UK: JCPC considers claim for rectification of share register

The Judicial Committee of the Privy Council gave its opinion earlier this week in Nilon Limited v Royal Westminster Investments S.A. [2015] UKPC 2 (an appeal from the Court of Appeal of the British Virgin Islands). The case concerned a claim for an order for rectification of Nilon’s register of members under section 43(1)(a) of the BVI Business Companies Act 2004 (the equivalent of section 125 of the Companies Act 2006).

At issue was whether proceedings for rectification of the register were permitted only if the register was presently inaccurate or whether the proceedings could be used to determine if a party was in breach of contract by failing to procure a company to issue shares. It was the former (according to Lord Collins, delivering the opinion of the Board): proceedings could only be brought where the applicant had a right to registration by virtue of a valid transfer of legal title. It was not enough to have a prospective claim against the company, dependent on the conversion of an equitable right to a legal title by an order for specific performance of a contract. In reaching this view, Lord Collins held that the English decision Re Hoicrest Ltd [2000] 1 WLR 414 was wrong as a matter of principle (however sensible it may have been as a matter of case management).

UK: The Queen's Speech - Small Business, Enterprise and Employment Bill

The UK Parliament was opened yesterday, for the final session of the current term, by The Queen. The Queen's speech sets out the Government's legislation programme for the final session. The proposed Small Business, Enterprise and Employment Bill will (amongst other things) provide for the establishment of a public register of company beneficial ownership and make changes to the regime for the disqualification of directors. Consultation on these proposals has already taken place: see here.

UK: England and Wales: proper purposes and company register inspections

Section 116 of the Companies Act 2006 provides that a company's register and index of members' names must be open for inspection by a shareholder without charge and any other person on payment of a fee. It also provides that any person may require a company of the company's register of members, or part of the register, on payment of a fee. Section 117 provides that a company need not comply with a request under Section 116 if an application is made to the court and the court is satisfied that the inspection or copy is not sought for a proper purpose. The operation of section 117 has recently been considered by the Court of Appeal in Burry & Knight Ltd v Knight [2014] EWCA Civ 604. The court upheld the Registrar's decision to grant an order permitting a company not to comply with a request under section 116. In doing so, Lady Justice Arden set out the purpose of section 116 in the following terms (paras. [24] and [25]):

Unless a company obtains an order under section 117(3) it must comply with a request for access and a criminal penalty is imposed for non-compliance by section 118. This is an important signal that Parliament attached importance to the exercise of the right of access to the share register. I agree with the Registrar that the way the statutory provisions are framed reflects a strong presumption in favour of shareholder democracy and a policy of upholding principles of corporate transparency and good corporate governance. I also agree with the Registrar that these factors point in favour of the court exercising its discretion "sparingly and with circumspection" where requests are made by shareholders to communicate with fellow shareholders. The reasons for this are obvious. If a member cannot communicate with fellow members, it puts the board into a very strong position. The corporate governance of a company is accordingly weakened. The relationship between the board and the shareholders cannot operate as it is intended to operate with the shareholders monitoring the activities of the directors. In my judgment, it would require a strong case to prevent access for these reasons.

Moreover, it is in principle for shareholders to assess whether a communication is of value to them and what action they should take. Parliament cannot in my judgment be taken to have intended the court to take a view about just how far the information which the member seeking access wishes to give him is information of value. This would involve the court making a commercial judgment as to the merits of the requesting member's view and would lead to satellite litigation which would delay a decision on access. In some cases, however, it will be obvious that the information is of no value, as where the information is already known to members or simply nonsense. But if the court is in any doubt, it should not make a no-access order."

UK: A public register of company beneficial ownership information

The Government has confirmed that its proposed register of company beneficial ownership information - the creation of which was outlined in the discussion paper Transparency and Trust earlier this year (here, pdf) - is to be publicly available: see here. The Government's formal response to the discussion paper will be published in early 2014.

UK: BIS consults on options for reforming various company filing requirements

The Department for Business, Innovation and Skills has published a consultation paper setting out various reform options concerning the annual return, register of members, statements of capital and the disclosure of information in respect of subsidiaries: see here (pdf).

Australia: the Corporations Amendment (No 1) Bill 2010 - draft published

The Treasury has published a draft of the Corporations Amendment (No 1) Bill 2010: see here. The Bill contains, amongst other things, provisions dealing with access to the register of members, the size of fines imposed for insider dealing and the powers of ASIC.

Australia: access to company share registers - proper purpose test proposed

The Treasury has published a paper - see here (pdf) or here (rtf) - in which it sets out a proposal to subject access to company share registers to a proper purpose test. According to the Treasury's paper:

The test would require a person to state, in writing, the purpose for which they are seeking to access the company’s register. If the company considers that purpose to be improper, the applicant will have the right to have the decision reviewed by a court.

The proposed test specifically targets improper uses of a register and will preclude the use of a register for the purpose of making unsolicited share offers for less than market value. The test does not seek to permit specific behaviours and as such would not set out proper purposes. Instead, the test will operate to exclude undesirable uses of the information on a register and, as such, would specify certain improper purposes. Accordingly, this method will be more effective in preventing the types of behaviour associated with use of a register that are causing concern, rather than attempting to define all purposes that could be considered proper".

UK: ICSA guidance note on access to company registers

ICSA - the Institute of Chartered Secretaries and Administrators - has published an updated guidance note concerning access to companies' register of members. Under the 2006 Act, access is subject to a proper purpose test (see Sections 116 and 117). What constitutes a proper purpose is not defined; ICSA's guidance note provides suggestions.