Shareholder rights to access member registers and s168

A company’s register of members is something that must be kept.  At its most basis, it catalogues each shareholder’s name and address as well as other particulars such as when they became a shareholder and how many shares they hold and what price was paid per share (amongst other things).  Shareholders have a broad right to inspect the register of members, but restrictions are placed on how they can use the information they contain.

Inspecting a register of members

Section 173(1) of the Corporations Act 2001 (Cth) (Act) provides as follows:

“A company or registered scheme must allow anyone to inspect a register kept under this Chapter.  If the register is not kept on a computer, the person inspects the register itself.  If the register is kept on a computer, the person inspects the register by computer.”

The production of this register can be requested in an electronic spreadsheet format, which often has the benefit of being searchable, pursuant to section 173(3) of the Act and regulation 2C.1.02(a) of the Corporations Regulations 2001 (Cth) (Regulation).

There is, however, a restriction on what can be done with the information obtained pursuant to a request under section 173.  Broadly and subject to further more specific restrictions, section 177(1) provides:

“A person must not:

• use information about a person obtained from a register kept under this Chapter to contact or send material to the person; or
• disclose information of that kind knowing that the information is likely to be used to contact or send material to the person.”

Note: An example of using information to send material to a person is putting a person’s name and address on a mailing list for advertising material.”

This restriction is targeted at protecting the interests of privacy that might be expected by shareholders, particularly in circumstances where there name and address may be contained in a register.  The limits on the use of information obtained from a register of members was considered in Hongkong Xinhe International Investment Company Limited -v- Bullseye Mining Limited [2020] WASC 276 (Bullseye).

The decision in Bullseye

In Bullseye, a shareholder requested that the company provide its register of members to them.  After some delay, Bullseye provided that register, albeit in an inappropriate format.  The Court determined that the register provided was noncompliant as it contained only five columns of information that showed shareholder name, currency, shares, options and percent holding and was silent as to the date on which the member was issued its shares and whether shares were held beneficially of not – meaning whether the shareholder was a trustee of a trust.

The shareholder applied to the Court for an order that Bullseye provide the register in accordance with the law. Bullseye resisted the application on the basis that the shareholder sought to use the register for a forbidden purpose – which was to contact another shareholder in relation to the company’s operational and business activities.

The Court in Bullseye considered decision of IMF (Australia) Ltd v Sons of Gwalia Ltd [2005] FCAFC 75 (IMF) which held in relation to the restriction on using information contained within a members register, at [63]:

“Accordingly, s 177(1) [of the Act] may not inhibit use of information in order to communicate with members concerning their potential rights, as shareholders, to bring or join in an action against a company for relief against oppression or to bring or intervene in a statutory derivative action. Such a use could be characterised as being for the purpose of communicating with a shareholder about a subject that is connected with the fact that that person holds the shares in respect of which the person is registered.  It might also be characterised as being for the purpose of communicating about a subject that is connected with the exercise of rights attaching to such shares.”

Further, it was also held, in relation to the restriction in s177 , that ‘it is clear that the limitation was not intended to preclude use of information to contact or send material to the person if that use had a direct bearing on the interest held.”^[1]

Having considered this judgment, the Court in Bullseye held at [50] that:

“communicating with shareholders in respect of the performance of the company and its directors, and an invitation to communicate with [other shareholders] to discuss any concerns, is connected to the holding of the shares as well as, potentially, with the exercise of rights attached to those shares.”

 In effect, the decisions, when considered together, show three (3) things in relation to the use of information contained in a register of members, namely that shareholders:

• have a statutory right to receive personal particulars pursuant to a request to view a register of members;
• may act upon that right by communicating with other shareholders who’s information was obtained by viewing that register if such communication is connected to their rights as a shareholder; and
• will not be in breach of s 177(1) merely by discussing the performance of a company and its directors with other shareholders, as such activity is connected to their rights as a shareholder.

Takeaways about requesting a register of members

Companies have a strict obligation to provide access to a register of members to any person who has requested such access.  There are restrictions on what can then be done with the information obtained in such a register, but that restriction does not prevent mutual shareholders from contacting each other in order to discuss the performance of the company or its directors.  Such discussion is permitted on the basis that it is connected to the holding of shares and, potentially, the exercise of rights attached to them.

Links and further references

Legislation

Corporations Act 2001 (Cth)

Corprations Regulations 2001 (Cth)

Cases

IMF (Australia) Ltd v Sons of Gwalia Ltd [2005] FCAFC 75

Hongkong Xinhe International Investment Company Limited -v- Bullseye Mining Limited [2020] WASC 276

Re Bullseye Mining Ltd [2020] WASC 276

Further information and assistance about shareholder oppression

If you need advice on accessing a register of members or you have a directors dispute or are being oppressed as a shareholder, contact us for a confidential and obligation-free discussion:

Disclaimer

This article contains general commentary only.  You should not rely on the commentary as legal advice.  Specific legal advice should be obtained to ascertain how the law applies to your particular circumstances.

[1]           IMF (Australia) Ltd v Sons of Gwalia Ltd [2005] FCAFC 75, [9].

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