Shareholder inspection rights: lessons from Australia

Abstract

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. This article examines the trajectory of shareholder inspection rights in Australia. It 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. The article also explores the tension between inspection rights (which provide individual shareholders with access to non-public company information) and modern securities laws which promote 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 and implications of different models of regulating shareholder inspection rights.