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Shareholders’ Right to be Informed at the General Meeting

Each and every shareholder is by rights entitled to be properly informed. This is intended to let shareholders exercise their rights as they really wish. As no duty of loyalty for shareholders is stipulated in the law, the right to be informed runs up against its limits when business secrets and legitimate interests need to be protected.

Right to be informed

The inalienable right of shareholders to be informed is addressed in article 697 of the Code of Obligations. It enables them to demand information about business operations from the Board of Directors or about reviews and their findings from auditors. The law foresees such a right for shareholders only. In the Articles of Association, however, this right can also be awarded to participants.

The right to be informed is intended to make it possible for shareholders to form their own views and, based on such views, exercise their rights. Accordingly, a request for information should refer to what is actually relevant for the decision-taking process. In addition, only general information can be inquired about as the right to be informed does not substantiate any legal entitlement to be provided with specific details about the course of business or an audit.

Limitation of the right to be informed

Although the right to be informed is really inalienable, its enforceability remains limited. The Code of Obligations does not stipulate any duty of loyalty for shareholders. No such duty can also be introduced by means of the Articles of Association. Therefore, the right to be informed does not apply to the company’s business secrets or other legitimate interests if the latter might be compromised as a result of providing information. It is why the public limited company cannot be obliged to report on the current state of research or reveal any details of how a product is manufactured if this might somehow help the competition.

In each individual case interests should be weighed. If the public limited company declines any disclosure, it should be precisely explained why such information could compromise its business secrets or other legitimate interests. Criteria such as the company’s size or financial and legal structure are often taken into account when weighing out which interests should be protected.

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