Solved: Explain how disclosure in relation to documenting and assessing business or enterprise

Explain how disclosure in relation to documenting and assessing business or enterprise risks, and the controls in place to mitigate these risks, can build shareholders’ trust?

Expert Answer

As per general principle of most the companies that the documents and property belongs to company will be shared with the shareholder as per there requirement for purpose of investment. Directors manage the company but don’t own the company documents. Second thing is disclosure of the documents with shareholders. Shareholders forward the intimation for requirement of information to the directors. But that information will be shared as per confidentiality law and principle of company. In general the financial statements and annual turnover of the organization can be shared with the shareholder to build their trust. This information comes under the category of trust law not the part of company law. This information will make him able to make decision for investment in the organization.

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Extra detailed information can be destructive; the disclosure of success idea of the organization in public can raise the competition in the market. So limited information must be shared which is necessary to build the shareholder trust.

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