Access to the register of members

The Court of Appeal has ruled on whether a request for access to a listed company’s register of members was for a proper purpose.

The decision reinforces the value of the ICSA guidance note on proper purpose, although this will be redrafted in the light of the court’s comments. It also addresses the question of whether a proper purpose can be the commercial benefit of the requestor. 

Section 117 of the Companies Act 2006 (CA06) says that when a company receives a request for access to its register of members, it must within five working days either comply with the request or apply to court for a direction that the request is not for a proper purpose. 

CA06 does not define ‘proper purpose’ – that is left to the court. 

In an effort to help companies make their decision, ICSA published guidance on what might or might not constitute a ‘proper purpose’ in 2007. There has been little case law on the subject since that date – the implication being that requests have either been for a proper purpose or have been sufficiently close to one that the company has chosen to allow them. 

In this recent case, Burberry plc received a request from a tracing company that sought to locate shareholders who had lost contact with the company, reunite them with their assets, and retain a commission from the sums reclaimed. 

Burberry applied to the court under s117 on the basis that this was not a proper purpose because it did not believe the request to be in the interests of members. Burberry had already appointed a tracing agent, which had access to data under terms controlled by Burberry, including restrictions on commission retained which were more favourable to shareholders than those of the requestor.
 

The court found in favour of Burberry, but the requestor appealed. His appeal has been unanimously dismissed by the Court of Appeal. However, all three appeal judges provided different reasons for reaching their decision and did so on a more detailed basis than the lower court. 

The key points from their decisions are as follows:

• The failure of the initial request to provide the names and addresses of the people to whom the information on the register would be given did not comply with section 116(4) of the Act. Therefore, the initial request for the register of members was invalid and the company was not obliged to comply with it.
• It is for the company receiving the request to prove it is not for a proper purpose, and the court will decide on the basis of the individual circumstances.
• There is no distinction in law between requests received from members or from non-members.
• Whether the purpose is in the interests of shareholders is irrelevant to whether or not it is a proper purpose.
  
  

The fact that the appeal court judges disagreed on what might be a proper purpose is unhelpful, and there is a case for government to clarify the matter. 

However, the decision does make it clear that the strict procedural requirements of CA06 must be complied with. If they are not, a company may reject a request completely without applying to court. 

The decision in Fox-Davies v Burberry plc [2017] is available on the Bailii website.