Shareholder inspection rights in Australia: then and now

Abstract

Information asymmetry between shareholders and corporate managers can subvert contemporary calls for increased institutional investor oversight. Information asymmetry can also arise between minority shareholders and controlling shareholders, impeding the monitoring of the latter by the former. Shareholder inspection rights provide an important antidote to this problem. This chapter examines the trajectory of shareholder inspection rights in Australia. It describes and evaluates the effectiveness of an important shift in the 1980s from the narrow and prescriptive U.K. common law inspection right to a statutory regime, which confers broad discretion on the courts to decide whether inspection is appropriate. As this chapter shows, the Australian statutory inspection right is generally regarded today as a significant improvement over shareholders’ previous common law rights. The chapter also highlights a notable issue in the listed company context. This is the tension between inspection rights (which provide individual shareholders with access to non-public company information) and modern securities laws which seek to ensure market integrity by preventing selective disclosure of material information by listed entities. The Australian experience provides international law makers and researchers with important insights into the efficacy of different models of regulating shareholder inspection rights and the interface of individual shareholder inspection rights with broad market-based disclosure rules.