Minority shareholders frequently face the issues of how to obtain information about the company that they are invested in and how to communicate with fellow shareholders. Both of these present challenges.

Where the ability to communicate with fellow shareholders is dependent on gaining access to the company’s register of members, the Court of Appeal has recently provided guidance on the circumstances in which access will be granted. Before turning to that guidance, though, it is worth considering the general entitlement of minority shareholders to company information.

It is of course not uncommon for minority shareholders, especially those who feel disenchanted with the way in which a company is being managed, to want information: perhaps to understand the current plans for the company’s business, why it has taken or not taken particular steps, or about the state of its current financial position and prospects. As explained below, though, shareholders are not typically entitled to such information. Those that are in a position to bargain for it will do so as a term of their investment into the company. In other cases, forcing the company to provide the information desired is likely to be difficult unless there is a basis for asserting that the minority is being unfairly prejudiced by the conduct of others.

The general position

Often a shareholder’s entitlement to access company information will be enlarged, or at any rate clarified, by the company’s articles of association, or through a shareholders agreement.

Jul-Sep 2018 issue

Dechert LLP