Does every shareholder have the right to inspect the company’s accounts and documents?

When joining a company, a new shareholder should know what rights they have with respect to the company. In addition to obvious issues such as the right to participate at shareholders’ meetings, a shareholder has the right, under Article 212 of the Commercial Companies Code, to inspect the company. This article states that all shareholders, no matter how many shares they hold, have the right to inspect the company. This right may be exercised by inspecting the accounts and documents of the company, drawing up a balance sheet and requesting explanations from the management board. In addition, while carrying out its inspection, the shareholder may be accompanied by an authorized person, such as a lawyer or accountant, though the shareholder must always be present in person while carrying out the inspection.
Accounts and documents mean financial statements, balance sheets, profit and loss accounts, court and registry files, contracts executed by the company and other documents connected with the day-to-day operations of the company.

When can a shareholder exercise the right to carry out an inspection?

A shareholder may exercise its right of inspection at any time, within reason. This means that a shareholder should respect the office hours and not interfere with business activities. It is good practice to schedule such inspections sufficiently in advance to allow the management board can prepare the necessary documents.

Can a shareholder be denied the right to carry out an inspection?

Under Article 212 § 2 of the Commercial Companies Code, the management board may refuse to give a shareholder explanations or to provide the accounts and documents of the company for inspection in the event that there is reasonable concern that the shareholder will use them for purposes contrary to the company’s interest, thereby causing substantial damage to the company. In this case, the management board should adopt a relevant resolution in which it sets out the circumstances that indicate the perceived threat. Such circumstances must be specific and precise. The management board is required to present details of any possible risk resulting from the provision of such information to the shareholder and to demonstrate a causal link with the possible damage to the company.

What happens if a shareholder is refused the right to carry out an inspection by the management board?

In this case, the shareholder may request that the issue be settled by the remaining shareholders and may demand the adoption of a relevant resolution in this respect. The resolution should be adopted within one month from the date on which the demand was submitted. The shareholder who has been refused the right to inspect the company’s accounts and documents may appeal to the remaining shareholders though the management board. The shareholders may settle this issue without convening a meeting of shareholders, for example by adopting a resolution in writing.

If the remaining shareholders share the concerns of the management board and refuse access to the company’s information, or if the deadline of one month to adopt the specific resolution passes, then the shareholder who wished to exercise the right of inspection may have this issue finally settled by the court. The shareholder may bring court action within seven days from receiving notice about the resolution of shareholders, or seven days after the date on which the deadline passed for the adoption of the resolution. It is important that the shareholder, before turning to the court, must follow the entire internal corporate procedure or the action will be rejected as inadmissible.