Alternative entity inspection rights

Abstract

Recent years have brought a shift in the landscape of American organizational entities. Historically dominated by traditional corporations, this space has experienced a dramatic influx of alternative entities. Although traditional corporations remain the entity of choice among publicly traded firms, alternative entities have made continued inroads among privately held enterprise. Indeed, in Delaware - the most prominent state for American organizational law - alternative entities now outnumber traditional corporations by a margin of over three to one. Inspection rights are no less important for alternative entities than they are for traditional corporations. This chapter therefore reviews the law on inspection rights for major alternative entity types. Throughout, I highlight how alternative entity inspection rights, embodied in uniform acts, model acts, and Delaware’s statutory law, mirror and diverge from rights in traditional corporations. To capture the scope of inspection rights in for-profit alternative entities, I analyze general partnerships, limited partnerships, limited liability partnerships (LLPs), and limited liability companies (LLCs), while I turn to nonprofit corporations and benefit corporations to canvass nonprofit alternative entity inspection rights. This survey allows for a critical analysis of how inspection rights vary by entity type, a projection of where future disputed issues in inspection rights will likely develop, and an assessment of how these rights could be optimized to address ownership issues unique to specific types of alternative entities.