Factors To Take Into Account When Dealing With A Request To Inspect A Company's Register Of Members

The Court of Appeal has considered two issues regarding a request to inspect a company's register of members. First, whether a request is valid if it does not contain all the information required by the Companies Act 2006 and, secondly, the circumstances in which a request by a non-member satisfies the proper purpose test.

Background:

Section 116 of the Companies Act 2006 gives members of a company and others the right to inspect and ask for a copy of the company's register of members. The section prescribes the information which the request must contain. This includes the purpose for which the information will be used and whether it will be disclosed to any other person, in which case the request must also include certain details about the recipient.

A company must within five working days of receipt of a section 116 request either comply with it or, if it believes that the request is not made for a proper purpose, apply to court. If the court considers that the request is not for a proper purpose, it must direct the company not to comply.

The Act does not set out any guidance on what is, or is not, a proper purpose. However, the Institute of Chartered Secretaries and Administrators (ICSA) has published guidance which is intended to provide an industry view, with examples, of what ICSA considers should constitute a proper purpose and what is likely to be an improper purpose.

Facts:

Burberry Group plc received a section 116 request from the appellant, who ran a tracing agency tracing lost members in public quoted companies. His stated purpose was to help members of the company who might otherwise be unaware of their entitlements to reassert their rights. However, his request did not state that the information would be disclosed by the tracing agency to specialist researchers nor include the names and addresses of those specialist researchers.

Decision: Upholding the first instance decision and dismissing the appeal, the Court of Appeal unanimously held that the request was invalid as it did not contain all the information about the recipients of the information required by the legislation. Receipt of an invalid request did not set running the five working days in which the company had to comply with a request or refer the matter to court.

The Court of Appeal was also asked to consider whether the appellant's purpose was a proper one. At first instance the High Court had held that it was not. The Court of Appeal unanimously upheld this...