Legal Updates

A shareholder is entitled to receive data on the company both from the company and directly from the control holder who manages it

March 19, 2018

A minority shareholder of a British Virgin Islands company managed from Israel did not intervene in the management of the company but regularly received his share of the profits. At some point, the control holder demanded that the minority will waive some of his holdings because he is not participating in the management and when refused, the company ceased distributing profits.  The control holder, the company and its subsidiary also refused to furnish the minority shareholder with data on the activity of the company and the subsidiary.

The Court Obligated the control holder to provide data about the company and states that beyond the obligation of a company to provide information to its shareholders, when a certain shareholder has broad management powers, including management of the company's financial affairs, such shareholder has a general duty to act in good faith and fairness towards the shareholder who requests to review the company's affairs and is required to allow him to review the company's documents in order for him to be able to ascertain his financial position. However, this right does not apply to the receipt of information from the subsidiary because the rights to receive profits are for the company and not for its shareholders, and therefore they are not entitled to receive information from the subsidiary.