## Facts

- Louise Price Parsons, a substantial shareholder of Jefferson-Pilot Corporation, made a written demand to inspect and copy corporate records.
- The demand sought (1) a list of beneficial owners of the corporation’s stock, (2) minutes and records of shareholder and director action, and (3) accounting records to investigate possible mismanagement or misappropriation of corporate assets.
- Jefferson-Pilot permitted inspection of some records but refused to produce a beneficial-owners list, stating it did not maintain such a list, and refused inspection of accounting records, asserting they were outside the statute’s inspection scope for public corporations.
- Parsons narrowed her accounting request to records concerning compensation, perquisites, and relationships involving executive officers and directors, their family members, and companions; the corporation again refused.
- Parsons sued and sought injunctive relief compelling inspection, including accounting records and the beneficial-owners list.
- The trial court denied the corporation’s motion for summary judgment and Rule 11 sanctions; it ordered inspection of accounting records and governance records but declined to order production of a beneficial-owners list the corporation did not have.
- The Court of Appeals agreed no beneficial-owners list had to be produced and found the demand sufficiently particular, but reversed the order requiring inspection of accounting records based on the statute’s limitation for public corporations.

## Issues

1. Whether shareholders of a public corporation retain a common-law right to reasonably inspect corporate books and records, including accounting records, for a proper purpose.
2. Whether the shareholder inspection statute limits only inspection “as of right,” while preserving a court’s power to compel production of corporate records.
3. Whether the shareholder’s written demand stated a proper purpose and described the requested records with reasonable particularity.
4. Whether a corporation must obtain or compile a beneficial-owners list it does not possess or maintain.

## Decision

- The Supreme Court affirmed in part, reversed in part, and remanded.
- The Court held shareholders possess a common-law right to reasonable inspection of corporate books and records, including accounting records, for a proper purpose, and that this right was not abrogated by the statute.
- The Court interpreted the statute to limit a public-corporation shareholder’s self-executing inspection rights, but to preserve judicial power to compel production of records in appropriate cases.
- The Court held Parsons’s demand adequately stated a proper purpose and described the requested accounting records with reasonable particularity.
- The Court held the corporation had no duty to produce a beneficial-owners list it did not maintain and could not be compelled to create or obtain one.

## Legal Principles

- Shareholders have a common-law right to reasonably inspect corporate books and records, including accounting records, when acting in good faith for a purpose germane to their interests as shareholders (e.g., investigating suspected mismanagement or misappropriation).
- Statutory limits on inspection “as of right” for shareholders of public corporations do not eliminate a court’s independent authority to compel production of corporate records.
- A shareholder seeking compelled inspection must state a proper purpose and describe the requested records with reasonable particularity and reasonable relation to that purpose.
- Inspection rights generally extend only to existing corporate records; a corporation is not required to create, compile, or obtain records it does not possess.

## Conclusion

The court recognized that, notwithstanding statutory limits on public-company inspection as of right, courts may order inspection of accounting records under preserved common-law principles when a shareholder states a proper purpose and a sufficiently specific request, while denying any attempt to force the corporation to generate or acquire a non-existent beneficial-owners list.


Parsons v. Jefferson-Pilot Corp., 333 N.C. 420, 426 S.E.2d 685 (N.C. 1993)