Update on access to a company's register of members

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Members of a company have always had the right to request access to or a copy of its register of members. This applies to all companies, including those limited by shares, limited by guarantee and unlimited companies. The company has five working days to respond to the request. This right also extends to the wider public, upon payment of a fee. 

Proper purpose test

Any request must be for a 'proper purpose'. If the request is not for a proper purpose, the company can apply to the Court to issue a no-access order. The Court of Appeal has recently considered a no-access order for the first time in Re Burry & Knight Ltd [2014] EWCA Civ 604.

In reaching its decision, the Court confirmed that the phrase 'proper purpose' should be given its 'ordinary, natural meaning' and referred to and approved the Institute of Chartered Secretaries and Administrators' (ICSA) advice on what may be interpreted as a proper purpose. The advice includes examples of what may or may not be considered proper purposes.

The Court also confirmed that where a request is made for more than one purpose only one need be improper for the company to reject the request (even if the other reasons are legitimate).

Advice

Any company receiving a request to access or copy its register of members should continue to honour such request where it is made for a proper purpose. When deciding what is or is not a proper purpose, companies should refer in the first instance to the ICSA advice stated above. Bear in mind that only one of any of the reasons for requesting access to the register needs to be improper to deny access. If you remain unsure about whether a request is proper or not, we recommend that you seek further legal advice.  

Facts

In Re Burry & Knight Ltd, a minority shareholder in a family-run company requested access to the register of members following an ongoing family dispute. The request specified the following reasons for inspecting the register:

  • to study the current list of members;
  • to write to the members raising concerns about previous conduct of directors; and
  • to raise concerns about the proposed method of share valuation and advise the members to obtain expert advice.

Decision

The Court of Appeal, upholding the decision of the Companies Court, issued a no-access order, as the request contained both proper and improper purposes. It held that the first two reasons were not proper purposes, as they could not confer any benefit on the members. It did not matter that the third reason may have been proper; only one reason has to be improper to deny access to the registers.

Lady Justice Arden confirmed that the phrase 'proper purpose' should be given its 'ordinary, natural meaning'. This means that 'proper' has no specific legal definition, therefore companies should be able to establish whether a purpose is proper or not. Giving a legal definition would both limit the court in its powers to exercise justice in such cases and limit companies in responding to requests to access their register of members. The Court referred to and approved the ICSA advice on what may be interpreted as a proper purpose.

Impact of the proposed Small Business, Enterprise and Employment Bill

The impact of this decision may be reduced by the Small Business, Enterprise and Employment Bill, if it becomes law. The Bill is currently being debated in Parliament and would allow companies to keep their register of members at Companies House, as opposed to at the company's registered office.  As a result, responsibility for determining whether a request to access or copy a company's register of members would pass from the company to Companies House, although the mechanics of this proposal are still to be worked out.

For more information, please contact a member of the company secretarial team at company.secretary@blakemorgan.co.uk