Directors’ right to access the company’s books and records
In Australia, directors’ have the right to access the company’s books and records for the board they serve on. This right is governed by the various provisions in the Corporations Act and the company’s constitution. Directors have a duty to act in the best interest of the company, which includes the responsibility to review relevant company records.
The following are some key aspects in relation to the right of directors to access books and records in Australia:
- Access to financial records:
- Directors have the right to access the company’s financial records, accounting records, and financial statements. This includes profit and loss statements, balance sheets, and cash flow statements.
- Meeting minutes
- Directors can review minutes of board and shareholder meetings. This enables them to review decisions made by the board and shareholders.
- Company constitution
- The company’s constitution may set regulations regarding additional rights and limitations of directors’ access to records. Directors should refer to the constitution to understand specific regulations related to this matter.
- Inspection of records
- Directors can normally inspect these records at the company's registered office or at other locations determined by the board.
- Confidentiality obligations
- While directors have the right to access company records, they also have confidentiality obligations. They cannot disclose sensitive company information without appropriate authorisation.
- Legal proceedings
- If directors believe their access rights are improperly denied, they can seek legal remedies through the court.
It should be noted that the exact rights and procedures may vary based on the specific circumstances of the company, the company’s constitution and any additional agreements or contracts. Directors should consult legal practitioners to obtain guidance on accessing company records to ensure compliance with the law and company governance documents.
Rights of directors under the Corporations Act 2001 in Australia
The current director can apply to the court under section 198F(1) of the Corporations Act for the following orders:
- Request the other party to provide you, as the current director (and your professional consultant), with the right to inspect the company’s books and records (excluding financial records) within a reasonable time and allowing copies to be obtained.
Please note that the above provision does not include the right to inspect financial records of the company.
If you are a former director, you continue to have similar rights within 7 years after ceasing to be a director. In this scenario, according to section 198F(2) of the Corporations Act, these rights include the ability to inspect the company's financial records.
According to section 290 of the Corporations Act, current directors may apply to the court to make the following order:
- Request the other party to provide you, as a director (and your professional consultant), with the right to inspect the company’s financial records and allowing copies to be obtained.
The Corporations Act has defined the phrase “financial records”:
- invoices, receipts, orders for the payment of money, bills of exchange, cheques, promissory notes and vouchers;
- documents of prime entry;
- work and other documents required to explain the following:
- the methodology used to develop the financial statements;
- the adjustments required in the preparation of the financial statements.
Summary
Overall, company’s directors and shareholders in Australia have the right to access company’s books and records, but these rights may not always be obvious. It is therefore wise to seek legal advice when encountering concerns and disputes to avoid unnecessary legal proceedings and thereby ensure cooperation and transparency between the company and its shareholders. This will contribute to maintaining healthy and sustainable corporate governance, while ensuring the rights and interests of all stakeholders are fully respected.
How can I learn more?
Clare Chung.
Associate.
- Commercial & Litigation
- 03 9890 3321
- Email Address: c.chung@robinsongill.com.au
Clare is a litigation lawyer in the disputes team at Robinson Gill. A commercially savvy advocate with a sharp eye for detail, she acts on behalf of local and international clients in a range of dispute resolution matters.
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