A director’s right to inspect the accounting and other records of a company under S. 245 of the Companies Act, 2016 (“CA 2016”) is absolute, in that he is entitled to inspection without demonstrating any ground for the inspection as the law presumes it to be made in the best interest of the company.
The Courts have no residual discretion to refuse inspection by a director unless the company discharges its burden to establish with clear proof that the director is exercising his right of inspection for some ulterior motive or to injure the company.
Datuk Beh Kim Ling (“Datuk Beh”), a director of the Defendant company, was however denied of his absolute statutory right under S. 245 CA 2016. Following that, he filed an originating summons against the Defendant company seeking an order for the accounting and other records of the Defendant company and its 20 direct and indirect subsidiaries (within and outside the jurisdiction) to be open for inspection by his Auditor and for copies to be supplied.
Although Datuk Beh was not a director in any of the Defendant company’s subsidiaries and none of the subsidiaries were named as a party, he relied on the Singapore Court of Appeal’s decision in Mukherjee Amitava v Dystar Global Holdings (Singapore) Pte Ltd and Others to argue that S. 245 CA 2016 is wide enough to cover his right to inspect the accounting and other records of the Defendant company’s subsidiaries.
Relying on the doctrine of “separate legal entities”, the Defendant company argued otherwise.
The High Court was inter-alia tasked with deciding whether Datuk Beh’s statutory right under S. 245 CA 2016 encompasses the accounting and other records of the Defendant company’s subsidiaries. The High Court agreed with Datuk Beh’s argument. In the absence of any local authority, the High Court followed the approach of the Singapore Court of Appeal in Mukherjee Amitava to hold that the right of inspection pursuant to S. 245 CA 2016 would include the accounting and other records of the company’s subsidiaries, if the accounting and other records in questions are necessary to give a true and fair view of the state of the company’s affairs. The High Court’s decision was upheld by the Court of Appeal on 27/09/2023.
The High Court's decision has since been followed in Shakib bin Abu Bakar Banafee v ASF Shipcare Services Sdn Bhd.
