Access to the Company Records by a Former Director
Former directors of companies who find themselves involved in legal proceedings related to their tenure with an organisation have two ways, should they require it, of gaining access to company financial records.
Section 198F of the Corporations Act 2001
The first is a legally enforceable right of access under Section 198F of the Corporations Act designed to ensure that former directors have access to a company’s books for seven years after they have ceased to be a director.
The right of access is restricted to purposes related to legal proceedings to which a former director is a party, or, proposes to bring in good faith, or has a reasonable belief will be brought against the director.
The onus of establishing good faith about a proposed inspection of company records, for reasons related to legal proceedings, is on the former director; as the purpose of Section 198F is not to give access to a former director for purposes unconnected with a legal claim, or liability, arising out of his, or her, capacity as a director.
Where authorisation is granted, a former director may make copies of documents required for legal proceedings that the organisation is not to refuse. Section 198F is not intended to restrict any other right of access to the books of a company that the former director might otherwise have.
Deed of Access
Another mechanism that allows former directors access to company records involves the lawful nomination of an appointed person to hold a set of board papers available for inspection and copying for former directors that relate to their term in the office of director.
It is now a common practice among large listed companies for a deed of access to be agreed upon between a company and directors that provides directors with the right to inspect and copy board papers for a specific period after their tenure as company director has ended.
A director is also entitled to retain possession of all written communications given to them from the company during the time they acted as a director for the company and which may include Board papers, minutes and related communications.
Simon Della Marta
Partner
T: +61 2 9390 8310
E: simon.dellamarta@holmanwebb.com.au