Company Law Reform Bill [HL]

moved Amendment No. 116:"Page 52, line 26, leave out ““not”” and insert ““being””" The noble Baroness said: I rise for the first time to speak in a Grand Committee. In moving Amendment No. 116, I shall speak also to Amendments Nos. 117 and 118. I have tabled only a few amendments to this Bill because I am supporting small shareholders and some of the organisations that support them. At present, Clause 116 retains the good principle of the rights of inspection of the register and the provision of copies. I assume that the new powers to refuse access have been inserted to protect members from the predations of fanatics and serious nuisances, yet I think that they may unwittingly create difficulties for those with a legitimate interest in knowing who the members are. My amendments are designed to ensure that the new restrictions added in subsections (3) to (5) of Clause 116 do not unwittingly allow a company to delay, stall or refuse access to the register when access is required for a legitimate purpose but one which the company may not be too keen to support. For example, it is not uncommon that a shareholder can come across disquieting information that he or she may wish to share with other shareholders and alert them to a particular set of facts or circumstances before the AGM in order to influence and gather support for a point of view. It is often also the case that shareholders’ support organisations want to bring certain relevant matters to the attention of shareholders. I can remember them doing exactly that to me as an investor in a particular venture capital trust, and I was very grateful for it. Under these new regulations, a reluctant company could stall or delay access to the information and stifle legitimate debate simply by announcing that it was referring the matter for an opinion to the court, knowing well that it was likely perhaps that the court would support access. But by then the AGM would be over and the matter stitched up. They also allow courts to narrow down what ““proper purposes”” might be. So I believe we need much stronger support for a wide range of proper purposes and an ability to prevent access for those purposes which are clearly improper, hence the inclusion in the amendments of a suggested definition of ““improper””. The threat to refer the matter to the courts would deter shareholders’ requests for access unless they had very deep pockets. The cost of legal representation would be prohibitive for most individuals and even most shareholder organisations or groups. In addition, the way the Bill is worded, if the application is rejected by the court then the applicant has to pay the company’s costs. So even the slightest risk of losing would doubly deter people. A lack of certainty about what is or is not a proper purpose is unhelpful. I beg to move.