Burberry Group Plc v Fox-Davies

Factual and Procedural Background

On 9 May 2013, Company A applied to the court for relief under section 117(3) of the Companies Act 2006 following a request from Appellant for a copy of the register of members pursuant to section 116 of the Act. Appellant is not a member of Company A. The stated purpose of the request was to assist shareholders who might be unaware of their entitlements to reclaim ownership or recover benefits. Company A operates a tracing programme through Company B to locate 'gone-away' shareholders and reunite them with unclaimed entitlements. Company B charges fees only if the lost members make valid claims through its services. Appellant operates a separate tracing business, engaging independent researchers to trace lost members and charging fees on claims. Company A refused Appellant's request, contending it was invalid and made for an improper purpose, and sought a court direction not to comply with the request. The court proceedings involved examining the validity of the request, the purpose behind it, and whether the request was proper under the Companies Act 2006.

Legal Issues Presented

1. Whether the initial letter dated 27 March 2013 constituted a valid request under section 116 of the Companies Act 2006.
2. Whether the purpose of the request made by Appellant to inspect or copy the register of members was a proper purpose within the meaning of section 117 of the Companies Act 2006.
3. Whether Company A was entitled to refuse the request and seek a court direction under section 117(3) of the Act.
4. The applicability and interpretation of statutory provisions concerning inspection rights, proper purpose, and data protection safeguards in the context of tracing lost shareholders.

Arguments of the Parties

Company A's Arguments

• The letter dated 27 March 2013 was an invalid request under section 116 due to failure to disclose the names and addresses of all individuals to whom the information would be disclosed, thus the statutory time limit for court application did not run.
• The purpose stated by Appellant was not the real purpose; the true purpose was commercial gain through charging fees to lost members, which is an improper purpose under the Act and guidance.
• There are significant concerns about the security and confidentiality of shareholder information once disclosed to Appellant, especially given the use of unknown third-party researchers and the instability or inactivity of Appellant’s related entities and websites.
• Company A already employs a secure and controlled tracing agency (Company B), and the introduction of Appellant’s commercial enterprise would cause confusion and potential harm to shareholders’ interests.
• The penal provisions in the Act (section 119) are ineffective as safeguards because enforcement against unknown foreign parties is impractical.

Appellant's Arguments

• The purpose of the request was clearly stated as assisting shareholders to recover their entitlements and was consistent throughout the correspondence.
• Unlike in the cited precedent, there was no evidential basis to infer any improper use of the information, such as disclosure to animal rights activists or other improper parties.
• The business of tracing lost assets serves a public interest by reuniting shareholders with their property and prevents stagnation of unclaimed assets.
• Section 119 of the Act provides sufficient safeguards against misuse of information, and it is impractical to require disclosure of all potential recipients of the information.
• Appellant’s company is registered under the Data Protection Act 1998 and takes confidentiality seriously to protect its commercial value.
• Although Appellant accepts his motivation is commercial, this does not negate the legitimacy of the purpose.
• Appellant contends that the time limit for Company A to apply to court did not begin to run because the initial letter was a valid request, and therefore the application is out of time.

Table of Precedents Cited

Precedent	Rule or Principle Cited For	Application by the Court
Burry & Knight Ltd v Knight [2014] 1 WLR 4046	Interpretation of "proper purpose" under Companies Act 2006 section 117; guidance on when a request to inspect the register may be refused; relevance of shareholder status and use of information.	The court relied on this authority to clarify that "proper purpose" should be given its ordinary meaning, that the court must find the real purpose of the request, and that improper purpose includes commercial exploitation not in shareholders’ interests. The case guided the court in assessing whether Appellant's request was proper.

Court's Reasoning and Analysis

The court first examined whether the initial letter dated 27 March 2013 constituted a valid request under section 116(4) of the Companies Act 2006. The court found that the letter failed to disclose the names and addresses of all individuals to whom the information would be shared, specifically the independent researchers engaged by Appellant. This failure was held to invalidate the request, meaning the statutory five-working-day period for Company A to apply to court had not commenced.

The court then assessed the stated versus real purpose of the request. Although Appellant asserted the purpose was to assist shareholders in reclaiming their entitlements, the court found that the real purpose was commercial self-interest, namely to extract fees or commissions from traced lost members. This commercial motivation, coupled with the lack of transparency and security regarding the dissemination of shareholder data to unknown third parties, rendered the purpose improper.

The court considered the guidance from the Institute of Chartered Secretaries and Administrators and the precedent in Burry & Knight Ltd v Knight, which emphasize that a proper purpose generally relates to shareholders’ rights and interests, and that improper purposes include commercial exploitation and insufficient safeguards for personal data.

The court took into account Company A’s existing asset reunification programme with a secure and controlled tracing agent and found that Appellant’s proposed use of the register introduced risks of confusion, inconsistent terms for lost members, and potential misuse of personal information. The court also noted the instability and inactivity of Appellant’s related entities and websites, further undermining confidence in the security of data handling.

Finally, the court found that the statutory penal provisions were inadequate protections in practice due to difficulties of enforcement against unknown foreign parties.

On balance, the court concluded that the request was not made for a proper purpose within the meaning of section 117 of the Companies Act 2006 and directed Company A not to comply with the request.

Holding and Implications

The court held that the request made by Appellant for a copy of the register of members was not for a proper purpose under section 117(3) of the Companies Act 2006, and accordingly directed Company A not to comply with the request.

The direct effect of this decision is that Company A is not required to disclose its register of members to Appellant. The court emphasized the importance of protecting shareholders’ personal information from potential misuse and commercial exploitation by tracing agencies lacking sufficient transparency and safeguards. No new precedent was established beyond the application of existing statutory provisions and the precedent in Burry & Knight Ltd v Knight. The decision reinforces the principle that requests to inspect company registers must be made for proper purposes aligned with shareholder interests and must comply strictly with statutory requirements.