A common problem that can arise in the context of corporate disputes relates to director access to company information and records. Such disputes arise when directors request to inspect books and records of the company but are refused the opportunity to do so.
The Corporations Act 2001 (WA) (the Act) sets out the various circumstances where a director is entitled to access to company information.
The Act provides that a director of a company has a right of access to the financial records of a company at all reasonable times.1
Where the director is refused such access, they can apply to the Court for orders authorising a person to inspect the records on the director’s behalf.2 Where such an order is made, the authorised person can also make copies of the records, unless the Court orders otherwise.3 If such an application is made, it is prudent for the company to consider whether it should seek orders limiting:
Director access to company books while a director
The Act also provides that a director may also inspect and make copies the books of the company (other than its financial records) for the purposes of legal proceedings:
It is important to note that the Act provides a company must not refuse access; that is, a company must allow a person to exercise their rights to inspect or take copies of the books for the purposes of those proceedings.6
A director also has the right to inspect and make copies of the books of the company (including its financial records) for the purposes of legal proceedings:
for up to seven years after they cease to be a director of the company.7
Again, it is important to note that the Act provides a company must not refuse this access; that is, a company must allow a person to exercise their rights to inspect or take copies of the books for the purposes of those proceedings.8
In circumstances where a company refuses to grant a director access to the books and records of the company in the circumstances outlined above, the Court has the power to order the company to comply.9 However, the Court will consider various factors before ordering such compliance.
For an application to be successful under section 198F of the Act, the director in question must establish (among other things) the factual basis for the application by more than unsubstantiated assertions.10 For example, applications have failed where:
Directors have a right to inspect financial records and books of a company both during their term of appointment as a director and for up to seven years after they retire. Where directors make a valid request to inspect, the company should comply with the request. Failure to do so may result in a costly application which otherwise could have been avoided.
That said, notwithstanding a valid request being made, a company should consider whether there are circumstances where it should seek to place limits on the use of any information inspected and/or the right of a person to make copies of any information inspected.
There are various factors that need to be taken into account in order to determine whether a director has a valid basis to make a request to inspect and whether a company ought to comply with such a request. Each situation is different and needs to be carefully considered. Lavan’s Corporate Disputes team is able to provide you with advice that is specific to your situation.
 Corporations Act 2001 (WA) s 290 (1).
 Ibid (WA) s 198F(2); Ibid s 198F(3).
 Ibid (WA) s 198F(4).
 Ibid (WA) s 290 (4).
 Ibid s 198F(1); Ibid s 198F(3).
 Ibid s 198F(4).
 Ibid s 198F(2); Ibid s 198F(3).
 Ibid s 198F(2); Ibid s 198F(3).
 Ibid s 1303.
 Stewart v Normandy NFM Ltd  SASC 344.
 Re Motasea Pty Ltd (2014) 97 ACSR 589.