Register of Members - Who Can Use It?
Tuesday, August 05, 2008
by
Catherine Feechan
In the past under the Companies Act 1985, companies had no right to keep the details of their members - names, addresses and shareholdings, confidential. Any member had the right to inspect or copy the Register free of charge and third parties could do so on payment of a fee. This led to shareholders being contacted by a range of organisations for a variety of reasons, some of them legitimate and related to company business and others less so – selling kitchens!
To protect shareholders from being deluged with unwanted mail, the new Companies Act provides that anyone seeking to inspect or copy the Register of Members must supply to the Company their name and address, the reason for which the information is required and whether or not that information is to be disclosed to any other person (in which case the same information is needed in relation to them).
If a Company gets such a request it has five days either to comply or apply to the Court for an Order that the request was not made for a proper purpose. So what is a proper purpose? This will of course be for the Courts to decide but, by way of example, shareholders checking their own details are correct, regulatory bodies requiring access to the information, requests relating to takeovers or acquisitions of the Company or shareholders wishing to contact other members about company related matters would all qualify as proper purposes. Improper purposes would be carrying out credit checks on shareholders or obtaining information for use in commercial mail shots.
Companies can put conditions on the disclosure of the information where appropriate, for example, if they agree to supply details for research purposes they should ensure that the recipient undertakes not to disclose the details to third parties or to contact the shareholders direct.
If a decision to go to Court is taken, the Court will decide whether or not the information requires to be disclosed. It will also decide on the issue of costs and may require an applicant who does not have a proper purpose for the information to pay all of the Company’s legal costs – a strong deterrent to making frivolous applications.
Clearly given that there is only a five day window to object to any request for information, companies should ensure that they have proper procedures in place for responding and ensuring that such requests are treated with urgency rather than left to languish on somebody’s desk.
If you have any queries about the new rules, please contact Catherine Feechan, Corporate Finance Partner on 0141 228 8000 or cfeechan@biggartbaillie.co.uk.
The information contained in this article is given for general information only and does not constitute legal advice on any specific matter.