Inspection of register of members
Article 4 minute read

Inspection of register of members

23 April 2015

When it comes to the inspection of a company’s registers, it does not always run as smoothly as anticipated for those requesting to inspect them. Our expert looks at who is entitled to view the register of members, and how the process is complied with.

It is a statutory requirement to maintain company registers, and the location of these must be made publicly available. A company may choose to hold its records at either its registered office or may opt to maintain them at a Single Alternative Inspection Location (SAIL) located in the same part of the UK as the company’s registered office.

Note that a company is only allowed one SAIL for all its statutory registers, that is, it cannot have one alternative inspection location for its register of members and a different alternative inspection location for its register of directors and secretaries.

Sections 113 - 128 of the Companies Act 2006 (CA 2006) stipulate that every company must maintain a register of members which details the following information:

  • the names and address of each member
  • the number and type of shares held by each member
  • the amount paid, or otherwise agreed to be paid, on the shares
  • the date of which the shareholder was registered
  • the date of any member ceasing to be a shareholder.

Any member of the company has a statutory right to inspect the register of members, with copies being available for a fee. But these rights are now subject to that person submitting a request for access that satisfies the “proper purpose” test. Under sections 116 - 117 the applicant must provide the following:

  • the name and address of the individual making the request
  • the details of the company or organisation an individual is acting on behalf of (if the request is made for a corporate member)
  • why they require the information and what they intend to use it for
  • they must also stipulate as to whether the information will be forwarded to or used by anybody else, and if so, provide their details respectively.

The company has to reply within 5 working days of that request to allow inspection and/or provide a copy of the register, or, if it believes that the request is not made for a proper purpose, to refer the request to the court for judgement.

A recent example of what constitutes a proper purpose is “The Burberry Group plc V Richard Charles Fox-Davies [2015] EWHC 222 (Ch)” case which showed that a valid request to inspect the register of members must contain all the information set out in section 116(4) of the CA 2006.  In this case, the High Court directed that a company did not have to comply with a section 116 request to inspect or copy the company's register of members that had been made by the defendant (a person who was not a member of the company, and who ran a tracing agency to trace lost members in public quoted companies). The defendant's request was invalid as it did not contain the names and addresses of any individuals with whom the defendant was going to share the information, as required by section 116(4)(d) of the CA 2006. As a result, the receipt of the invalid request did not set time running for the five working day period in which the company had to refer the matter to court under section 117 of the CA 2006.

ICSA guidance considers that it is not a “proper purpose” if the purpose of the request is made by an agency specialising “in identifying and recovering unclaimed assets for their own commercial gain by then contacting and extracting commission or fees from the beneficiaries, where the company is not satisfied that such activity is in the interests of shareholders.”

The above case identifies that a company does not need to comply with the request if the request does not comply in full with the requirements of the CA 2006.

UK companies should always consider and more importantly, be vigilant when a request to view the registers is received and conclude as to whether the request does in fact constitute “proper purpose”.  To help do this and in view of the short deadline for responding, companies should develop procedures to deal with section 116 requests.  We suggest these include:

  • guidelines on what constitutes proper and improper purposes
  • a process for making further enquiries of the person submitting the request, where appropriate
  • a process for arranging inspection and the provision of copies of the register of members, particularly where the register is located at a SAIL.

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Written by

Keaton Comer

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