Where the inspection rights in sections 216 and 216A are confined to listed documents, section 219 of the Companies Act 1997 is open-ended.
Sections 219(1) and (2) — the request
(1) A shareholder may at any time make a written request to a company for information held by the company.
(2) The request shall specify the information sought in sufficient detail to enable it to be identified.
Not confined to documents, and not confined to any list. It reaches management accounts, board papers, budgets, contracts, correspondence, valuations and legal advice — anything the company holds. That is far wider than the nine categories in section 216.
The counterweight is subsection (2): the request must be specific enough to identify the information. A demand for “all documents relating to the business” does not comply. A request for “the management accounts for each month of the last financial year” or “the board papers for the meeting of 12 March at which the sale was approved” does.
Section 219(3) — the company’s four options
(a) provide the information; or
(b) agree to provide it within a specified period; or
(c) agree to provide it within a specified period where the shareholder pays a reasonable charge (which shall be specified and explained) to meet the cost of providing it; or
(d) refuse to provide it, specifying the reasons for the refusal.
The company shall do one of the four things within one month. Ignoring the request is a breach of a duty owed to the shareholder, actionable under section 149 and enforceable by a mandatory order under section 150 or section 142(1)(b).
Note the requirements attaching to each response. A charge under paragraph (c) must be specified and explained, not merely asserted. A refusal under paragraph (d) must specify the reasons — and those reasons are what the Court will examine under subsection (7).
Section 219(4) — the stated grounds of refusal
(a) disclosure would or would be likely to prejudice the commercial position of the company; or
(b) disclosure would or would be likely to prejudice the commercial position of any other person, whether or not that person supplied the information to the company; or
(c) the request is frivolous or vexatious.
The opening words are “without limiting the reasons”. Other grounds may be advanced — legal professional privilege, a binding confidentiality obligation, or the fact that the information is not held. But whatever ground is relied on must be specified in the refusal under subsection (3)(d).
Paragraph (b) is important in practice: a company may refuse to hand over a customer’s or supplier’s confidential information even though the shareholder’s request is otherwise proper.
Section 219(5) — the charge, and deemed withdrawal
Where the company requires a charge, the shareholder may withdraw the request, and is deemed to have done so unless, within one month of receiving notification of the charge, the shareholder pays the charge.
So a shareholder who is quoted a fee has one month to pay it. Doing nothing ends the request automatically — and the shareholder must start again. If the fee is excessive, the answer is not to ignore it but to apply under subsection (6).
Sections 219(6) to (8) — the Court’s powers
The Court may, on the application of a shareholder who has made a request, where satisfied that (a) the period specified for providing the information is unreasonable, or (b) the charge set by the company is unreasonable, order the company to supply the information within such time or on payment of such charge as the Court thinks fit.
The Court may order the company to supply the information where satisfied that (a) the company does not have sufficient reason to refuse, or (b) the company has sufficient reason to refuse but other reasons exist that outweigh the refusal.
Even a good reason for refusal can be outweighed. A company may properly say that disclosure would prejudice its commercial position — and the Court may still order disclosure where the shareholder’s need is greater, for example where the information is required to assess a section 152 claim or a derivative action.
Section 219(8) then allows the Court, where it makes an order under subsection (7), to specify the use that may be made of the information and the persons to whom it may be disclosed. That is how the commercial sensitivity is managed — disclosure on terms, rather than refusal.
Using section 219 well
- Be specific. Identify documents by date, meeting, transaction or period. Subsection (2) is a real requirement.
- Explain why, even though you need not. A stated purpose connected with your position as a shareholder makes a refusal on “frivolous or vexatious” grounds harder to sustain, and assists the subsection (7)(b) balancing.
- Use the inspection rights first. The section 216 categories — including the interests register and directors’ certificates — come without a section 219 refusal risk, and section 218 copies must be sent within five days.
- Diary the month. One month for the company to respond; one month for you to pay any charge or the request lapses.
- Consider section 220 where the company is stonewalling. That allows the Court to authorise a qualified person to inspect and copy the records, and even to audit the accounts — with the company bearing the reasonable costs unless the Court orders otherwise.
- Remember directors have a better right. Under section 166, a director may inspect all the records, in written form, without charge, unless the Court orders otherwise on the company’s application.
Sources
- Companies Act 1997 — ss 142, 143, 149, 150, 152, 164, 166, 216, 216A, 217–220
Before relying on anything here, read the current text of the Companies Act 1997 and check for later amendments. If a decision matters to you, get advice — start with the Office of the Public Solicitor, or find a firm in the law firms directory.