Director and shareholder addresses

Although not far enough for some, great strides have been made with the new Act to give additional protection to the identities of both shareholders and directors.
At the moment, under S.356 of the 1985 Act, a company has a legal obligation to make the register of members open to inspection, and to provide a copy to anyone who requests it.  Companies can charge a reasonable fee for providing that copy, and have ten days within which to provide it, but they are not in a position to refuse a request (although they can, and often do, provide only a hard copy).
The experience at GlaxoSmithKline in early 2006, where it was felt that shareholders were written to in an unacceptable way by animal rights activists, brought into the public eye something which had been long thought in some quarters, namely that there is a need to limit such use of the register to purposes which are not ‘improper’.  Therefore, the new Act ensures that where there is a request from anyone, whether a member or non-member, to either inspect the register or receive a copy, the company has to be furnished with the following details:

• The name of the individual or organisation
• The purpose for which the information is to be used
• Whether the information will be disclosed to another person, and if so to whom and for what reason.

The company then has five days within which it has to either allow the inspection or provide the copy, or apply to the court to get permission to refuse.  The court will base its decision upon whether it believes the purpose to be proper.  If the court directs the company not to comply with the request it may further order that the company’s costs be paid in whole or in part by the person who made the request.  This should act as a disincentive to applicants to pursue a doubtful purpose.  The court may also direct that the company does not have to comply thereafter with request made for similar purpose.
There has been no attempt to define a ‘proper’ or ‘improper’ purpose, which is probably sensible, and the question of what is a proper purpose will ultimately be a question for the courts.  However, ICSA believes that industry views would hold some sway, and to this end it has been put together a working group to discuss what a proper purpose might be.  The group will consider, for example, whether the definition should be limited to statutory and regulatory purposes, or whether commercial purposes such as sales and marketing should be allowed.  It is expected that some guidance for companies will come out of the work of the group.
In an attempt to discourage those making the request from giving a false purpose, it will be an offence for any person to knowingly or recklessly make a statement in their request which is misleading, false or deceptive in a material particular.
As many commentators have pointed out, it’s rather pointless controlling access to the register via the company or registrar when there is easy access to shareholder lists via Companies House in the annual returns that are filed every year.  To close this loophole, there is a proposal to change the requirements relating to the annual return such that public companies will only need to file details of shareholders with over 5 per cent of capital, and for private companies only shareholder names, with no addresses.  ICSA understands this proposal will be consulted upon during 2007.
On directors’ addresses, at the moment there is a system of confidentiality orders at Companies House, outlined in S.723B CA 1985.  The system is fairly cumbersome, though, involving applications being made to the Secretary of State, and applicants have to be able to show that the public availability of the address is likely to create a serious risk that he or she will be subjected to violence or intimidation.
The new Act brings in a new right for directors to file service addresses at Companies House (they will be able to continue to use their residential addresses if they choose).  The service address can be the company’s registered office, and unlike under the current confidentiality order regime, directors and use different service addresses at different companies.  Wither way, residential addresses will still have to be kept on private registered both internally and at Companies House.  In other words, a company will be running two registers: the register of directors with the service addresses, which will be open to the public; and a register of directors’ residential addresses, which won’t.
It has been deemed to time-consuming to delete the residential addresses which are currently available from Companies House.  That’s understandable when there are apparently about five million registered directors, and bearing in mind that via daily downloads from the Companies House website by various agencies, the details are already widely available anyway.  Therefore, the new provisions will not be so useful in protecting current directors until such time as they move house.
The new regime includes protection for company secretaries, too, in that the register of secretaries will also only require a service address, and not a residential address, as is currently the case.  Again, the service address may be the company’s registered office. 
If you have any views as to which purposes would be ‘proper’ please contact Bridget Salaman in Policy and Development on This e-mail address is being protected from spam bots, you need JavaScript enabled to view it

Bridget Salaman, Head of Policy, Corporate, ICSA

To download this section as a PDF click here