Information Access Rights

The story of a corporation’s formation, capital, business and affairs is typically set out in its minute book, financial statements, and related corporate records. That does not, however, mean all of that information is automatically available for review. A person’s right to access corporate information depends on the nature of their relationship with the company.

Questions about access to corporate records can arise at moments of tension: during financings, shareholder disputes, governance reviews, or when directors disagree about the direction of the company. It can be helpful to be prepared in advance of information requests.

Corporations governed by the Canada Business Corporations Act (the “CBCA”) and the Business Corporations Act (Ontario) (the “OBCA”) share many of the same underlying principles, but each statute includes its own set of rules governing which records a corporation must maintain, and who has access to them.

CBCA Recordkeeping Requirements

Under the CBCA, a corporation is required to prepare and maintain certain records, including:

• Articles and by-laws;
• Minutes of meetings and resolutions of the shareholders, directors, and any committee of directors;
• Registers of securities, officers, and directors;
• Certain notices and government filings;
• A register of individuals with significant control over the corporation; and
• A copy of the financial statements of each of its subsidiaries and of each other corporation the accounts of which are consolidated in the financial statements of the corporation, together with “adequate” accounting records (which must be retained for at least six years after the end of the last fiscal period to which they relate).

OBCA Recordkeeping Requirements

Similar to the CBCA, the OBCA requires a corporation to prepare and maintain:

• Articles, by-laws, and a copy of any unanimous shareholder agreement known to the directors;
• Minutes of meetings and resolutions of the directors and shareholders;
• Registers of directors, securities, and security transfers;
• A register of ownership interests in land in Ontario;
• A register of individuals with significant control over the corporation; and
• The latest financial statements of the corporation and each subsidiary, and adequate accounting records (which must be retained for at least six years after the end of the last fiscal period to which they relate).

Directors Have Comprehensive Access

Directors owe a fiduciary duty to act in the best interests of their corporation. Unlike shareholders, whose inspection rights are expressly set out in the CBCA and OBCA, directors’ access to information arises from a combination of the statutes’ recordkeeping requirements and directors’ fiduciary duties.

Read together, these provisions support the principle that directors are entitled to access all corporate information reasonably required to discharge their duties. Directors may also request, and are entitled to receive, information from officers and employees as required for effective corporate supervision.

Shareholders Have Limited Access

Unlike directors, shareholders do not owe fiduciary duties to their corporation, and their statutory information rights are correspondingly narrower. The scope of these rights can also vary depending on the attributes of the shares they hold, such as whether the shares carry voting rights.

The statutory framework is broadly structured to provide shareholders with the information they need to vote responsibly, understand significant corporate changes, and review the corporation’s financial position.

CBCA Shareholder Information Rights

Under the CBCA, shareholders have a right to inspect, among other things:

• Articles and by-laws;
• Minutes of meetings and resolutions of the shareholders;
• Any unanimous shareholder agreement;
• Registers of securities; and
• Annual financial statements of the corporation and the report of the auditor, if any, together with the financial statements of each subsidiary and each other corporation which are consolidated into the financial statements of the corporation.

Shareholders of a CBCA corporation may also examine the portions of any minutes of meetings of directors or of committees of directors in which a director has disclosed that he or she has a conflict of interest in a contract or transaction.

However, shareholders do not have statutory rights to access any other board resolutions or minutes, or detailed accounting records.

The CBCA also contemplates that shareholders may require their corporation to provide a list setting out, among other things, the names of the shareholders of the corporation, the number of shares owned by each shareholder and the address of each shareholder, together with supplemental lists with updated information. Certain additional steps are required for a shareholder to access these records, and the information set forth in these lists may only be used in connection with:

• an effort to influence the voting of shareholders of the corporation;
• an offer to acquire securities of the corporation; or
• any other matter relating to the affairs of the corporation.

OBCA Shareholder Information Rights

Under the OBCA, shareholders can inspect the following records relating to their company:

• Articles and by-laws;
• Minutes of meeting and resolutions of the shareholders;
• Any unanimous shareholder agreement;
• Registers of securities and directors, and certain director consents; and
• Annual financial statements and the report of the auditor, if any, together with the latest annual financial statements of each subsidiary of a holding corporation.

Similar to the CBCA, shareholders of an OBCA company do not have statutory rights to examine board minutes, committee reports, or internal financial documents. As with the CBCA, shareholders may access a list of shareholders, but additional steps may be required in order for a shareholder to examine that information.

Mandatory Information to be Delivered to Directors and Shareholders

In addition to the rights of inspection described above, the CBCA and OBCA also require corporations to proactively deliver certain information to directors and shareholders.

These statutory obligations operate independently of any request and help ensure that those responsible for oversight and decision-making receive key materials at the right time.

Information to be shared with directors

Corporations must deliver to each of their directors certain information, including:

• Notice of directors’ meetings, unless the notice is waived;
• Annual financial statements, which directors must review and approve before they are sent to shareholders;
• The auditor’s report, if the corporation has not been exempted from appointing an auditor; and
• Any information necessary to approve matters requiring board action, including materials relating to fundamental changes or transactions submitted to the board for approval.

Information to be shared with shareholders

The information that corporations must deliver to shareholders includes:

• Notice of the annual meeting, unless all shareholders sign a written resolution in lieu of holding a meeting; and
• Annual financial statements, together with the auditor’s report, if any.

Where a corporation is seeking shareholder approval for a corporate change such as an amalgamation, continuance, or sale of all or substantially all of its assets, or where management is soliciting proxies from shareholders, a corporation may be required to deliver to shareholders an information circular with additional details.

In addition, the notice of meeting for any shareholder meeting at which “special business” is to be transacted must include sufficient details to permit a shareholder to form a reasoned judgment on the special business. “Special business” is any business aside from consideration of the minutes of an earlier meeting, consideration of the financial statements and auditor’s report, election of directors and reappointment of the incumbent auditor. For more information about shareholder meetings, see our Spotlight blog.

These mandatory deliveries complement the statutory inspection rights available under each act and form an important part of the governance framework for both CBCA and OBCA corporations.

Other Considerations

Unanimous shareholder agreements and other contracts

Contracts such as unanimous shareholder agreements, credit agreements, and board observer agreements can provide stakeholders with significant information rights beyond those contemplated by the relevant corporate statute.

Limitation periods on shareholder enforcement

Each of the CBCA and OBCA require a corporation to provide audited financial statements to shareholders, unless the shareholders unanimously agree to exempt the company from this requirement. A recent Ontario Court of Appeal decision confirms that shareholders’ statutory rights to corporate information, such as to receive audited financial statements, may be subject to limitation periods.

In Lagana v. 2324965 Ontario Inc., the court held that a shareholder’s application under the OBCA to compel the production of audited financial statements constitutes a “claim” and is therefore subject to the basic two-year limitation period in Ontario’s Limitations Act, 2002.

The decision is a reminder that information rights may not be indefinite, and shareholders and directors should act promptly to obtain the information they require.

Key Takeaways

• Directors enjoy broad access to corporate records, including those not specifically enumerated in the statutes, helping to ensure they can discharge their fiduciary and oversight duties effectively.
• Shareholders have more limited access rights that are primarily designed to support informed voting, assessment of fundamental corporate changes, and review of the corporation’s financial position. Those rights typically include access to core corporate documents, shareholder resolutions, and financial statements, as well as certain prescribed information about fundamental changes, but stop short of details about board deliberations or internal management records.
• Access to information does not equal entitlement to copies in all circumstances.
• Corporate by-laws or shareholder agreements can be used to expand, but not reduce, statutory rights.
• Information rights may be subject to limitation periods and restrictions on access in the context of litigation.
• For shareholders needing broader access (e.g., to board minutes or internal accounting records), relief is generally only available through a court application unless the corporation voluntarily consents.