The common law right to an accounting refers to the right of a shareholder, partner, or other interested party to demand a detailed financial statement from a company or partnership, showing how its profits and losses were calculated and how its assets were managed.
The common law right to an accounting is not specifically set forth in statutory law, but is based on principles of equity and fairness. Courts have recognized this right in various contexts, including partnerships and other business relationships. Fiduciaries have a responsibility to account for the assets and liabilities of the company they manage. As such demanding an accounting from a fiduciary who has allegedly breached his/her duties to the company or its shareholders/members is a common-sense claim in most shareholder disputes or business-breakups.
In order to establish the right to an accounting under common law, a plaintiff must show that they have a valid interest in the financial affairs of the company or partnership, and that there is a fiduciary relationship between the parties. The plaintiff must also show that there has been a breach of that fiduciary duty or other wrongdoing, such as mismanagement of assets or improper allocation of profits.
Once the plaintiff establishes their right to an accounting, the court may order the company or partnership to provide a detailed financial statement showing how its profits and losses were calculated and how its assets were managed. The statement must be prepared in accordance with generally accepted accounting principles and must be provided within a reasonable time period.
If the court finds that there has been a breach of fiduciary duty or other wrongdoing, it may also order the defendants to pay damages or take other appropriate action to remedy the harm caused. The court may also award the plaintiff reasonable attorneys’ fees and costs if they are successful in their action.
