Directors’ Right to Information in Corporations: a strong right, but not without limits

In Swiss corporations, it is common practice to delegate day-to-day management to an executive body or to a managing director. Such delegation may raise a governance issue: how far does the right to information extend for a director who is not involved in daily operations?

The Code of Obligations (CO) provides a clear answer in principle, but a more nuanced one in practice.

1. The legal principle: a general and inalienable right to information

Article 715a para. 1 CO grants each member of the board of directors a general right to obtain information on all matters relating to the company, regardless of whether the director has executive responsibilities.

This right is linked to the board’s non-transferable and inalienable duties, in particular:

• the duty of overall supervision over persons entrusted with management (Art. 716a para. 1 no. 5 CO);
• the duty to act with due care and loyalty (Art. 717 CO).

Swiss case law consistently emphasizes the personal nature of the director’s mandate. Each director must form an independent judgment, monitor management with a “critical eye,” and actively request the information required. A director may not rely on an alleged lack of information if no effort was made to obtain it.

2. Practical modalities of the right to information (Art. 715a CO)

The right to information operates on several levels.

a. During board meetings

Any director may request information on all company matters from:

• other members of the board;
• the executive management (Art. 715a para. 2 CO).

b. Outside board meetings

Outside meetings, a director may:

• request information on the general course of business;
• request information on specific matters, subject to the approval of the chairperson (Art. 715a para. 3 CO).

This approval requirement is intended to prevent disorganized requests, but it must not be used as a means of obstruction.

c. Right to inspect books and records

Article 715a para. 4 CO further allows each director to request the production of documents insofar as this is necessary for the performance of their duties.

In practice, most tensions arise around this notion of “necessity,” which is occasionally subject to interpretation.

3. Executive vs. non-executive directors: what are the real differences?

a. Directors with management powers

Where a director is also entrusted with management responsibilities (managing director or member of executive management):

• they benefit from direct, continuous, and proactive access to information;
• such access derives directly from their management duties (Art. 716b CO) and, where applicable, their power of representation (Art. 718 para. 2 CO).

b. Directors without management powers

A non-executive director:

• does not enjoy automatic access to all information;
• but holds a very broad right to information, oriented toward supervision and strategic oversight.

Case law stresses that even non-executive directors must actively inform themselves and intervene in the event of irregularities.

4. When may access to information be refused?

The director’s right to information is broad, but not absolute.

a. Lack of necessity (Art. 715a para. 4 CO)

A refusal may be justified where the requested inspection:

• manifestly bears no relation to the duties of supervision or ultimate management;
• concerns purely personal documents;
• constitutes an excessively broad, undifferentiated, or unfocused request.

In such cases, the request may approach an abuse of rights, particularly where its sole purpose is to paralyze the board’s mission.

Certain internal preparatory documents (working notes, unfinished drafts) may be excluded, but this limitation must be interpreted restrictively. Effective supervision often requires insight into decision-making processes.

b. Conflict of interests

Although not expressly provided for in Article 715a CO, access may be refused in cases of:

• interests external to the company, where a director seeks information for personal purposes, for a competitor, or for reasons contrary to the company’s interests;
• a concrete risk that the information will be used to the detriment of the company, for example by disclosing sensitive trade secrets to a competitor, where there are serious reasons to doubt the director’s loyalty or ability to maintain confidentiality.

The company bears the burden of proof. Mere suspicion does not suffice.

c. Business secrecy and duty of loyalty

Directors are subject to a duty of loyalty and confidentiality toward the company (Art. 717 para. 2 CO).

Precisely for this reason, their right of access is broader than that of shareholders.

A refusal based on business secrecy remains exceptional and requires concrete indications of a potential breach of the duty of loyalty.

d. Mandatory collegial decision

Any initial refusal by the chairperson may be challenged before the board of directors (Art. 715a para. 5 CO). The board, acting as a collegial body, must make the final decision, balancing the director’s interest in obtaining the information against the company’s legitimate interest in protecting certain data.

5. Consequences of an unjustified refusal

a. For the director denied access

The affected director may:

• submit his request to the entire board, which must rule on the matter (Art. 715a para. 5 CO);
• bring a court action to obtain access, by analogy with Art. 697b CO applicable to shareholders;
• rely on the refusal as a defence in liability proceedings (Art. 754 CO), provided that the requests and refusals were properly documented.

Case law suggests requesting that both the request and the refusal be recorded in the minutes. A director may only be held liable for what he knew or should have known. Where information was deliberately and unjustifiably withheld, liability may be reduced or excluded.

Failing this, resignation may be considered to avoid personal liability.

b. For the company and its governing bodies

An unjustified refusal may constitute:

• a breach of the duties of corporate bodies (chairperson, management, or the board itself if it endorsed the refusal) (Art. 717 CO);
• grounds for a liability claim if the refusal causes damage to the company, for example by preventing the detection of irregularities or risks (Art. 754 CO). Proof of damage and adequate causality is required and may be difficult to establish;
• invalidity of decisions, in extreme cases where the refusal prevented informed decision-making and resulted in serious defects,
• a factor of poor governance and reputational risk.

Conclusion for entrepreneurs and directors

The director’s right to information – including for non-executive directors – is a cornerstone of sound corporate governance and a direct corollary of statutory duties.

Restrictions are permitted only in narrowly defined circumstances, notably in the manifest absence of necessity or in duly established cases of abuse of rights. Any limitation requires a balancing of interests and, in the event of disagreement, a collegial decision by the board.

From a governance perspective, effective information flow within the board should therefore not be viewed as a constraint, but as a fundamental legal and organizational requirement serving the company’s best interests.