Thursday, September 23, 2010

Singapore High Court Examines Shareholder Right to Company Accounting Records

The Singapore High Court has noted that apart from the annual audited accounts and accompanying reports, a shareholder normally has no access to the accounting records of the company. The annual audited accounts and accompanying reports are the primary means by which the directors of a company account for their stewardship. Hence, the requirement that the accounts present a true and fair view of the company’s financial affairs. However, the court went on to say that directors do nit have an absolute right to deny financial information to shareholders in all circumstances. There is neither statutory nor common law authority to justify such an absolute position. There there is in principle no absolute bar against granting shareholders, in limited egregious circumstances, access to specified financial information. Additional information for shareholders may be warranted in egregious circumstances  revealing a pattern of behavior that was dismissive of the shareholders’ concerns and that marginalised their participation once they began probing into suspicious transactions. In other words, the denial of information formed a key element in the overall oppression and unfair treatment of the shareholders. Lian Hwee Choo Phebe v. Maxz Universal Development Group, Singapore High Court, Sept 8, 2010.