The Parliamentary Joint Committee on Corporations and Financial Services (the Committee) has recently recommended an amendment to the Corporations Act which if adopted will limit public access to the share register of Australian companies. In particular, the Committee has recommended that section 173 of the Corporations Act be amended to limit access to the details of shareholders with non substantial holdings, subject to a 'proper purpose' test which if met would enable access on certain conditions.

Currently, section 173 of the Corporations Act allows any person to inspect a company's register of shareholders. The Committee strongly criticised the provision, arguing that it is contradictory to Australian privacy laws, and that 'the financially illiterate have been exposed to predatory share purchase offers, while shareholders who mistakenly believe the company is complicit in making the offer may avoid engagement with the company as a consequence'1.

Support for the proposal has been mixed. Chartered Securities Australia (CSA) has endorsed the Committee's recommendation, proposing that the Act be amended to allow companies to keep two separate shareholder registers. One would contain details of all shareholders and would only be available to other shareholders and a bidder under a takeover bid. The other register which would be available to the public would only include the details of those shareholders with a substantial shareholding ie greater than five per cent.

CSA also recommended that a 'proper purpose' test be introduced, enabling companies to test the bona fides of those seeking to access the personal details of their shareholders.

Conversely, the Australian Shareholders Association (ASA) has opposed the Committee's proposal, arguing that rather than restricting access rights, the solution to the problem is educating unsophisticated investors about predatory share offers.

It will be interesting to see whether the Committee's recommendation is ultimately adopted by Parliament and public access to the share register of Australian companies limited.

Footnote

1. Parliamentary Joint Committee on Corporations and Financial Services report: 'Better shareholders - Better company: Shareholder engagement and participation in Australia', at para [3.113].

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