13 Dec 2010

Access to member registers now locked down

The long-awaited restrictions on access to copies of company registers came into force today (13 December).

From today:

  • people wanting to obtain a copy of a company or registered scheme register will have to disclose why they want access; and
  • companies and schemes will be able to refuse to provide a copy if the information is to be used for a banned purpose.

Regulations have been made setting out the list of banned purposes.

What registers does this apply to?

The new rules apply to registers kept under Ch 2C of the Corporation Act:

  • register of members;
  • register of option holders;
  • register of debenture holders.

What's the new process?

Under the new rules a person who asks for a copy of a register will have to give the company a statement of why he or she wants the information.

If the company believes that that purpose is on the banned list, it can refuse to provide access. The applicant would then have to take the company or scheme to court and prove that the purpose was not on the banned list.

It is a criminal offence to mislead the company about how the applicant intends to use the information. If they then go on and use the information for a banned purpose, they commit another offence.

The new provisions may cause problems:

  • where it is unclear from the application whether or not the applicant has a banned purpose;
  • where the company uses the banned purposes list to delay granting access to the register (forcing the applicant to go to court).

What are the banned purposes?

The banned purposes are:

  • soliciting a donation from a member;
  • soliciting by a stockbroker;
  • gathering information about a member's personal wealth;
  • making an unsolicited offer (within the meaning of Part 7.9 Div 5A of the Corporations Act - otherwise known as a "low-ball offer").

Are there other changes in relation to registers?

There are!

Significant changes affect registers held on computers and the charges for accessing registers.

Where a register is held on a computer, the company will no longer be required to provide a free print-out. Instead, the applicant will have to inspect the register on the computer or pay for a print-out or electronic copy.

Until now, if a person asked for an electronic copy of a register, the company did not have to supply it in a form which could be manipulated by a computer program (to extract a mailing list for example). The regulations now require that the copy be provided as a delimited text file produced by a commercially available spreadsheet or database application.

On the upside for companies, they will be able to charge higher fees for hard copies of registers that are held on computer.

Since the AXA case in 2008, the general view has been that the law only allows companies to charge $250. Under the new rules, there will be a tiered fee structure: $250 as a base fee, plus 5 cents for every member between 5000 and 19999, and 1 cent for every member over 19999.

When do the new rules start?

The restrictions on applications apply to applications made after the commencement of the amendments. The restrictions on the use of information obtained from registers apply to all information obtained from registers, whether it was obtained before or after 13 December.

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Clayton Utz communications are intended to provide commentary and general information. They should not be relied upon as legal advice. Formal legal advice should be sought in particular transactions or on matters of interest arising from this communication. Persons listed may not be admitted in all States and Territories.