A recent Court of Appeal case has illustrated the circumstances in which a company can reject a request to receive a copy of its shareholder register, according to a corporate lawyer.

“A company is legally obliged to maintain a register of its shareholders, and to supply a copy to any interested party subject to the payment of a fee” says Philip Round, a Partner at George Green LLP. “It can, however, refuse such a request on certain grounds.”

Mr Round continues, “the case of Richard Charles Fox-Davies v Burberry Plc concerned a request by a tracing agent to be provided with a copy of the register of members of Burberry Plc which it intended to use as part of its business of tracing lost members. It intended to provide such members with details of their asset, subject to the payment of a commission. A request was refused. In accordance with the requirements of company law, Burberry applied to court for a direction that they did not need to supply the registers on various grounds.  These included a failure to provide the company with the full names and addresses of those persons to whom the information would ultimately be disclosed, as required by company law. Burberry also argued that the request was for an improper purpose.”

According to Mr Round, the Court of Appeal upheld a decision by the High Court that the company was not obliged to comply with the request. “Burberry was correct in its assertion that the tracing agent had not supplied the requisite information regarding the likely recipient of the information. Furthermore, the court held that the information was being requested for an improper purpose. The judges disagreed on the reasons for the impropriety. It is clear that an applicant need not be acting in the interests of the shareholders. Financial motivation is not necessarily itself improper. In this instance, however, concern appears to have arisen from the fact that the tracing agent did not plan to disclose any information to the shareholders unless they paid a commission. There was also some uncertainty regarding the tracing agent’s precise terms of engagement.”

Mr Round concludes, “a company’s directors should be aware of their obligation to supply shareholder lists on request, and also the circumstances in which they can properly refuse to do so, particularly as the onus is on the company to prove that any request is for an improper purpose. A company has five working days to either comply with a request or refer the matter to the court, and the directors will therefore need to act quickly. Whilst the Institute of Chartered Secretaries and Administrators provides some useful guidance, legal advice should be sought where there is any uncertainty, particularly as failure to comply attracts a criminal penalty.”