Request to an American company

A request to an American company is an important tool for interaction between the participants of the company and the organization itself. This mechanism allows participants (such as shareholders) to fully exercise their legal powers, including the right to participate in the management of the company, receive information about its activities, and make informed decisions.

However, it should be noted that companies do not always demonstrate openness to dialogue and provide the necessary responses to their shareholders’ requests. In situations where a company ignores inquiries or responds insufficiently clearly, shareholders may face difficulties in exercising their rights and obligations.

In such situations, our qualified lawyers are ready to offer their assistance in drafting a request that meets all official requirements and standards. We understand the importance of clear and accurate wording in a request to ensure its maximum effectiveness and achieve the desired outcome.

By turning to our specialists, you can be confident that your request will be prepared with consideration of all nuances of legislation and corporate norms, enabling you to successfully exercise your powers and restore dialogue with the company. Your rights as a shareholder deserve respect, and we are ready to support you on this path.

When might this be relevant?

The internal corporate relationships between the participants of a company and the organization itself in the U.S. represent a complex system of interaction based on mutual rights and obligations. These relationships are formed within the framework of corporate governance and are regulated by both the company’s internal documents and legislation.

Shareholders, as key participants in the corporate structure, play an important role in making strategic decisions and determining the direction of the company’s development. They possess a number of rights, including the right to vote at general meetings, the right to receive dividends, the right to access information about the company’s activities, and the right to participate in the distribution of assets in the event of liquidation. These rights allow shareholders to influence the management of the company and protect their interests.

We were approached by a client who holds several tens of thousands of fully paid and perpetual shares in an American corporation. For an extended period, he attempted to demand a financial report and other financial documents from the company’s management through correspondence, which he is fully entitled to receive. However, in response to his requests, he received unjustified refusals or intentionally incomplete information, which grossly violated his corporate rights.

Faced with such inaction, he turned to our lawyers, who studied the internal acts of this company and current American corporate legislation, prepared convincing arguments in defense of our client, and sent a request on his behalf to the company. We invite you to familiarize yourself with how to properly draft and send such a request and substantiate your position.

What rights do shareholders of American companies have?

The key right of shareholders is the right to vote on major issues concerning the corporation’s activities, including the election of management and fundamental decisions regarding mergers or the liquidation of the organization. The U.S. Securities and Exchange Commission clarifies that a shareholder can exercise their voting rights by proxy through their legal representatives or even by mail.

Any shareholder also has the right to transfer their ownership of shares through trading on the stock exchange. However, this right cannot be exercised if the shareholder is unaware of the liquidity of their shares in the market. They can only determine this by studying the organization’s financial statements.

This is why special attention is given in America to a shareholder’s right to access all corporate documents: the annual report, minutes of board meetings, etc. The Securities Exchange Act of 1934, which is in effect at the federal level in the U.S. and is mandatory, requires corporations to periodically disclose their financial reports to participants.

A classic financial report is the Form 10-K, which must be filed annually with the Securities and Exchange Commission. It contains information not only about the company’s legal structure but also includes financial statements, earnings per share, subsidiaries, and some other details.

However, in some cases, shareholders may encounter situations where management conceals or distorts financial reporting, which can lead to significant negative consequences. Shareholders, relying on incomplete data, cannot make informed decisions regarding their investments, which jeopardizes their financial interests. Additionally, withholding information may create favorable conditions for corruption and abuse by management.

How can corporate participants protect their rights?

American legislation specifically protects the right of company participants to take legal action in case of misconduct by management. It may seem that this is useless and ineffective. However, this is not the case – in 2002, shareholders of WorldCom, faced with misleading reporting from management, filed a class-action lawsuit and won. This became an important precedent in the U.S. judicial system, confirming that if a company presents a false representation of its financial condition and artificially inflates its stock liquidity metrics, it constitutes a gross violation of the Securities Exchange Act and is subject to legal action.

However, this does not mean that one should immediately go to court in case of violations. In many states, filing a lawsuit incurs a fee of several hundred dollars, and the proceedings can drag on for a long time. Therefore, we recommend utilizing a claims procedure first.

Claim dispute resolution is a process in which parties discuss their disagreements and attempt to find a mutually acceptable solution before resorting to the courts.

Advantages of filing a claim:

1. claim dispute resolution significantly reduces the time needed to resolve a dispute
2. this approach saves financial resources
3. it allows for the possibility of maintaining business relationships between the parties.

To initiate this process, it is necessary to send a claim to the company’s management. It is important to remember that the management of an American company may ignore requests from your foreign lawyers; however, if you send the request personally, they will be obligated to respond.

In the case of our client, whose rights as a shareholder were grossly violated, we also recommended that he send a claim to the company’s management. Our lawyers drafted the request effectively and articulated the client’s position, which helped him achieve a long-awaited response without resorting to court.

What should be included in the request?

Such a document must be composed in accordance with certain standards and include key elements that contribute to its effectiveness.

1. Contact Information of the Recipient

At the beginning of the official claim, it is necessary to provide the complete contact information of the recipient, including the full name of the manager, their position, the name of the company, as well as the company’s physical address and email address. This ensures proper identification of the recipient and helps avoid any potential misunderstandings.

2. Indication of Your Status

The next step is to clarify your status within the company. It is important to clearly state that you are a shareholder of the company, as well as specify the number of shares and their category (if applicable). This will confirm your legitimacy as a party entitled to file a claim.

3. Main Body: Violation of Corporate Rights

In the main body of the document, it is necessary to detail which specific corporate rights are being violated by the company’s management. This may relate to a lack of access to information about the company’s financial condition, failure to fulfill dividend payment obligations, or ignoring your proposals and initiatives. It is crucial to provide specific facts and circumstances that support your claims.

For example, in our client’s claim, we pointed out that he had repeatedly attempted to exercise his rights and obtain information about financial indicators through correspondence; however, management provided refusals or incomplete information. Together, this may indicate intentional inaction.

4. Reference to Legislation

To strengthen your position, it is advisable to reference the relevant legislation that regulates the protection of shareholders’ rights and corporate governance. This may include any regulatory acts that support your claims and justify the legality of your demands, including internal local acts (for example, the company’s charter).

In our client’s case, we built our argumentation by referencing the Generally Accepted Accounting Principles (GAAP) established by the Securities and Exchange Commission. These principles, outlined in the Codification of Accounting Standards, establish the obligations of corporations to disclose financial information to shareholders.

The information that must be disclosed includes:

• Financial statements as a whole (Section 205)
• Balance sheet of the company (Section 210)
• Statement of shareholders’ equity (Section 215)
• Income statement (Section 225)
• Statement of cash flows (Section 230)

You may also utilize the arguments we provided from the legislation. However, it is important to remember that each situation is unique, and the correct legal wording and reference to laws are crucial for successfully resolving your situation. Therefore, drafting a claim is difficult to imagine without qualified legal assistance.

5. Conclusion: Demands

At the end of the official claim, you need to clearly articulate your demands. For example, you may request the provision of financial statements for a specific period, the convening of an extraordinary general meeting of shareholders, or the execution of other actions aimed at restoring your rights. It is important that your demands are specific and well-founded.

How can you effectively persuade the company’s management to respond to you? Of course, by threatening to appeal to the competent authorities. For instance, in our client’s claim, we indicated that if our request went unanswered, we would submit an appeal to the financial regulatory authorities in the state of Delaware, which would be authorized to consider our claim and hold the company accountable for violations of securities legislation.

What can we offer you?

Our team of lawyers has significant experience in drafting requests and claims against American companies. For many years, we have successfully defended our clients’ corporate interests, providing reliable legal support and effective representation in complex situations.

Our specialists have a deep understanding of the nuances of American law and business practices, allowing us to develop relevant legal positions and strategies tailored to your needs. We are confident that we can effectively represent your interests in any matters related to interactions with American companies.

We are ready to carefully examine your situation, prepare a detailed request, and send it to the appropriate authorities. We guarantee that our request will be formulated in such a way as to avoid going unanswered and to facilitate a