The Court of Appeal have now ruled on the case of Fox-Davies v Burberry Group plc (the full decision can be found here
), a court case relating to access to the Register of Members and what constitutes a 'proper purpose' under the 2006 Companies Act.
This original court case related to a request by Burberry for court direction on a proper purpose request made by a tracing company who wished to access the register of members. Burberry's view was that the proper purpose test had not been met as the request was not in the best interest of their shareholders, principally because Burberry had already appointed their own tracing agency and whose terms were more favourable to the members than those of the party making the proper purpose request.
An initial court decision found in favour of Burberry, stating that the interest of the tracing agency in the register of members was for 'commercial self-interest' and that their activities did not advance the interests of the members (in light of a pre-existing tracing programme on more favourable terms). This decision was appealed by Fox-Davies, but the Court of Appeal has unanimously dismissed the case, but for different reasons than the presiding judge in the first case:
- The initial request by Fox-Davies for a copy of the register of members did not constitute a proper purpose and was invalid as it failed to provide the names and address of the persons to whom the information on the register would be given. The second request did conform to these requirements and is therefore the one which was tested before the courts
- The onus is on the company to show that the purpose of the request is improper as the test is as to whether the purpose is improper is objective. When deciding whether a purpose is proper, it may be necessary to look at both the objective in obtaining the information but also the methods being used to achieve that objective
- There is no distinction between members and non-members and the test should not depend on whether it is in the interests of the members.
The Court in particular felt in this case that the manner in which the tracing was conducted (in particular that members would have to pay a fee prior to having information disclosed) meant the request was not for a proper purpose. One judge felt that if the commercial terms were oppressive then the purpose might not be proper.
While the decision made in this case adds to the uncertainty in the practice of deciding if a request is for a proper purpose, it does confirm that a company may reject a request without the need for a court proceeding, if the procedural requirements are not strictly met.