Rights of a shareholder to information

Does a shareholder have the right to inspect the board minutes? How can a shareholder better understand how certain decisions were made by the board of directors?

While Section 189(1) of the Companies Act requires the minute books of a company to be kept at its registered office, Section 189(2A) expressly excludes minutes of board meetings from the general entitlement of the rights of a shareholder to copies of minutes. This exclusions includes any minutes recorded for meetings of the managers of a company. The reason being the need maintain confidentiality and to allow for open discussion between directors. Board meetings and managers' meetings usually involve matters that are price-sensitive, strategic and confidential.

The directors of a company are obliged to know the affairs of the company and have a statutory right to access the accounting and other records of the company that sufficiently explain the transactions and financial position of the company. Therefore any concerns a shareholder may have can be raised with the directors of the company only at general meetings.

The annual general meeting is one of the best forums for any concerned shareholder to require the board of directors of a company to account for and provide more insight into the affairs and business of the company. A shareholder can, at the annual general meeting, ask the board to explain the rationale and basis for the decisions taken.

If you intend to set up a company but remain only the shareholder of the company please note that you will be bound by Section 189(2A) in that the boards of directors are not obliged to disclose what transpired in any board meetings.

Sandhurst Consultancy provides guidance on corporate practices and statutory compliances.


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