There are many variables to operating a business and sometimes you’re not able to oversee every aspect of the company. Business owners will sometimes seek a co-owner to divide and conquer everyday operations and keep the business running. One facet of the company that should always be readily available to owners is the accounting of the business. This may at times be entrusted to only one member, making them the trustee of accounting. If, at any point, that member is not fulfilling their duty, you may have to take formal steps to retrieve the information owed to you as a beneficiary and part owner of the company.
First, let’s go over the duties of the trustee in charge of accounting. The trustee is the person designated to manage trust assets, which can include anything from funds to financial documents. This person is legally obligated to follow Nevada trustee laws along with terms of the governing documents of the company, such as an operating agreement or company bylaws.
If other members of the business, also known as beneficiaries, are denied access to the trust assets or feel there is a breach of duty, they have the right to make a “demand for accounting” from the member in charge of accounting. It’s important to follow the necessary steps in Nevada Revised Statutes 165.141 when making the demand for accounting. A demand of this nature must include:
(a) The identity and address of the demanding beneficiary
(b) The period for which the accounting is being requested; and
(c) The legal basis for the demand.
The trustee will have 14 days from receipt to respond to the demand for accounting. Their response can be any of the following:
(a) The trustee accepts and provides the requested accounting within 60 days after receipt of the demand, unless that time is modified by the beneficiary or by the court
(b) The trustee rejects the beneficiary’s demand for an account and informs the beneficiary that they have 60 days to appeal to the court and review the rejection
(c) The trustee files a petition with the court pursuant to NRS 164.015 seeking instructions from the court regarding the sufficiency of the demand or the right of the beneficiary to the trust account.
If the trustee fails to accept, reject, or seek direction from the court, the beneficiary’s demand shall be considered rejected. A beneficiary must file a petition requesting the court’s review of the trustee’s rejection within 60 days after the rejection date. If you are finding it difficult to receive the proper accounting for your business, you should contact an experienced Nevada business attorney that can guide you through this process. The statute on trustee’s accounting is an important tool to be utilized by owners of a business because it can protect them from their partners engaging in unfair conduct.