Fengxian Court Case: Sun improper-purpose inspection

Reference Case: Sun Mou v. a Shanghai Trading Company

A shareholder may renew a request to inspect financial reports, but access to accounting books and vouchers remains subject to the improper-purpose limitation. Where the shareholder or close relatives control an affiliated business that competes substantially with the target company in products, customers, and market, the court may find an improper purpose and deny inspection of books and vouchers.

Holding

A shareholder may renew a request to inspect financial reports, but access to accounting books and vouchers remains subject to the improper-purpose limitation. Where the shareholder or close relatives control an affiliated business that competes substantially with the target company in products, customers, and market, the court may find an improper purpose and deny inspection of books and vouchers.

Issues

improper-purpose defensesubstantial competitive relationshipscope of access to reports and books