Many shareholders are considering the 'Right to Inspect Accounting Books and Records' under Article 466 of the Commercial Act to accurately understand the internal circumstances of the company they have invested in and to secure evidence. In this post, we summarize the essential elements from the requirements for shareholders of both listed and unlisted companies to exercise this right, how to write a 'written request with reasons' that needs careful attention when making the request, and how to respond if the company refuses.

[Table of Contents]

1. What is the Right to Inspect Accounting Books and Records? (Key to Securing Evidence)

2. Requirements for Exercising the Right by Type of Shareholder: Listed vs Unlisted Companies

3. Effective Request Method: Importance of 'Written Request with Reasons'

4. Response Solutions When the Company Refuses: Burden of Proof and Litigation/Provisional Measures

5. Consultation on Shareholder Rights Protection by Cheongchul Law Firm

1. What is the Right to Inspect Accounting Books and Records? (Key to Securing Evidence)

The Right to Inspect Accounting Books and Records defined in Article 466 of the Commercial Act allows shareholders to directly check the company's accounting books and documents to monitor the transparency of corporate management and, if necessary, secure evidence for legal action.

2. Requirements for Exercising the Right by Type of Shareholder: Listed vs Unlisted Companies

To request the inspection of accounting books, certain shareholding requirements must be met under the Commercial Act.

• Unlisted Companies: Must hold at least 3% of the total issued shares.

• Listed Companies: The key requirement is to hold shares for at least 6 months and to hold at least 0.1% of the shares. (However, for listed companies with a paid-in capital of 100 billion won or more, it is possible if holding more than 0.05%). Notably, for investors in listed companies, the '6-month continuous holding' is a key factor that determines the success or failure of exercising rights, so please be aware of this requirement.

3. Effective Request Method: Importance of 'Written Request with Reasons'

Simply stating "show me all the books" is a vague request and can be risky. The Commercial Act specifies that requests must be made with a 'written request with reasons.'

• Supreme Court's Position: Accounting books contain trade secrets, which is considered a 'serious procedure.' Therefore, the company must explain specific reasons that allow it to determine the existence and scope of its obligations.

• Writing Tips: It is not necessary to attach perfect evidence to prove reasonable doubts; however, the circumstances and purposes of the request must be specifically stated to be recognized as legitimate.

4. Response Solutions When the Company Refuses: Burden of Proof and Litigation/Provisional Measures

Just because the company refuses the request does not mean the exercise of the right ends. Based on the structure of Article 466 of the Commercial Act, a refusal is only permissible in exceptional cases.

• Company's Burden of Proof: The company must directly prove that the shareholder's request is unjust (such as infringement of trade secrets, causing company damage, or exploratory requests).

• Legal Response: If the company wrongfully refuses or delays, the shareholder can file a lawsuit seeking permission for inspection. If the matter is urgent, the shareholder should consider applying for provisional measures to quickly secure the books.

Cheongchul Law Firm protects shareholders' valuable rights. The right to inspect accounting books requires strategic approaches, from reviewing requirements to writing documents and responding to possible lawsuits. If you need to secure evidence as a shareholder or are struggling with the company's unjust refusal, consult with the experts at Cheongchul Law Firm. We will provide you with the optimal legal service tailored to your situation.