Is a Former Director Entitled to Accounting Information

Is a Former Director Entitled to Accounting...

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A director of a client company resigned about three months ago and went to work for a competitor.

While with the company he never showed any interest in the company's financial affairs even though he was also a 5% shareholder. Accounts were never sent to him as a shareholder but they were available if he was interested and while at the company he was given regular accounting information e.g management accounts,  cost centre reports etc.

Three months on he has now come back asking for accounts saying that as a director and shareholder he is entitled to them.

We can provide the accounts which were filed at Companies House (medium) to him in his capacity as shareholder but how many years should we provide? Perhaps 3 years which is the time companies are required to keep records under the Companies Act, 6 years or what?

Also, should we provide the detailed p&l which he would have been entitled to as a director while there or should we refuse as he is now no longer a director and working for a competitor? The other directors are concerned about his motives.

Thanks for all your help.

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By johngroganjga
11th Jan 2014 06:32

He is entitled as a shareholder to the full statutory accounts (not just those filed at Companies House if they were abbreviated). The statutory accounts do not include the detailed profit and loss account. If he were a director he would be entitled to more, but he isn't.

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By johngroganjga
11th Jan 2014 06:46

Sorry missed your question about how many years to provide. I would say only future years. All past years were available to him when he was a director and if he didn't take advantage of that opportunity it is his problem. Ultimately the question of what to provide to him is a matter for your clients and not a decision for you to take. What I have set out is the information you should give to your clients about what the former director is strictly entitled to, if they ask you for it.

I do not agree with Basil that your clients should go running to a solicitor when all they are dealing with, I assume, is a polite request for copies of certain documents. If the matter should escalate into a full blown dispute with the gentleman in question about what he is and is not entitled to, that would be a different matter.

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Replying to In a Daze:
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By asmyth1
11th Jan 2014 11:01

Ex director
He is still a shareholder.

Thank you

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By johngroganjga
11th Jan 2014 11:20

Yes my understanding was that he is still a shareholder, and my comments were made on that basis. I am grateful to @asmyth1 for confirming that my understanding was correct.

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