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Disclosure of Shareholder Registers – High Court Guidance

Corporate democracy and transparency demand that public companies must generally disclose their shareholder registers to anyone who asks to see them. However, in a case of interest to anyone involved in corporate governance, the High Court has underlined that such disclosure can only be requested for proper purposes.

A businessman, who specialised in identifying untraced shareholders and reuniting them with their property for reward, had requested a copy of a company’s register of members under Section 116 of the Companies Act 2006. The latter either had to comply with the request within five working days or apply to the Court to be relieved of the disclosure obligation. It took the latter course.

The company argued that it had its own effective arrangements in place for seeking out ‘gone away’ shareholders. It expressed concern that the contents of the register, including shareholders’ personal contact details, might find their way into the wrong hands. There was no guarantee that the information would be held securely and shareholders would not be sufficiently protected against the information being disseminated and potentially used in fraud or other wrongdoing.

The businessman argued that his intended use of the information was in the best interests of shareholders who might otherwise be unaware of their entitlements. Ruling in the company’s favour, however, the Court found that his request was invalid in that it did not accurately set out the purpose for which it was made.

That purpose was in any event improper in that it was motivated by commercial self-interest. The businessman’s intention was to extract a commission or fee from traced shareholders in a manner which had the potential to conflict with the company’s own arrangements. He was based abroad, making his activities difficult to regulate, and it could not be said that compliance with his request would be in the interests of the company’s shareholders generally.