What is considered a “proper purpose” when making a s.116 request to inspect or obtain a copy of a company’s register of members?

Under s.116(2) of the Companies Act 2006, any person may require a copy of a company’s register of members, or of any part of it, on payment of such fee as may be prescribed.  The request must contain certain information including the purpose for which the information is going to be used and if this is not a “proper purpose” the recipient can apply to the court for relief under s.117 of the Companies Act 2006.

But what is considered a “proper purpose”?

Case law has provided the following guidance:

  • In Burry & Knight Ltd & Another v Knight [2014] the Court of Appeal found that a minority shareholder’s request was not for a proper purpose as it did not confer any benefit on the shareholders and was really an attempt to pursue matters which were stale with the real purpose to harass fellow shareholders.  It noted, amongst other matters:
    • in the case of a request by a member, the “proper purpose” ought generally relate to the member’s interest in that capacity and/or the exercise of shareholder rights.
    • although one of the purposes in the application was potentially a “proper purpose”, the test under s.117 was that access did not have to be given if one of the purposes was not a proper one.
  • In Burberry Group plc v Richard Charles Fox-Davies (2015) a request made by a tracing agent for the purpose of extracting a commission or fee from a traced lost member was found by the High Court to have been made for an improper purpose. It noted, amongst other matters:
    • unlike the case above, the request was made by a member of the public and the court viewed this as significant in its application of the proper purpose test as a member of the public is not seeking access for a purpose related to their shareholder rights and so the court’s emphasis shifted to protection of the shareholders as a class.
    • guidance published by The Chartered Governance Institute UK and Ireland which, although non-binding, indicated that while there was no blanket ban on requests by tracing agencies, such a request would be for an improper purpose “where the company is not satisfied that such activity is in the interests of shareholders”. In this case the company had its own tracing agency with more favourable terms and as there were some unknown issues with the tracing agent, the court found that, on the balance of probabilities, the request was not for a “proper purpose”.
  • In Sir Henry Royce Memorial Foundation v Hardy (2021) the High Court considered whether, among other matters, it could be a “proper purpose” to seek to remove from office directors alleged to have committed misconduct in another capacity. At the time of the request, the only allegations made against the directors of the company were in their capacity as directors of another company and on its face did not directly concern the activities of the subject company. As there was nothing alleged which would justify the request for details of the members to call a meeting for the purpose of removing the directors from office as directors of the company, the court would have had to make a no-access provision order because at least one of the stated purposes was improper.
  • In Aviva plc v Litani LLC (2025) the High Court held that a company had not proved that an application by a third party was not for a proper purpose merely because that purpose was commercial or would be commercially disadvantageous to the company’s shareholders.

Here, the purpose for the information was to make an offer to purchase shares from certain retail shareholders at a discount of up to 17.5% below market value, with a maximum acceptance set at 1% of the company’s share capital which was found to be for a proper purpose.  It noted, amongst other matters:

  • While the purpose was “avowedly commercial”, that did not in itself prove the purpose was not proper. To establish that a commercial purpose is not proper “it is necessary to find something with a flavour of the genuinely exploitative or unscrupulous”.
  • The terms of the offer were within the limits of what is commercially acceptable even though they would be “commercially disadvantageous” to shareholders if accepted. The availability of alternative deals on better terms did not mean that the purpose was not proper.
  • The purpose was not undermined merely because most shareholders would never receive an offer but would still have their data disclosed.
  • “the test is not one of good character; the requesting party does not have to prove itself to be a proper person”.
  • that it was not for the court to express a view about the “desirability or otherwise of mini-tender offers” such as the offer proposed, noting that such offers are not unlawful in the UK and are not subject to specific regulatory control.

You can see from the above that the test for a “proper purpose” is different where the applicant is a member of the company as opposed to a member of the public and that even if one of the purposes for which the information is sought is a proper one, access did not have to be given where there is any purpose given which is not proper.

Perhaps the most interesting development is that Aviva plc v Litani LLC (2025) has shown that an application could still be for a “proper purpose” even if that purpose was overtly commercial or would be commercially disadvantageous to the company’s shareholders but whether this becomes a regular tactic in hostile takeovers remains to be seen.

 

The content of this article is intended to provide a general guide to the subject matter.

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