Our client is a shareholder of a group company. The group company regularly provided the client with its Annual Audit Report. However, we discovered that these reports contained errors in the application of accounting standards, failed to consolidate financial statements as required by law, and exhibited multiple obvious omissions and mistakes.
We argued that the Annual Audit Report provided by the group company did not accurately, objectively, or truthfully reflect the operating conditions of the enterprise group. The client therefore submitted a written request to exercise their shareholder right to information, but the request was rejected by the group company’s board of directors. Consequently, the client filed a lawsuit against the group company.
Prior to the lawsuit, we conducted an empirical analysis of the scope of shareholder right-to-information claims and court-supported rulings in judicial practice. During the litigation, we submitted a corresponding case law retrieval report to the court and presented our legal arguments.
The court ruled that the shareholder’s right to information is an inherent right granted by the Company Law. The defendant failed to provide evidence proving that the plaintiff’s request was made with improper purposes. Moreover, the law does not stipulate that providing an audit report precludes the exercise of the shareholder’s right to information. Therefore, the plaintiff’s claim to exercise their shareholder right to information should be supported.
The court accepted our arguments and ruled in favor of most of the plaintiff’s claims. Notably, the court supported the plaintiff’s request to both inspect and copy the company’s financial accounting reports and audit reports. Additionally, while allowing access to accounting vouchers, the court specified the scope of original accounting documents that could be inspected, including bank statements, contracts, invoices, company bank account information, asset inventories, asset ownership and usage certificates, and approval documents for economic activities authorized by relevant higher authorities. This achieved an ideal litigation outcome.
