Shareholder rights - access to a company's financial documents
Shareholders of private limited companies registered in England and in Wales have a statutory entitlement to be provided with a copy of the company's annual accounts and related documentation. This right is pursuant to sections 423, 424 and 431 of the Companies Act 2006 (the Act).
Under section 431 of the Act a shareholder is entitled to be provided (without charge) with:
- the latest annual accounts;
- the strategic report (if any) for the last financial year;
- the latest directors' report; and
- the auditor's report on the accounts.
A failure to comply with a demand sent by a shareholder under section 431 is a criminal offence.
We recently acted for a minority shareholder in a claim under these provisions of the Act in circumstances where a demand under section 431 was not complied with.
It was argued on behalf of the company that our client was entitled to no more than a copy of what had been filed at Companies House, namely abbreviated and unaudited accounts. This was in the context of an ongoing legal dispute where the company was seeking to limit our client's access to information.
The company's position was incorrect for reasons which were explained in correspondence. In short, the issue of whether a company is permitted to file abbreviated accounts at Companies House is entirely distinct from its statutory obligation to prepare full accounts for members.
However, the company refused to comply and proceedings were issued by our client seeking an Order for the disclosure of the full unabbreviated annual accounts for the previous financial year.
After hearing from both parties, the Court agreed with our submission that the company was in breach of its duties under the Act.
It therefore ordered the immediate disclosure of the accounts and the company was ordered to pay our client's costs.
If you require any advice regarding your rights as a shareholder or in relation to a company's statutory duties then please do not hesitate to contact a member of our team.
The team at Blake Morgan LLP has extensive experience of dealing with various corporate dispute matters providing both for directors and shareholders of companies. If you'd like to discuss a specific issue or case please call 029 2068 6199 to speak to Delme Griffiths or 029 2068 6181 to speak to Paul Caldicott.