Your right to information as a shareholder

Have you ever found yourself in a situation where you, as a shareholder, needed more information than you were given by the management board? It’s only logical that you want to know what’s going on in the company in which you are a shareholder.

But the management board is responsible for the day-to-day management of the company and is not always available or doesn’t always feel it is necessary or desirable for the shareholders to be checking up on it too much.

It can be very difficult if the expectations of the General Meeting and the management board are at odds with each other. The management board wants to be able to manage and run the business with a level of autonomy. The shareholders want to be kept informed because it is they who run the financial risk.

But how much information is reasonable? How much does a shareholder need? And when does it become just meddling?

First and foremost, it is good know what the law says about this: ‘the management board and the supervisory board [if there is one] will provide it [the general meeting] with all the requested information, unless a compelling interest of the company prevents this.’

Under the law, therefore, the right to information is a right of the general meeting of shareholders and not a separate right of an individual shareholder. However, each individual shareholder has the right to ask questions at the general meeting, which the company (the management board) will be required to answer.

An example of a compelling interest that would prevent information from being shared with the general meeting could be the suspicion that one or more shareholders are leaking information to third parties, which could harm the company’s competitive position. Another example is the situation where internal relations within the company could be severely damaged if certain information were to be shared with the general meeting.

It is already clear from the text of the law and the examples that company directors must exercise extreme caution in invoking this exception.

Besides the general meeting of shareholders’ right to information, under certain reasonable conditions an individual shareholder may request information that is specifically important to him. This right, however, is not as enshrined in law as the right of the general meeting to obtain information. In order to determine whether an individual shareholder has the right to certain information, the law, the articles of association, any shareholders’ agreements and public and personal interests are important.

One could imagine, for example, a situation in which three shareholders together hold the entire capital, but two of the three shareholders hold the majority of the shares and act together, and perhaps are both directors too. In that case, it is reasonable for the third minority shareholder to request additional information, certainly if there may be a conflict of interests.

In order to avoid any doubt or discussion, we advise including in the shareholders’ agreement some provisions on how often and in what manner the management board will provide the individual shareholders with what information. The format of the articles of association also deserves the necessary attention on this point, about which we would be pleased to advise you.