The shareholder’s right to information in the The shareholder’s right to information is one of the fundamental pillars that guarantee transparency and effective participation of shareholders in the management of a company. This right, regulated mainly by the Spanish Companies Act (LSC), is essential for shareholders to be able to make informed decisions at General Meetings and, in general, to be able to exercise their rights fully and responsibly.
What is the right to information?
The right to information allows shareholders to request from the company’s management body the reports and clarifications they deem necessary on the matters to be discussed at the General Meeting. This right ensures that all shareholders, especially minority shareholders, have access to relevant information that enables them to vote with full knowledge of the facts and to participate actively in the company’s decision-making process.
This right is closely linked to other political rights of the shareholder, such as the right to attend and vote at General Meetings, as well as the right to challenge company resolutions that they consider contrary to the law or the company’s articles of association.
Exercise of the Right of Information in the Limited Liability Company (S.L.)
In the case of Limited Liability Companies (S.L.), the right to information is regulated in Article 196 of the LSC. Shareholders may exercise this right in two ways:
- Antes de la Junta General (Before the General Meeting): Shareholders may request in writing the information they consider necessary on the items on the agenda. This request must be made sufficiently in advance so that the directors can provide an adequate response before the General Meeting.
- Durante la Junta General (During the General Meeting): Shareholders may also verbally request reports and clarifications on the matters discussed at the General Meeting. The directors are obliged to respond during the meeting, unless they consider that disclosure of such information would be detrimental to the corporate interest. In any case, if the request comes from shareholders representing at least 25% of the share capital, the directors may not refuse to provide the requested information.
Exercise of the right to information in the Public Limited Company (S.A.)
In Public Limited Companies (S.A.), the right to information is regulated in article 197 of the LSC and presents some differences with respect to the exercise of this right in public limited companies:
- Antes de la Junta General (Before the General Meeting): Shareholders of an S.A. may request information up to seven days before the General Meeting. In the case of a listed company, the deadline is reduced to five days. The directors are obliged to respond in writing before the general meeting.
- Durante la Junta General (During the General Meeting): As in S.L.’s, shareholders may verbally request clarification during the General Meeting. If the requested information cannot be provided at that time, the directors must provide it in writing within seven days of the meeting.
Limits to the right to information
The LSC establishes certain limits to the right to information to avoid its abusive or detrimental use. Directors may refuse to provide information in the following cases:
- When the information is not necessary for the protection of the member’s rights.
- If there are objective reasons to believe that the information will be used for purposes unrelated to the company’s interests.
- If disclosure of the information could be detrimental to the company or its related companies.
However, if the request for information comes from shareholders representing at least 25 % of the share capital, these limits cannot apply unless the articles of association provide for a lower percentage, which may not be less than 5 % of the share capital.
Consequences of a breach of the right to information
The reform for the improvement of good corporate governance has limited the possibility of challenging resolutions of the General Meeting due to infringement of the right to information. If the infringement occurs during the meeting, the affected shareholder may demand compliance with the obligation to provide information and claim damages, but may not challenge the resolutions adopted.
Furthermore, abusive or harmful use of the information obtained may give rise to liability for the partner who requested it, who will be liable for damages caused to the company.
Challenging agreements due to insufficient information
Article 204 of the LSC establishes that resolutions cannot be challenged on the grounds of insufficient or incorrect information provided, unless this information is essential for the reasonable exercise of the shareholder’s voting rights or other participation rights. Therefore, in order to challenge a resolution, it is necessary to demonstrate that the lack of correct or sufficient information has significantly affected the shareholder’s ability to exercise his or her rights.
Conclusion
The shareholders’ right to information is a fundamental tool to ensure transparency and the active participation of shareholders in the life of the company. Knowing and exercising this right properly enables shareholders to make informed decisions and to protect their interests within the company. Likewise, directors must be aware of their obligations in this area and be prepared to handle requests for information in an appropriate manner, complying with regulations and avoiding potential conflicts.
In short, the correct exercise of the right to information is key to good corporate governance and the protection of the rights of all shareholders, especially in an increasingly complex and regulated business environment.
This publication does not constitute legal advice.
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