New laws governing public access to share registers aimed at unsolicited share offers
In brief — Restricted access aimed at unsolicited share offers
The government recently brought into force new laws regulating access to share registers. Although aimed primarily at unsolicited share offers, the Corporations Amendment (No 1) Act 2010 restricts access to registers for a far wider range of users.
How the Act works
Previously any person could access information from a share register, provided they paid the necessary fee. The only legal limitation was that they could not subsequently use the information for a purpose unrelated to the shareholding.
Under the new Act, a person who applies to access the register will have to disclose to the company the purpose for which they intend to use the information. If that is a “prescribed purpose”, the company will have the right to refuse access.
What is a prescribed purpose?
The Corporations Amendment Regulations 2010 (No. 10) define a prescribed purpose as:
- Specific groups in the community (such as charities) soliciting donations from shareholders
- Brokers soliciting clients
- Obtaining information about the personal wealth of clients
- Making off-market offers to purchase securities (other than for a takeover of an unlisted company)
Problematic consequences of the new laws
The new rules tip the balance in favour of companies. In practice, companies should be entitled to block approaches by share raiders like David Tweed. However, it may also allow companies to block investigations by financial journalists, leading to concerns this may give companies a convenient means of obstructing legitimate media inquiries.
For more information on this subject, please see Crackdown aimed at David Tweed could have unexpected consequences and Public access to company registers — the proper purpose test.
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