The Shareholder's Right to Information in the S.A.

Legal Insight

June 2022

George Kefalas, LL.M. (mult.), Μ.Sc.

Summary: Perhaps the most important right granted to the minority in the context of joint stock company law is the right to information. This right is structured either as an individual right of each shareholder, or as a right of a small or large minority, with a corresponding differentiation of the information that each category can request. The information provided contributes both to a more correct exercise of shareholders' voting rights and facilitates the exercise of other minority rights (such as the request for an extraordinary audit) and the exercise of corporate actions.  

 1. Introduction

In a previous article (see here), we have already referred to the right of the minority of a public limited company (PLC) to request the court for an extraordinary audit of the company for the reasons mentioned there. Another right that contributes indirectly to the control of the company's management by the minority, and by every shareholder, is the right to information provided for in Article 141 of the Law. 4548/2018. The scope of this right is differentiated depending on whether it is exercised by an individual shareholder, a small minority or a large minority, as specifically mentioned below. Through this right, each shareholder or minority can obtain information on corporate matters in view of the General Meeting (GA), so that, on the one hand, they can exercise their voting rights correctly and, on the other hand, they can take further measures in case of doubts regarding the way the Board of Directors (BoD) manages the company.

2. The right to information

2.1 The right to information as an individual right of every shareholder

According to the provision of para. 6 of article 141 of the Act. 4548/2018.

Thus, any shareholder of a public limited company, even a non-voting shareholder, may, by a request submitted to the company at least five full days before the (ordinary or extraordinary) general meeting, request information on the company's affairs, provided that such information is relevant to the items on the agenda of the general meeting. It is not required that the requested information be directly related to an item on the agenda, but it is sufficient that it be indirectly related to it. In the case of a pledge or hypothecation of shares, the pledging lender or hypothecary is also deemed to have this right. The information requested may relate either to the current or to past financial years, without in principle any time limitation. 

The request may be submitted in writing or orally to the competent body, i.e. the legal representative of the company or the Board of Directors as a body. Usually, for evidentiary reasons, the written form, namely service of the shareholder's request by a bailiff, will be preferred. The request must be received by the company at least 5 full days before the original General Meeting, and in the event of postponement of the General Meeting, no new right to information is granted to shareholders, as the postponed General Meeting is a continuation of the previous one. The requesting shareholder is not required to state in his/her application why he/she is requesting the information or to justify its relation to the items on the agenda. However, the request must request specific information, otherwise the Board may legitimately refuse to provide information of a general nature. 

The Board of Directors is responsible for providing the information, which must provide it, in principle orally, before the General Meeting, even if the requesting shareholder is not present at the meeting. However, neither the shareholder individually nor the (small or large) minority has the right to show documents or examine the company's books and records. The purpose of this right is not only to inform the requesting shareholder, but also the general meeting, and the information provided may contribute to the exercise of other management rights of the shareholder or minority. 

The information provided by the Board in response to a request must be complete, accurate and true. However, it is expressly stated in the relevant provision of the law that 'there is no obligation to provide information where the relevant information is already available on the company's website, in particular in the form of questions and answers'. Similarly, there will also be no obligation to provide information in relation to information arising from published financial statements. 

2.2 The right to information of the small minority

The same provision of the law provides that "at the request of shareholders representing one twentieth (1/20) of the paid-up capital, the board of directors is required to announce to the general meeting, if it is a regular meeting, the amounts paid during the last two years to each member of the board of directors or the directors of the company, as well as any benefit to such persons from any cause or contract of the company with them".

What has been said above about how to exercise the individual right to information also applies in this case, except that in this particular case the law expressly states that the right of the small minority may only be exercised before the ordinary general meeting. 

Furthermore, the subject of the information in this case is the amounts paid during the last two years by the company to members of the board of directors and/or directors (as well as their relatives) for any reason whatsoever. The information also includes amounts paid to members of the temporary management of a public limited company appointed pursuant to the provision of Article 69 of the Civil Code (see here). 

The Board's response to this request, which will likewise be submitted to the General Meeting, must be detailed, i.e. it must indicate not only the amounts paid to the members of the Board and the directors, but also the reason for them and the specific circumstances of these payments. 

However, in both of the above cases (i.e. both the individual right to information and the right of the small minority), the Board of Directors may refuse to provide the information either for formal reasons (e.g. late submission of the request or addressing the request to another body and not to the Board of Directors of the company), but also if it considers that there is an overriding substantial reason, which should be recorded in the minutes of the General Meeting. 

2.3 The right to information of the large minority

The provision of par. 7 of the same Article 141 of the Law. 4548/2018 provides that: "Upon request of shareholders representing one tenth (1/10) of the paid-up capital, submitted to the company within the time limit specified in paragraph 6, the board of directors shall provide the general meeting with information on the course of corporate affairs and the company's assets and liabilities."

This right granted to the minority of 1/10 of the share capital is therefore much broader and concerns information on the progress of the company's affairs and its assets. In this case, therefore, the information requested need not relate to an item on the agenda or be specific. 

It is obvious that the information requested by the large minority on the development of the company's affairs and assets is not limited to the information reflected in the company's financial statements, but also includes an assessment of the relevant data, their expected future development and a comparison with data from previous years.

Otherwise, the aforementioned provisions on how to exercise the right to information (it must be submitted to the competent body at least five full days before the General Meeting) and on the grounds for the Board of Directors to refuse to provide the requested information (i.e. in case of an inadmissible request or if there is an overriding substantial reason justifying the refusal to provide the information) also apply to the right of the large minority. 

3. The consequences of unjustified refusal to provide the requested information

As mentioned above, the Board may refuse to provide the information requested if there is a substantial and substantial reason for not providing it, in which case the reason must be noted in the minutes of the General Meeting, and when the request has not been duly submitted. 

In this case, the requesting shareholder or the requesting minority shareholder whose request for information has been rejected has the following possibilities:

A) If they wish to receive the information, they may bring an action for injunctive relief before the Single-Member Court of First Instance of the company's registered office, which will decide whether or not the refusal of the Board of Directors to provide the requested information is justified. If the court finds that the Board of Directors unreasonably refuses to provide the information, it will order the company to provide it. 

B) They may also appeal to the same court within a period of four months from the date of the decision of the General Meeting and request that it be declared null and void because of the Board's unjustified failure to provide the information requested. If the court finds that the Board has indeed unjustifiably refused to inform the shareholder, it shall annul the decision taken at the relevant General Meeting.

4. Instead of an epilogue

The right to information is perhaps the most important of the minority rights, as through it the shareholder can obtain the necessary information in order to then form and properly express his will before the General Meeting with the right to vote. Furthermore, through this right, the minority, but also each shareholder, is able to exercise effective control over the management of the company (which will be appointed by the majority) and to exercise any further claims of the shareholder or the company (e.g. exercise of control rights or corporate action).

What is of particular importance is, on the one hand, the proper exercise of the right, whether it is exercised individually or by a minority, and, on the other hand, in the event of a refusal by the board to provide the requested information, the control of whether or not this refusal is justified.