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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