Burberry Group Plc v Fox-Davies

Key legal principles and grounds:

• The Court applied sections 116, 117 and 119 of the Companies Act 2006 to requests for inspection/copies of the register of members.
• A request under section 116(4) must comply with the statutory mandatory requirements (including identifying any persons to whom the information will be disclosed); a failure to comply renders the request invalid and prevents the five working day period under section 117(1) from running.
• Even where a request is treated as valid, the court will refuse inspection under section 117(3) if, on the balance of probabilities, the inspection is not sought for a proper purpose; the court may look to the real purpose and to how the information will be used.
• Applying those principles here, the March 2013 letter was invalid for failure to comply with section 116(4). The requester’s real purpose was commercial self-interest as a tracing agent extracting commissions from traced shareholders and involved dissemination to unknown third parties; that purpose was not in the interests of the Company’s shareholders and was therefore improper. The Company was directed not to comply with the request.

Background and parties: The claimant, Burberry Group Plc, applied under section 117(3) of the Companies Act 2006 for a direction that it need not comply with a request from Richard Fox-Davies for a copy of the Companys register of members. The requester, who operates tracing businesses (TPR/Interum), stated that the purpose was to assist lost shareholders to recover entitlements. The Company had an existing tracing arrangement with ProSearch Asset Solutions Limited (PS).

Nature of the application and procedural posture: The Company sought a court direction that it was not obliged to provide the register after it considered the request improper. The Company issued the application on 9 May 2013. The parties agreed the April 2013 letter could be treated as a valid request for the purposes of the hearing.

Issues framed by the court:

• Whether the March 2013 letter constituted a valid request under section 116(4) and therefore whether the five working day period under section 117(1) began to run;
• Whether the request (as to purpose and real purpose) was for a proper purpose under section 117(3);
• Whether statutory safeguards such as section 119 provided adequate protection where information may be passed to third parties or overseas entities;
• Whether the companys concerns about security, confidentiality and the interests of shareholders justified refusal.

Courts reasoning and conclusions: The Court held that the March 2013 letter was invalid because it failed to comply with the mandatory wording of section 116(4) (in particular by not identifying the individuals to whom the register would be disclosed and by misstating how disclosure would occur), so the five day period under section 117(1) did not run from that letter. The April 2013 letter was treated as a valid request by agreement. On the substantive issue of proper purpose the Court examined the requesters business model, the use of unidentified third-party researchers, the disparity between the requesters and the Companys tracing arrangements, and practical difficulties in enforcing statutory sanctions abroad. Applying Burry & Knight and the ICSA guidance as aids to interpretation, and taking account of the Companys articles and interests, the Court found the requests real purpose was commercial extraction of fees from traced shareholders and involved dissemination to unknown agents; that purpose was not in the interests of shareholders and therefore improper. The Court directed that the Company need not comply with the request and indicated an order under section 117(3)(b) would be appropriate on costs.

Wider context: The judgment emphasises a fact-sensitive inquiry into purpose, the mandatory nature of section 116(4) requirements, and the courts willingness to scrutinise data security and the manner of intended use of register information when an outsider requests access.

First instance: The claimant Companys application succeeded. The court directed pursuant to section 117(3) of the Companies Act 2006 that the Company shall not comply with the requesters application for a copy of the register. The court ruled the March 2013 request invalid for failure to satisfy section 116(4) and, on the balance of probabilities, that the real purpose of the request was commercial self-interest by a tracing agent and was not in the interests of shareholders (an improper purpose).