18 January 2021 – need2know
When drafting participation, syndicate or investment agreements, the information and inspection rights for shareholders must be regulated carefully.
Access to business documents and corporate information is regularly crucial for co-determination, control and the exercise of shareholder rights. In particular, if a shareholder is not represented in the management or a supervisory board of a limited liability company (“GmbH”).
A GmbH shareholder is allowed to inspect all business documents of the GmbH, to make copies and he has a comprehensive right to information.
In case a GmbH holds shares in other companies, the question arises whether and to what extent these rights of the GmbH shareholder apply to or for such affiliated companies. The Austrian Supreme Court (“OGH”) has recently defined the limits OGH 02.09.2020, 6 Ob 11/20 s.
Starting point – The shareholders comprehensive right of inspection regarding the GmbH
It is undisputed that a GmbH shareholder has a general and comprehensive information claim regarding the company, irrespective of the percentage of shares held. This claim does not have to be substantiated. The documents to be inspected also do not have to be named or specified before.
Furthermore, documents of group companies or shareholdings, which are in the possession of the GmbH (as shareholder), are regarded as its own and are covered by the comprehensive right of inspection of the shareholders.
When is the company generally allowed to withhold information?
- When the disclosure of information is prohibited by law; or
- if the information claim is exercised in abuse of rights.
There is also a principle of proportionality: The burden placed on the company by the disclosure of information and the interference with the company’s interests must not be out of proportion to the shareholder’s interest in information.
100% subsidiaries are treated equally
Fully owned subsidiaries of the GmbH subject to the disclosure obligation are treated in the same way as the GmbH for the shareholder’s right of inspection. In this constellation, the interests of third parties – such as shareholders who only hold shares in the information-bearing company, but not in the GmbH itself, which is obliged to provide information – are not affected.
How to exercise the information claim in case of shareholdings in companies below 100%?
In the case of such companies, the shareholder in general only has a right to information, but no right to inspect business documents. The shareholder of the GmbH as holding company must therefore specify the information requested in detail and explain his justified corporate interest.
Extent of the information claim in the case of shareholdings in companies below 100%?
The information claim on companies not fully held by the GmbH depends on the legal form of such company and generally only exists to the extent that the GmbH as shareholder itself has an (enforceable) right to receive information.
In the case of a stock corporation, the information claim is therefore limited to the right to information at the shareholders’ meeting within the meaning of section 118 para 1 Austrian Stock Corporation Act (“AktG”). This right to information is factually limited to the subject matter of the respective shareholders’ meeting.
Section 118 AktG does not provide a right for the shareholder to inspect books and make copies of business documents.
The OGH rejected the idea partly expressed in the literature to derive a right to inspect the books and records of a stock corporation from the partnership provisions under civil law (“GesbR”). Because according to section 1175 para 4 Austrian General Civil Code (“ABGB”), the GesbR-law is only applicable to other companies on a subsidiary basis if the specific corporate law does not regulate this issue. However, this is not the case with the shareholder’s information and control rights as the AktG primarily regulates the right to information and the institute of special audits.
In the case at hand, a request was made that the GmbH as holding company (respondent) must allow its shareholders (applicant) to inspect the commercial books, business papers and other business documents of the stock corporation and to enable the production of copies. This application failed because the GmbH as shareholder of the stock corporation does not have the legal authority to fulfill such request.
Stock corporation – May a special audit be requested?
The decision of the supreme court does not deal with the question whether the GmbH shareholder for an information request in the stock corporation, in which the GmbH holds shares, might demand the resolution on a special audit from the GmbH.
In principle, this should be permissible if the GmbH shareholder exactly describes and limits the subject of a special audit and if the shareholder can demonstrate his justified corporate interest. A justified interest may exist, for example, if – based on the rules for the judicial appointment of special auditors – there are reasons for suspicion that dishonesty or gross violations of the law or the articles of association have occurred with respect to the process to be audited.
Limited partnership/limited partner
In the case of a limited partnership, the limited partner’s right of control is limited. The limited partner can only request extraordinary information if there are important reasons. The request to the GmbH for information on the limited partnership in which the GmbH holds an interest must therefore contain
- the information requested,
- the legal interest in it and
- the important reasons.
The information claim always has to be addressed to the GmbH as holding company
The affiliated company is not obliged to fulfill the information request of the indirect shareholder. The obligation remains with the GmbH as holding company in which the requesting shareholder holds an interest. Therefore, the request of information shall be directed against the GmbH as holding company. Accordingly, the GmbH as holding company has to fulfill the information request, however, within the limits of its own information claim.
Author: Daniel Zahourek
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