statutory category "minutes" does not encompass all presentations or reports made to the board but rather merely requires a record of the items addressed and actions taken at the meeting, as have been faithfully recorded after the meeting; and (5) a corporation may request a confidentiality agreement as a prerequisite to distributing otherwise-inspectable documents provided that the agreement reasonably defines the scope of confidential information subject to the agreement and contains confidentiality provisions that are not unreasonably restrictive in light of the shareholder's proper purpose and the corporation's legitimate confidentiality concerns. The Court found that the Corporation's proffered confidentiality agreement in this case was not sufficiently tailored or limited in scope and thus the shareholder's refusal to sign it could not serve as a legal basis for avoiding liability for denying his inspection claims. View "Pederson v. Arctic Slope Regional Corp." on Justia Law