Section 10A-5A-4.09 Records to Be Kept; Right of Members and Dissociated Members to Information.

(a) Each limited liability company shall maintain the following records: (1) A current list of the full name and last known business or residence street address of each member. (2) A copy of the filed certificate of formation and all amendments thereto, together with executed copies of any powers of attorney pursuant to which any documents have been executed. (3) Copies of the limited liability company’s federal, state, and local income tax returns and reports, if any, for the three most recent years. (4) Copies of the then effective limited liability company agreement including any amendments thereto. (5) Copies of any financial statements of the limited liability company for the three most recent years. (b) Subject to subsection (g), a member may demand (i) on 10 days’ notice made in a writing received by the limited liability company, the records set forth in subsection (a) above, and (ii) on 30 days’ notice made in writing received by the limited liability company, any other books and records of the limited liability company, wherever situated, to inspect and copy for any proper purpose by the demanding member during regular business hours. (c) Subject to subsection (g), on 30 days’ notice made in a writing received by a limited liability company, a dissociated member may inspect and copy, during regular business hours, at a reasonable location specified by the limited liability company, any record maintained by the limited liability company, to the extent the information pertains to the period during which the person was a member, was material to the person’s rights and duties under the limited liability company agreement or this chapter when the person was a member, and the person seeks the information in good faith and for a proper purpose. (d) A limited liability company may charge a person that makes a demand under this section the reasonable costs of labor and material for copying. (e) A member or dissociated member may exercise rights under this section through an agent or attorney, or in the case of an individual under legal disability, a legal representative. Any restriction or condition imposed by the limited liability company agreement or under subsection (g) applies both to the agent, attorney, or legal representative and to the member or dissociated member. If the demanding person’s agent or attorney is to inspect and copy the books and records of the limited liability company, the demand shall be accompanied by a power of attorney or other writing which authorizes the attorney or other agent to so act on behalf of the demanding person. (f) The rights under this section do not extend to a transferee. (g)(1) In addition to any restriction or condition stated in its limited liability company agreement, a limited liability company, as a matter within the ordinary course of its activities and affairs, may: (A) impose reasonable restrictions and conditions on access to and use of information to be furnished under this section, including designating information confidential and imposing nondisclosure and safeguarding obligations on the recipient; (B) keep confidential from the members and any other persons, for such period of time as the limited liability company deems reasonable, any information that the limited liability company reasonably believes to be in the nature of trade secrets or other information the disclosure of which the limited liability company in good faith believes is not in the best interest of the limited liability company or could damage the limited liability company or its activities and affairs, or that the limited liability company is required by law or by agreement with a third party to keep confidential; and (C) redact portions of the records to be inspected and copied to the extent the portions so redacted are not directly related to the member’s or other person’s purpose. (2) In any dispute concerning the reasonableness of a restriction under this subsection, the limited liability company has the burden of proving reasonableness. (h) The rights under this section may be denied by the limited liability company if the limited liability company determines that the demanding person has within two years preceding his, her, or its demand improperly used any information secured through any prior examination of the records of the limited liability company. (i) For purposes of this section, a proper purpose shall mean a purpose directly related to the member or dissociated member’s interest as a member or dissociated member, as the case may be; provided, however, that a demand shall not be for a proper purpose if the limited liability company reasonably determines that the demand is in connection with: (1) an active or pending derivative proceeding in the right of the limited liability company under Article 9 of this chapter that is or is expected to be instituted or maintained by the member or the member’s affiliate; or (2) an active or pending civil lawsuit to which the limited liability company, or its affiliate, and the member or dissociated member, or the affiliate thereof, are, or are expected to be, adversarial named parties. (j) If a limited liability company does not within a reasonable time allow a person who complies with the requirements of this section to inspect and copy the records required by this section, the person who complies with this section may apply to the designated court, and if none, the circuit court for the county in which the limited liability company’s principal office is located in this state, and if none in this state, the circuit court for the county in which the limited liability company’s most recent registered office is located for an order to permit inspection and copying of the records demanded. The court shall dispose of an application under this subsection on an expedited basis. If the court orders inspection and copying of the records demanded under this section, it may impose reasonable restrictions on their confidentiality, use, or distribution by the demanding person and the court shall also order the limited liability company to pay the demanding person’s expenses incurred to obtain the order unless the limited liability company establishes that the limited liability company refused inspection in good faith because the limited liability company had: (1) a reasonable basis for doubt about the right of the demanding person to inspect the records demanded; or (2) required reasonable restrictions on the confidentiality, use, or distribution of the records demanded to which the demanding person had been unwilling to agree. If the limited liability company has declined to deliver or make available the records because the demanding person had been unwilling to agree to restrictions proposed by the limited liability company on the confidentiality, use, or distribution of the records, the limited liability company shall have the burden of demonstrating that the restrictions proposed by the limited liability company were reasonable.