In organizations, the right to information constitutes a transverse and necessary prerogative for the exercise of the other rights, patrimonial and non-patrimonial, inherent to capital participation.

The rights to share profits, vote, contest company resolutions, elect board members, ensure the transparency of company acts and the composition of company assets, as well as demand accountability of the board for irregularities and damages which have caused to the life of the company, essentially depend on access to information.

The positions assumed in the company by the partners (managing partners and other partners) influence to a great extent the degree of access to information about the life of the same. The partners who are part of the board, by way of example, have privileged positions to obtain information in the company. They have a considerably larger possibility of influencing the life of the company than the other partners and they also have access to a degree of information that is incomparable with that of other partners.

Board members (whether partners or not) are bound by a duty of care, loyalty and transparency, with a view to safeguarding the rights and interests of the other partners, the company, the bondholders and creditors in general. They must keep the members duly informed and ensure, within the legal and statutory limits, the right to consult the various books, records and documents inherent to the life of the company.

Pursuant to Article 104 (1) (c) of the Commercial Code, it is the right of the partners to obtain information about the life of the company.

The right to information of partners is detailed in article 112 (1) of the Commercial Code, which is broken down into several aspects, namely the right to: a) consult the minutes of the general meeting; b) consult the encumbrances register books, charges and guarantees; c) consult the share register books; (d) consult the attendance register books, where they exist; e) consult all the other documents that, legally or statutorily, must be disclosed to partners before general meetings; f) request from the directors and, where they exist, to the statutory auditor or to members of the fiscal council any information pertinent to the matters included in the agenda of the general meeting before the voting is carried out, provided that it is reasonably necessary for the clarified exercise of the right to vote; g) request, in writing, to the administration written information on the management of the company, in particular on any specific company operation; and h) request a copy of resolutions or entries in the company books.

Nonetheless, the right to information may be regulated by the Articles of association of the company, under the provisions of article 122 (2) of the Commercial Code, which may define limits and mechanisms for exercising it.

It happens that, often, the interests of the partners with respect to the pursuit of the company purpose are conflicting. Such conflict takes on a peculiar weight when the board members do not provide, when duly requested, the full information regarding the life and management of the company.

However, in the event of a refusal of information or where information provided is presumably false, incomplete or unclear, the partner may, among other alternatives, request a judicial review of the company in accordance with Article 124 of the Commercial Code.

This is a special procedure, whose procedural terms are regulated in Articles 1479 and follow the Civil Procedure Code. It is referred to as a Judicial Inquiry.

Thus, if a partner has well-founded suspicions of serious irregularities in the life of the company, the same can, by indicating the facts on which the suspicions are based and what the irregularities are, request that the court carry out an inquiry of the company in order to assess the same (Article 122 (5), 124 (1) and 325 (2), all of the Commercial Code).

A judicial inquiry is a process of voluntary jurisdiction. Having the legitimacy to make use of this means partners, as holders of a stake in the company, are irrelevant, regardless of whether or not they are a managing partner.

In effect, partners wishing to carry out a judicial inquiry where permitted by law, shall set out the reasons for the investigation (for example, refusal to provide information on the life of the company) and indicate the issues of fact that they are interested in ascertaining (Article 1479 (1) of the Civil Procedure Code).

From the initial application, the company is summoned to respond. When the administration has been heard or if there is no response, the court may order the inquiry to be carried out if the grounds on which it is based are well founded.

For the purpose of conducting the inquiry, in the order requiring it, the judge determines the issues of fact indicated that should be covered by the proceeding and appoints an expert, who may be an auditor (Article 1480 (1) and (2) of the Civil Procedure Code).

Once the diligence has been carried out and as a consequence of it, the judge may order the necessary measures to safeguard the partners, bondholders, other creditors or the company itself, namely:

  • The regularization of illegal situations found, by setting deadlines for that purpose;
  • The removal of the heads of the board responsible for the irregularities found; and
  • The dissolution of the company, if facts that constitute cause of dissolution are found.

The determination of the above measures takes into account their seriousness and their practical impact on the life of the company.

Once the irregularities have been determined and the measures necessary to resolve them have been ordered, in accordance with the aforementioned terms, the costs of the proceedings, the remuneration of the expert and the expenses that the applicant has reasonably incurred are borne by the company, which has a right of recourse against the holders of the heads of the board responsible for the irregularities (Article 124 of the Commercial Code and 1483 of the Civil Procedure Code).

In conclusion, the right to information is instrumental in the face of other rights inherent to capital participation. It is aimed at ensuring transparency in the acts and affairs of the company, as well as to address irregularities that may be practiced by board members. The information obtained as a result of a judicial inquiry should not in any case be intended for acts detrimental to the interests of the company or third parties, imposed by law or contract, hence the access to information is not an absolute right, and limits to its exercise are ipso facto imposed.

The article was also published in the SAL & Caldeira Newsletter No. 33 (2017). It is reproduced with permission of SAL & Caldeira .

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