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In one case, two groups of shareholders are in disagreement over the control and management of the company. A director representing the minority shareholders filed an application in court to inspect the company accounts and documents stating that:
(1) the company's accounts were improperly approved;
(2) certain company's loans were improperly made; and
(3) certain acquisitions by the company were unauthorised.
The court allowed the inspection and stated that right to inspect documents and, if necessary, to take copies of them is essential to the proper performance of a director's duties. A company shall make its accounting records available at all reasonable times for inspection without charge by any director of the company. The director need not provide his reasons to carry out the inspection. In the absence of clear proof to the contrary the court will assume that he will exercise it for the benefit of his company.
A director will not be deprived of his right of inspection because he has disagreements with the managing director. When there is suspicion and lack of co-operation between the directors, a director is all the more entitled, perhaps even obliged, to inspect company accounts to protect the interests of the company and its shareholders. A director will only lose his right of inspection if his intentions are to
abuse the information obtained from the inspection; or
to injure the company.
An intention to wrest control of the company from the managing director cannot be regarded as wanting to injure the company.
Raffleslaw.com
