Supreme Court rules accounting records access order expires after set period

The Supreme Court ruled on February 26 that a provisional order compelling a company to allow shareholders access to its accounting records loses legal effect once the specified compliance period expires.

In this decision, the high court rejected a shareholder appeal seeking indirect coercion fines, determining that no obligation existed to pay compensation for non-compliance occurring after the deadline. The court reasoned that because the provisional order's validity terminates when the set period passes, the duty to allow inspection ceases, leaving no basis for penalties triggered by subsequent refusal.

The ruling addressed a dispute where shareholders sought a court order forcing a corporation to permit inspection and copying of its books for 60 days, excluding Saturdays and public holidays, starting three days after service of the decision. The lower court had ordered the company to allow access within that timeframe and pay fines starting the day after the period ended if it failed to comply. Shareholders subsequently argued the company refused access and demanded enforcement of the fine payments.

The Supreme Court found a contradiction in the lower court's logic, noting that the obligation to allow access was limited strictly to the 60-day window. Since the legal force of such an order vanishes upon the passage of the designated period, the company no longer held a duty to permit inspection afterward. Judges emphasized that for an indirect coercion fine to be valid, the underlying duty to perform the specific act must remain in force throughout the period where penalties are assessed; ordering fines for a time when the duty no longer exists creates a legal inconsistency.

The court ultimately dismissed the appeal in the lawsuit concerning compulsory execution, case number 2025Da218465, citing provisions of the Commercial Act regarding shareholder rights to inspect accounts and the Civil Execution Act governing provisional dispositions and indirect coercion.