Are Iowa corporations required to disclose financial information to shareholders?
Iowa law requires Iowa corporations to provide certain financial information to their shareholders. In particular, Iowa Code Section 490.1620 mandates Iowa corporations provide their shareholders with “annual financial statements.” As you may suspect, “annual financial statements” should include a balance sheet, an income statement, and a statement of changes in shareholder equity, if any. Further, if financial statements are prepared for the corporation on the basis of generally accepted accounting principles (GAAP), the annual financial statements provided to shareholders must also be prepared on that basis.
When must an Iowa corporation’s financial statements be provided to shareholders?
Iowa law clearly states the corporation must send the annual financial statements to each shareholder within 120 days after the close of each fiscal year. See Iowa Code Section 490.1620 (2014). If the corporation, however, is a public corporation, additional requirements may apply under the United States Securities and Exchange Commission.
What if an Iowa corporation fails to provide annual financial statements to shareholders as required by Iowa law?
If an Iowa corporation fails to provide annual financial statements as required by Iowa law, the aggrieved shareholder(s) may choose to request relief from an Iowa court, including seeking a court order compelling the corporation to produce the required statements, and perhaps, damages if they can be established.
Annual financial statements are just a few of the corporate records a shareholder may access and review. To learn more about the records a shareholder may review, you may want to review these posts: here and here. Finally, if you or someone you know has not received annual financial statements and/or you are concerned about the financial condition of the corporation, or even whether management is properly running the corporation, a licensed attorney can help provide guidance.
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