## Facts

- Crane Co., an Illinois corporation, sought to acquire a substantial minority stake in Anaconda Co., a Montana corporation, through a public exchange (tender) offer for up to 5 million shares (about 22–23%).
- Anaconda’s management opposed the offer and communicated its opposition to shareholders.
- Federal litigation between the parties ended in a consent order limiting Crane’s acquisitions to 5 million shares, barring it from seeking board representation, and requiring antitrust compliance.
- After Crane’s SEC registration statement became effective, Crane distributed tender-offer materials through financial intermediaries to solicit Anaconda shareholders.
- Crane requested Anaconda’s shareholder list to communicate the offer directly to shareholders; Anaconda refused. At the initial request, Crane owned no Anaconda shares.
- Crane later acquired more than 2 million Anaconda shares (about 11%) and renewed its request with a formal written demand and affidavit stating the inspection was for the corporation’s business and to communicate the exchange offer.
- Anaconda again refused, asserting that urging shareholders to tender to a bidder was not a “proper purpose” under New York Business Corporation Law (BCL) § 1315.
- Crane filed a special proceeding seeking to compel inspection and copying of the shareholder list or, alternatively, to compel Anaconda to mail Crane’s materials to shareholders at Crane’s expense.

## Issues

1. Whether communicating a bona fide tender/exchange offer to fellow shareholders is a “proper purpose” for inspection and copying of a foreign corporation’s shareholder list under BCL § 1315.
2. Whether, if inspection is warranted, a court may order the corporation to mail the requesting shareholder’s tender-offer materials to shareholders at the requester’s expense as an alternative remedy.

## Decision

- The Court of Appeals affirmed the order granting relief to Crane.
- The court held that communicating a bona fide tender offer to shareholders is a proper purpose under BCL § 1315 because a pending tender offer relates to the corporation’s business and shareholders’ investment decisions.
- Upon Crane’s compliance with the statute’s demand-and-affidavit requirements, the burden shifted to Anaconda to prove an improper purpose; Anaconda failed to do so.
- The court approved equitable, discretionary relief allowing either inspection/copying of the shareholder list or, alternatively, a court-supervised mailing of Crane’s materials at Crane’s expense.

## Legal Principles

- Under BCL § 1315 (as informed by BCL § 624), a qualified shareholder may inspect a foreign corporation’s shareholder list upon written demand and a compliant affidavit stating a proper purpose.
- A tender or exchange offer “necessarily” bears on the corporation’s affairs and the safeguarding of shareholders’ investments; communicating such an offer to shareholders can satisfy “proper purpose.”
- “Proper purpose” is assessed with substantial weight given to shareholders’ informational rights and their ability to communicate with one another, not solely management’s view of corporate welfare.
- Once statutory formalities are met, the corporation bears the burden of proving the requesting shareholder’s purpose is improper to defeat inspection.
- In an Article 78 mandamus-style enforcement proceeding, courts may exercise equitable discretion to prevent misuse of shareholder lists and may fashion alternative relief such as a supervised mailing at the requester’s expense.

## Conclusion

The court held that a shareholder seeking to communicate a bona fide tender offer to fellow shareholders states a proper purpose for access to a foreign corporation’s shareholder list under BCL § 1315, and that after statutory compliance the corporation must prove improper purpose; equitable relief may include either inspection/copying or a court-supervised mailing at the requester’s expense.


Crane Co. v. Anaconda Co., 39 N.Y.2d 14 (N.Y. 1976)