Corporate News: Providing access to a company’s Register of Members

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Posted in:Corporate and Commercial, Litigation|October 7, 2014 | Join the mailing list

A duty to provide access to the company’s register of members

Under section 116 of the Companies Act 2006 (“CA 2006”) the members of a company have the rights to inspect and require copies of the company’s register and index of members’ names.
Under section 117 CA 2006 a company, upon receipt of such a request, must, within 5 days, either comply or apply to the court for a direction as to whether the request is sought for a proper purpose.

In the recent case of Burry & Knight Limited & Another v Knight [2014] EWCA Civ 604 (“Burry”) the Court of Appeal held that access to the register of members does not need to be granted following a request, if the purpose of the request
was not a proper purpose.

The request

When a member makes a section 116 CA 2006 request they must provide the following information:

•    individuals – their name and address;
•    organisations – the name and address of an individual responsible for receiving the information requested; and
•    for all requests – the purpose for which the information will be used.

Response

Upon receipt of a request, the company must consider whether they the request has been made for a proper purpose. If the company decides that the request has not been made for a proper purpose, or requires guidance, it must refer the matter to the court. Failure
to comply with the request or to refer the matter to Court may result in criminal sanctions.

The court may:

1. make a ‘no access order’ if they are satisfied that the purpose for the request is not proper;
2. extend the ‘no access order’ to other such requests if the company believes that it may be subject to other similar requests;

3. make a Pelling order (see below); or
4. make an order requiring the company to comply with the request if the court is satisfied that the purpose is proper.

Proper Purpose

The CA 2006 does not provide a definition of proper purpose and as such the question of what a proper purpose is must be decided by the courts.

In Burry the Court of Appeal held that the Institute of Chartered Secretaries & Administrators Guidance on Access to the Register of Members: Proper Purpose Test (“ICSA Guidance”) should be used by companies as an indication as to what the
court would consider to be a proper/improper purpose. ICSA Guidance is non-exhaustive, but suggests that a member making a request for the purpose of contacting the other members about a matter, or matters, relating to the company, its shareholding or to exercise
their rights, ought to be considered proper. ICSA Guidance suggests a member making a request for the purpose of representing or communicating to members, information that, the company considers, would harass or intimidate members or would otherwise be a misuse
of the members’ personal information could be considered an improper purpose.

Following Burry if the member has more than one purpose for the request, the company can refuse if one or more of the purposes is an improper purpose. However, the fact that one purpose is improper does not necessarily make another purpose by default
improper. In such circumstances, it may be appropriate for the court to make a Pelling order.

Pelling order

In Pelling v Family Need Fathers Limited [2001] EWCA Civ 1280, the Court of Appeal held that the court could, under section 353 (6) Companies Act 1985 (section 117 being the equivalent section of CA 2006), make an order that the member’s communication
be relayed by the company so that the members’ details remained private, but the specific message could be communicated.

Should you have any queries regarding the subject matter of this article, please contact
Keith Kennedy, Partner in the
Corporate and
Commercial Department, at

keithk@berg.co.uk
or by telephoning 0161 829 2599

   

   
The information and opinions contained in this article are not intended to be comprehensive, nor to provide legal advice. No responsibility for its accuracy or correctness is assumed by Berg or any of its partners or employees. Professional legal advice
should be obtained before taking, or refraining from taking, any action as a result of this article.

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