It’s a requirement under section 113 of the Companies Act 2006 for every company to keep a register of its members.

Under section 116 of the Companies Act 2006, any member of the company may inspect or obtain a copy of a company’s register of members if they make a request to the company.

 

Section 116

Although there is no prescribed form, section 116(4) sets out the requirements of a valid section 116 request.

Section 116(4) makes clear that the request must contain the following information:

(a) in the case of an individual, his name and address;

(b) in the case of an organisation, the name and address of an individual responsible for making the request on behalf of the organisation;

(c) the purpose for which the information is to be used; and

(d) whether the information will be disclosed to any other person, and if so—

(i) where that person is an individual, his name and address,

(ii) where that person is an organisation, the name and address of an individual responsible for receiving the information on its behalf, and

(iii) the purpose for which the information is to be used by that person.

An earlier High Court decision makes clear that a valid request to inspect the register of members must contain all the information set out in section 116(4).

 

What happens when a company receives a section 116 request for access?

When a company receives a section 116 request, it has 5 working days from receipt to allow inspection and/or to 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.

If the Court is satisfied that the inspection or copy is not sought for a proper purpose, the Court must direct the company not to comply with the request by making a “no access order”, and it may make a further order regarding the company’s costs.

Unless a company obtains an order under section 117 (a “no access order”), it must comply with a request for access.  Non-compliance incurs a criminal penalty.

But what happens where an invalid request is made?  Can an invalid request be corrected by supplying the missing information at a later date?

This issue, and others, was considered by the High Court in Sir Henry Royce Memorial Foundation v Hardy [2021] EWHC 714 (Ch).

 

Relevant background

The company in question was a company limited by guarantee and a registered charity.  It was run by a board of directors elected by the members.

In November 2019, Mr Hardy became a member of the company.  Shortly, thereafter in December 2019, he became the finance director of the club.

On 10th February 2020, Mr Hardy wrote to the company, indicating that he wished to exercise the rights given to members under section 116 of the Companies Act 2006 to inspect and take a copy of the register of members of the company.  The letter gave his name and address, and detailed the purpose of the request.  But did not state whether the information will be disclosed to any other person and, if so, the name and address of that other person and the purpose for which the information was to be used by that person.

On 13th February 2020, the company wrote to Mr Hardy refusing him access to the register, and informing him that it would be applying to the Court under section 117 for a no access order.

Mr Hardy replied approximately 15 minutes later, to say that he had noticed that he had “inadvertently admitted from my request the statement that I would not be making the information available to any other person.  I confirm that this was an oversight on my part and that I have no intention of making the information available to any other person…….”

On 18th February 2020, the company issued a claim under section 116 of the Companies Act 2006.

 

Decision of the High Court

The High Court held that the company had succeeded in its claim, and that it would make a no access order.

The High Court accepted that the phrase “I have no intention of making the information available to any other person” was sufficient compliance with section 116(4)(d).  The statute did not require the requesting party to make a promise;  it required them to make a statement which would assist the company to make up its mind in how to react to the request, and in particular whether to apply to the Court for a no access order.

However, a request under section 116 had to contain the information specified in section 116(4).  The request made in the email on 10th February 2020 was not a valid request, because it didn’t contain all information in accordance with section 116(4)(d).

The High Court held that the invalid notice could not be corrected and made whole by the additional information provided in Mr Hardy’s email of 13th February 2020.

This was on the basis the company needed to know where it stood as at the date of the request, especially given the criminal sanctions on the company and its offices under section 118.

The Court recognised that there were, after all, only 5 days in which to issue proceedings if a valid request was made but the company wish to challenge it.  On this basis, a request was either valid or invalid at the time it was made.  Its status does not change depending on what happened later.

 

Commentary

This is welcome clarification from the High Court on the impact of any “after the event” corrections to a section 116 request.

From the flow of work coming across my desk, it seems corporate-based challenges are on the increase in the property management sector.  You’ll find a number of company law resources and blogs in this resource hub.