New Rules For Access To Register Of Members

shareholdings, rules for access, members, ICSA,
United Kingdom Corporate/Commercial Law

A company’s statutory books include a register of members which contains details of a company’s members and, for company’s limited by shares, their shareholdings. Historically this is a public register open to inspection by any member without charge. In addition, currently any person (whether a member or not) can ask for a copy of the register in return for payment of a prescribed fee.

The new Companies Act 2006 ("the Act") makes access to a company’s register of members subject to a proper purpose test. This is intended to protect members from being contacted for an improper purpose. It is also anticipated that the content requirements of the shuttle annual return form will be changed by regulations made under the Act to avoid the possibility of member names and addresses being accessed by reference to the public register held at Companies House.

Commencement of the appropriate sections of the Act is tapered according to when a company’s annual return form is due – they commence in relation to a company upon submission of its first annual return after 30 September 2007 although an option exists for companies to bring their annual return date forward if they would like to become subject to this new regime more quickly.

"Proper purpose" has not been defined by the Act. It will be determined by the facts and circumstances of each case and will be a matter for the courts to interpret.

The Institute of Chartered Secretaries and Administrators ("ICSA") has recently issued guidance on access to the register of members and the proper purpose test. ICSA suggests that examples of proper purposes might include:

  • a member checking that his personal details have been accurately recorded on the register
  • a request from a regulatory or statutory body
  • an executor checking the shareholding of a deceased member
  • a member wanting to contact other members about matters relating to the company or their shareholding

Examples of improper purposes might include:

  • any purpose not related to the members in their capacity as members of the company (eg: commercial mailings)
  • any communication to members that the company is concerned would threaten, intimidate or harass
  • performing credit or identity checks on individual members
  • any purpose that could be unlawful (eg: any purpose that might abuse someone’s rights under data protection legislation)

A company must either supply the register or apply to the court within 5 working days of receipt of a request for access. If the court is satisfied that the inspection is not sought for a proper purpose it shall direct the company not to comply with the request and may order that the company’s expenses be met. Given the relatively short window for a company to respond to a request, ICSA suggests that companies should develop procedures in readiness for when these provisions apply to them so that decisions can be made quickly.

The guidance also contains some recommendations of best practice in this area. A copy of the guidance can be found on the ICSA website www.icsa.org.uk

Disclaimer

The material contained in this e-update is of the nature of general comment only and does not give advice on any particular matter. Recipients should not act on the basis of the information in this e-update without taking appropriate professional advice upon their own particular circumstances.

© MacRoberts 2007

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