Access to company registers: the ‘proper purpose’ test
Companies are required to make their register of members available to any shareholder on request providing they have a ‘proper purpose’ for wishing to access the register.
What happens when a company receives a request? And what constitutes a ‘proper purpose’?
Section 117 of the Companies Act 2006
S117 of the Companies Act 2006 (“2006 Act”) stipulates that a company must grant access to its register of members within 5 working days of a request being received from a shareholder (or a member of the public on payment of a fee).
The request, made subject to the provisions of s116 of the 2006 Act, must include certain prescribed information, including the purpose for which the information will be used. On receipt of a request containing all of the prescribed information, if a company believes that the request is not being made for a ‘proper purpose’, the Company should refer the request to the Court for a decision on whether they are required to provide the information requested.
The ‘Proper Purpose’ test
The law does not stipulate what constitutes a ‘proper purpose’, and each case is therefore considered on an individual basis.
A recent judgment at the Court of Appeal in Burry & Knight Ltd & Another v Knight ( EWCA Civ 604) – in which a company successfully argued that they ought not to accede to a shareholder request to view its members register – provides useful guidance on how the courts may examine such requests.
In this case, it was found that of the three reasons given by a minority shareholder for wishing to access the register, two were intended to facilitate a ‘personal vendetta’. The decision by the Registrar of the Court to grant a ‘no access’ order was therefore upheld.
Companies and shareholders should therefore be aware that a mix of proper/improper reasons for making an access request may in some, but not all, instances result in a ‘no access’ order.
How can we help?
The expert lawyers at Herrington & Carmichael can advise on all aspects of corporate law, including handling access requests under s117. If you need expert, incisive legal advice on this or any other legal issue, contact Michelle Lamberth on 0118 977 4045.
This reflects the law at the date of publication and is written as a general guide. It does not contain definitive legal advice, which should be sought as appropriate in relation to a particular matter.
By Michelle Lamberth
Senior Paralegal, Corporate and Commercial
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