Company directors have an almost absolute right of access to company information, which generally extends to privileged communications with company lawyers. It is, however, widely accepted that limitations on the right of directors to access are appropriate in certain circumstances. Where the interests of one or more directors (or of the shareholder for whom the director sits on the board of directors) have clearly diverged from the interests of the company, the company may seek to retain the books and records of the opposing administrator. Recent decisions of the Delaware Court of Chancellery have offered specific guidance on the governance procedures a company must follow to invoke the adversity exception to director access, and the scope of the restrictions allowed on it. access to company information.
The general right of directors to have unimpeded access to the books and records of the company stems from the recognition that those responsible for the management of the company should have access to all information (including communications with lawyers of the company). company) that a reasonable director needs to make informed decisions. In Delaware, directors are âjoint clientsâ with the company for the purposes of privileged communications with the lawyers of the company. A co-client normally has the right to obtain any advice or other communication shared between the lawyer and any other co-client. But what if the legal or financial interests of one of the co-client directors diverge from those of the company – for example, if certain directors or the shareholder who appointed them announce an intention to sue? an operation that a majority of the board does not believe in the best interests of the company?
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