Crane Co. v. Anaconda Co., 39 N.Y.2d 14 (1976)
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A qualified stockholder has the right to inspect a corporation’s stock register to identify fellow stockholders for the purpose of informing them directly of its exchange offer and soliciting tenders of stock, unless the purpose is inimical to the corporation or its stockholders.
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Summary
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Crane Co., seeking to acquire Anaconda Co. shares via a tender offer, was denied access to Anaconda’s shareholder list. Crane, already a substantial shareholder, argued it needed the list to communicate directly with other shareholders about its offer and to correct what it perceived as misleading statements by Anaconda’s management. The New York Court of Appeals held that Crane had a right to inspect the shareholder list. The Court reasoned that informing shareholders about a tender offer that could substantially affect the corporation’s value is a purpose related to the business of the corporation, and that a shareholder should be able to independently evaluate the situation.
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Facts
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Crane Co. announced a proposed exchange offer to acquire Anaconda Co. shares. Anaconda’s management opposed the offer and sent letters to shareholders arguing against it. Crane sought Anaconda’s shareholder list to communicate directly with shareholders about its offer and address Anaconda’s statements. Anaconda refused to provide the list. Crane, already holding a significant number of Anaconda shares (over 11%), formally demanded access to the stock book, stating the inspection was for a purpose related to Anaconda’s business and not for selling the list.
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Procedural History
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Crane initiated an Article 78 proceeding to compel Anaconda to produce the shareholder list. Special Term dismissed Crane’s petition, finding the purpose improper. The Appellate Division reversed, holding the matter proper as it was of general interest to Anaconda’s shareholders. Anaconda appealed to the New York Court of Appeals.
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Issue(s)
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Whether a qualified stockholder may inspect the corporation’s stock register to ascertain the identity of fellow stockholders for the avowed purpose of informing them directly of its exchange offer and soliciting tenders of stock.
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Holding
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Yes, because a shareholder desiring to discuss relevant aspects of a tender offer should be granted access to the shareholder list unless it is sought for a purpose inimical to the corporation or its stockholders—and the manner of communication selected should be within the judgment of the shareholder.
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Court’s Reasoning
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The Court of Appeals emphasized the importance of a shareholder’s right to inspect corporate books and records, tracing it to the right of partners to understand the business. This right is rooted in the shareholder’s beneficial ownership and the right to protect their investment. The Court reviewed the history of the statutory right to inspect corporate records in New York, noting the shifting balance between an absolute right and a qualified right based on