If you have to ask… Requesting access to a company's register of members
The Companies Act 2006 (CA 2006) provides at section 113 that every company must maintain a register of its members containing certain details of their membership, including their names and addresses. Primarily, the register evidences who owns the company, but this personal information can be very useful for a wide variety of purposes, and not just for members of the company. Recent case law has emphasised that applications to obtain the register should be made with care.
For further detail about the significance of share registers, the information to be included in them and what to do if there is an error, please see here.
Previously, under the Companies Act 1985, any person was entitled to obtain a copy of a company’s register of members on application and there were no grounds for the company to refuse such a request. Following evidence that this right was being abused, and that members of companies were open to harassment because their personal information was freely available to any member of the public who wanted it, Parliament qualified the right in the CA 2006. The legislation now provides that although any person may inspect the register of members or request a copy (section 116, CA 2006) and the company must grant access to its register of members within five working days of receipt of such a request (section 117, CA 2006), a company is entitled to apply to the court for permission to deny access to the register if the company considers that the request has not been made for a proper purpose.
Section 116 sets out the information that must be contained in the request:
- The name and address of the person making the request (or if an organisation, the person responsible for making the request on its behalf).
- The purpose for which the information will be used.
- Whether that information will be disclosed to any other person (and if so, that person's name, address and purpose).
It is crucial that the request contains this information.
The recent case of Sir Henry Royce Memorial Foundation v Hardy considered the validity of an application under section 116.
The claimant company (the Foundation) was, and is, a charity dedicated to the archives of Sir Henry Royce and his eponymous car company. Mr Hardy had served for a few months as finance director of the Rolls-Royce Enthusiasts Club (the Club), an unrelated company but nonetheless closely associated to the Foundation, with some overlapping membership and common board members. The Club provided the Foundation with much of its funding and rented property from the Foundation to use as its headquarters. Mr Hardy was also a member of both companies. After claiming to have uncovered serious wrongdoing by some of the directors of the Club (who were also directors of the Foundation), Mr Hardy duly made a section 116 request to the Foundation to inspect and copy the register of members. The Foundation sought permission to deny that request.
The court granted the Foundation the no-access order it had asked for. When sending his request, Mr Hardy had omitted the required statement as to whether he would disclose the information to any other person. Although he had realised his mistake and had later emailed the Foundation to confirm that he had no intention of disclosing the information to anyone else and the court considered that this statement would have satisfied the section 116 requirement, the request was still deemed invalid because (applying the Court of Appeal's decision in Fox-Davies v Burberry plc in which it was held that compliance with all the requirements of section 116 were mandatory) all the details were not included in the request at the time when it was sent. The court held that the omission could not be corrected by the later email as the Foundation needed to know where it stood at the time it received the request given the short time period it had in which to decide whether to resist it. The later email did not amount on the facts to a fresh section 116 request.
Although this was enough for the court to dispose of the claim, it also considered whether the request had been made for a proper purpose. Nowhere is 'proper purpose' defined in the CA 2006, but ICSA has published some useful guidance and there have been a small number of cases on the point. Mr Hardy's purpose in making the request was expressed to be to ask the members to convene a meeting to obtain certain information from the directors and to remove five directors of the Foundation for reasons relating to their alleged misconduct as directors of the Club. The court held that the information requests were proper purposes, but the attempt to remove the directors of the Foundation for allegations against them relating to their alleged conduct as directors of the Club was not a proper purpose. This was a mix of proper and improper purposes and, following the dicta of Arden LJ in Burry v Fox, the presence of the improper purpose among the proper purposes would have led the court to grant a no access order.
The case law clearly shows that if you intend to obtain a company's register of members, you must take care both to comply formally with the requirements of section 116 and to ensure that all your purposes for making the request are proper. A further cautionary note is that, while most such applications are dealt with summarily, Mr Hardy (who was representing himself), somehow ended up in a full trial and was hit by an order for costs of around £100,000. Serious consequences can result from what appears to be an innocuous procedural provision, and a request for the register of members should not be made without due consideration of the risks.
This note reflects our opinion and views as of 16 June 2021 and is a general summary of the legal position in England and Wales. It does not constitute legal advice.
Andrew is a Legal Assistant in our Corporate team.