Company directors must promote the success of the company. A board of directors are required to work together to achieve this aim. In doing so, directors must exercise reasonable care, skill and diligence and independent judgment.
In order to comply with these requirements and responsibilities, directors need, and are entitled to, access to all company documents and information.
However, directors cannot use company confidential information otherwise than for the benefit of that company. Any attempt to do so will be in breach of the duty of confidence a director owes to the company. The remedies available to the company for such a breach include damages, delivery up and destruction of material, an account of profits or an injunction.
Directors can fall out and professional relationships can break down. When that happens, it can often lead to one director trying to restrict another director from accessing key company information. This may appear to be a viable option to prevent company information from being used as a leverage in a dispute or to set up a competing company, but it is not.
A director cannot prevent another director from having access to company information and documents. As a director, you have a right to access and take copies of company information.
A director who is refused access to company documents by another director will be entitled to get a court order that the other directors provide access to information and documents. This can be costly and time consuming.
In any event, a court will grant access to documents requested by a director unless it can be demonstrated that the director who wants those documents is only seeking access for an improper purpose.
Geldards recommends that access to company information should not be constrained unless absolutely necessary and to prevent improper use of company information. Disputes over such issues can be expensive and take up management time that could be used promoting the company.
If you are concerned about your access to company information or that a fellow director is preventing you from seeing company documents, the commercial dispute resolution team at Geldards can help. We can advise you on what steps to take to protect your position and fulfil your director duties.
If you’d like further advice on this issue, please do not hesitate to contact a member of our Dispute Resolution Team.
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