Supervisory directors regularly dispose of confidential information on account of their position. How do they handle it and how should they handle it? Are supervisory directors entitled to any information they want by virtue of their office? Can the management board decide by itself what information is and is not given to the supervisory directors? Can the management board withhold or refuse information? These and similar questions arise regularly within every limited liability company.
Legal right to information
With regard to providing information, the legal framework is clear: supervisory directors have a legal right and a right under the articles of incorporation to any information they need to perform their supervisory duties. This means: financial information, all data concerning the business organization, schedules, reports, etc. However, there is also a restriction that is sometimes overlooked. Information not necessary for a proper performance of the supervisory duties does not have to be provided. Think for instance of personnel files of individual employees and of reports of performance reviews and assessment interviews. The form in which information has to be provided is also important. It will mostly be general rather than specific information. For supervisory directors mainly have to monitor the outline and certainly should not micro-manage.
Trust is essential
However, this is a thin line. It is possible that supervisory directors most certainly have to be informed more in-depth of specific personnel affairs, for instance in the event of an industrial conflict in the company. However, also in that case it will still mostly be general information. This means that there is no need for or right to information about certain persons. So providing information is a dynamic process that is concretized in a relationship. A rigid approach is doomed to fail. Information can only be provided properly and without impediments in an atmosphere of trust. The management board must be able to rely on it that supervisory directors will request only the information serving the proper performance of their supervisory duties. Moreover, the management board must be able to rely on it that this information is handled strictly confidentially. A supervisory director certainly cannot forward the specific information he has on account of his position to third parties, not even to the shareholder(’s representative). The other way around, the supervisory directors must be able to rely on it that the management board always gives them any information they need of its own accord and in time.
It is best to make clear arrangements on this topic before questions or problems in this area arise. These arrangements and courses of conduct can be recorded for instance in regulations for the management board and regulations for the supervisory board. the criteria for providing information, the desired information density and form, the frequency, but also the obligation to handle it confidentially can be regulated in these regulations. It can also be recorded in those regulations that supervisory directors have the right to have interviews with individual employees, however, only based on a resolution of the supervisory board and after consulting and through the management board. So provision of information has to be handled with common sense and good judgment.
When they take office, supervisory directors sign the regulations for approval. This makes the regulations part of their agreement for services. If they handle the information provided carelessly, they can be called to account for it more easily, and if necessary even be removed from their position.