# A Director's Right to Inspect the Accounting Records

> Section 245(4) gives every director an unqualified right to inspect a company's accounting records at all times — and Malaysian case law has extended it to the records of subsidiaries.

- Category: accounting
- Language: en
- Status: published
- Updated: 2026-07-20
- Canonical: https://negaraku.md/en/accounting/director-right-to-inspect-records

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In a shareholder dispute, the first shot is rarely a petition. It is a letter from a
minority director asking to inspect the accounting records — and it works because the
board has almost nothing to say in reply.

## The right itself

Section 245(4) of the Companies Act 2016 requires that a company's accounting and
other records **shall at all times be open for inspection by the directors**.

Three words carry the weight. *Shall* — not discretionary. *At all times* — no notice
requirement in the text. *The directors* — every one of them, individually, not the
board collectively.

Nothing in the subsection requires a director to give a reason, demonstrate a need to
know, or show that the request relates to a matter before the board. Malaysian courts
have treated the right as prima facie absolute and put the burden of resisting it on
the company. The reported position, as summarised in Malaysian commentary:

| Case | Point taken from it |
| --- | --- |
| Dato' Tan Kim Hor & Ors v Tan Chong Consolidated Sdn Bhd [2009] 2 MLJ 527 | A director need show no particular reason for the request; the company must prove improper purpose by clear evidence |
| Dato' Seri Timor Shah Rafiq v Nautilus Tug & Towage Sdn Bhd [2018] 8 MLJ 394 | Suspicion of wrongdoing can make inspection part of discharging a director's duties, not a reason to refuse it |
| Low Ean Nee v SNE Marketing Sdn Bhd [2024] 1 MLJ 447 | A strong case is needed to disentitle a director; but the right belongs to serving directors, and an ex-director cannot invoke it unless the removal is impugned |
| Haw Par Bros (Pte) Ltd v Dato Aw Kow [1973] 2 MLJ 169 | A former director has no proprietary or managerial interest in the records |

The practical lesson from *Low Ean Nee* is the one that decides real disputes:
**remove the director first and the right evaporates.** A minority director who
suspects something and waits until after an EGM has lost the cheapest tool available.

## The subsidiaries extension

This is the part accounting sites never cover, and it is the reason the remedy is
more powerful than it looks in a group structure.

In **Datuk Beh Kim Ling & Anor v NEP Holdings (Malaysia) Bhd**, a director of the
holding company sought inspection of the accounting and other records of the company
**and of some twenty direct and indirect subsidiaries**, including subsidiaries
outside the jurisdiction, in which he was not a director and which were not parties
to the proceedings.

The High Court, following the Singapore Court of Appeal in *Mukherjee Amitava v
DyStar Global Holdings (Singapore) Pte Ltd*, held that the section 245 right extends
to the accounting and other records of the company's subsidiaries **where those
records are necessary to give a true and fair view of the state of the company's
affairs**. The decision was upheld by the Court of Appeal on 27 September 2023 and
has since been followed.

The reasoning tracks the statute. Section 245(1)(a) defines the records by reference
to what is needed to prepare true and fair accounts. For a holding company, those
accounts are consolidated — so records one level down are within the description.

## Inspection through an auditor

Section 245(8) provides a route for a director who cannot personally make sense of
the material. **The Court may order that the records be open to inspection by an
approved company auditor acting for a director**, subject to a written undertaking
given to the Court that information acquired during the inspection will not be
disclosed by the auditor except to that director.

Two things to note. It requires a court order, unlike the personal right in s.245(4).
And the undertaking runs to the Court, which makes onward disclosure a contempt risk
rather than a commercial judgement call.

## Common mistakes

- **Answering an inspection demand with conditions.** Requiring an undertaking, a
  stated purpose or a confidentiality agreement as a precondition is not something
  s.245(4) provides for, and courts have treated such conditions unfavourably.
- **Refusing on suspicion of motive without evidence.** The company bears the burden
  and needs more than an assertion that the director is hostile.
- **Assuming subsidiary records are out of reach.** They are not, where they are
  necessary to a true and fair view of the parent's affairs.
- **Forgetting that refusal is an offence.** Denying access contravenes s.245, and
  s.245(9) carries a fine up to RM500,000 or three years imprisonment, or both, on the
  company and every officer.
- **Waiting until after removal.** The right is a serving director's right.

## What's next

Where records are held offshore on a group ERP or in a regional shared service
centre, the practical answer to an inspection demand depends on what the company is
required to hold in Malaysia in the first place — which is a separate set of
conditions under s.245(5) to (7).

## Sources

- Companies Act 2016 (Act 777), reprint as at 1 August 2022 — https://www.ssm.com.my/Pages/Legal_Framework/Document/Companies%20Act%202016_Akta%20777_BI%20(1.8.2022).pdf (SSM)

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