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Disclosure of Shareholder Registers – Court of Appeal Test Case

Companies are, on pain of criminal sanction, required by to keep their shareholder registers open for public inspection. However, as a Court of Appeal test case made clear, shareholders are entitled to expect that their personal data will only be used for proper purposes.

Pursuant to Section 116 of the Companies Act 2006, a businessman who specialises in tracing missing shareholders who are unaware of their assets requested a public company to disclose the entirety of its register of members. The company refused to comply and was granted a declaration that it was not obliged to do so by a judge.

The businessman’s methods involved tracking down shareholders and telling them that they held an asset, but without informing them of the nature of that asset until they agreed to pay a commission. The judge found that his purpose in requesting disclosure was to use the statutory machinery to obtain personal information so that it could be used to extract fees from missing shareholders. That was achieved through the expedient of not disclosing to shareholders the very information that he had obtained, namely that they held shares in the company.

In dismissing the businessman’s appeal against that ruling, the Court found that the disclosure of the register in those circumstances would be contrary to shareholders’ interests and that the request had not been made for a proper purpose. The Court noted that the company had in place its own system for tracing lost members on unobjectionable terms.

The Court found that the businessman’s request was in any event non-compliant with the legislation, which requires such requests to state, amongst other things, the purpose for which the information is sought, whether it will be disclosed to any other person and, if so, the person’s name and address.