Investor Information Rights
Also known as: Information Rights, Inspection Rights, Reporting Obligations, Right to Information and Inspection, Yatırımcının Bilgi Alma Hakkı
Author Ali Gül
In short
An investor's right to receive regular reports on the company's financial position and activities and to inspect certain documents; extended by the shareholders' agreement beyond statutory information rights.
Investor information rights ensure that the investor receives regular and timely information on the company’s financial position and activities. When an investor with a minority stake is not part of management, this is the main tool for monitoring its investment.
Statutory Information Rights
- Joint stock company: Shareholders may request information at the general assembly from the board on the company’s affairs and from the auditors on how the audit was conducted and its results. Financial statements and the annual activity report are made available for inspection before the general assembly. Information may be refused for reasons such as the risk of disclosing trade secrets (TCC Art. 437).
- Limited liability company: Shareholders may request information from the managers on all company matters and inspect the company’s books and records (TCC Art. 614).
Contractual Rights
Since statutory rights do not meet investors’ needs, the shareholders’ agreement usually provides for:
- Monthly or quarterly management reports (revenue, cash position, key performance indicators),
- Annual financial statements, audited if required,
- Submission or approval of the annual budget and business plan,
- Notification of significant lawsuits, regulatory investigations and developments in material contracts,
- The right to meet managers and inspect records on reasonable notice,
- Observer attendance at board meetings.
Information rights are usually granted to “major investors” holding more than a set percentage and are balanced by an obligation to keep company information confidential.
Points to Watch
- Competition law: If the investor also invests in competing companies in the same market, sharing competitively sensitive information creates information exchange risk.
- Personal data: If reports contain personal data of employees or customers, sharing must comply with data protection rules; aggregated or anonymised data should be used where possible.
- Trade secrets: The confidentiality of information shared with the investor should be secured contractually.
Frequently Asked Questions
Can an investor legally request any information from the company?
No. In a joint stock company, a shareholder's right to information is mainly exercised at the general assembly and may be restricted for reasons such as protecting trade secrets. In a limited liability company, shareholders' information and inspection rights are broader. Investors therefore have regular reporting rights written into the shareholders' agreement.
Is sharing information a problem when a competitor's fund is an investor?
It can be. Sharing competitively sensitive information such as prices, customers and strategy with an investor that also invests in a competitor or other ventures in the same market creates competition law risk. Such information should either not be shared or be shared with a limited team under confidentiality safeguards.
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