Explanatory MemorandumCirculated by the authority of the Parliamentary Secretary to the Treasurer, the Hon David Bradbury MP
Chapter 1 Access to registers
Outline of chapter
1.1 The Bill limits the instances in which a copy of a register of members of a company or registered scheme may be obtained; provides that where a copy of the register is provided, that the copy be provided in a prescribed format; and specifies that, where the register is maintained on a computer, a person seeking to inspect the register must do so on a computer.
Context of amendments
1.2 The provisions dealing with the maintenance of and access to registers of companies and registered schemes are currently found in Chapter 2C of the Corporations Act. For ease of reference, any reference to a company register should be read as including a reference to a registered scheme where appropriate.
1.3 A company's register of members is required to contain members' names, postal addresses and shareholding details. Currently, anyone may request a copy of a company's register without providing any indication of the purpose for which they intend to use the information. Increasingly, members' contact details are being used for purposes that are not considered proper or appropriate. There is currently no mechanism in the legislation to limit access to appropriate purposes.
1.4 The Corporations Act currently provides that a person seeking a copy of a register may specify a particular format, but the current provision does not require the company to provide the copy in the format requested, often leading to copies that are inappropriate for the requestor's needs or difficult to use.
1.5 The current provision relating to a register maintained electronically provides that the person seeking access is entitled to request that a copy of the register be printed. In these instances, a company is not able to recoup the cost of producing a copy.
Summary of new law
1.6 The Bill amends the Corporations Act to require a person seeking a copy of the register to apply to the company and state the purpose for which they intend to use the information contained in the copy of the register. The company can refuse to provide a copy where the purpose is an improper purpose as provided in the Corporations Regulations.
1.7 The Bill also amends the Corporations Act to provide that where a register is maintained on a computer that it is inspected on a computer and allows for formats of electronic copies of the register to be prescribed in the Corporations Regulations.
Comparison of key features of new law and current law
|New law||Current law|
|A person seeking a copy of a register will need to apply to a company and indicate the proposed use of the information contained in the register. The company has seven days to comply with the request or deny access to the copy of the register.||A person seeking a copy of the register only needs to request a copy from the company. The company has seven days to comply with the request.|
|The penalty for misuse of information contained in a register will be 50 penalty units.||The penalty for misuse of information contained in a register is 10 penalty units and/or three months imprisonment.|
|A person seeking to inspect a register maintained on a computer will do so on the computer, unless they wish to apply for a copy of the register.||A person seeking to inspect a register maintained on a computer may request a print-out of the register and is not required to pay the fee applicable for a copy of the register.|
|A person seeking an electronic copy of the register may receive it in the format prescribed in the Corporations Regulations.||A person seeking an electronic copy of the register must receive it on a 'floppy disk' if so requested, but the data need only be readable and need not be formatted in a particular way.|
Detailed explanation of new law
1.8 The proper purpose test will specifically target improper uses of a register. The test will not permit specific uses; instead it will exclude undesirable uses of the information on a register.
1.9 Applicants will be required to submit an application containing prescribed information (including their name, address, corporation and the proposed use of the register) which will be inserted in the Corporations Regulations. [Schedule 1, Items 6 and 8]
1.10 Where an application states more than one purpose, if any of these is an improper purpose specified in the Corporations Regulations, then the request to provide a copy will be refused.
1.11 The Regulations will specify a number of improper purposes. Where an applicant applies for a copy of the register for an improper purpose, the company can refuse to provide a copy.
1.12 There are relatively few improper purposes targeted by the proper purpose test, however, where an improper purpose becomes evident it is important that the law be able to swiftly respond. The specification of improper purposes in the Corporations Regulations enables the law to keep pace with changes to the use of a register or members and to be amended more swiftly than if improper purposes were specified in the Corporations Act. Any changes to the Corporations Regulations would be subject to the approval of the Ministerial Council for Corporations, prior to being made by the Governor-General.
1.13 It is an offence for an applicant to use information obtained from the register for an improper purpose specified in the Corporations Regulations or disclose the information knowing it is likely to be used for an improper purpose. [Schedule 1, Item 9]
1.14 Where a company denies an applicant access on the basis of one of the prescribed improper purposes, there is scope for judicial review of the decision under section 1324 of the Corporations Act.
1.15 The offences provisions under section 137.1 and 137.2 of the Criminal Code will also apply where someone knowingly makes a false or misleading statement or produces a false or misleading document in relation to an application.
1.16 The Bill will remove the current requirements in the Corporations Act regarding the format of an electronic copy of a register and allows for formats to be prescribed in the Corporations Regulations. This will avoid references to superseded technology in the Act, as the Corporations Regulations are able to more quickly incorporate changes. [Schedule 1, Item 7]
1.17 The Bill provides that where a register is maintained electronically, it is to be inspected electronically. Where a person requires a hard copy of the register, they will be required to apply for a copy of the register. [Schedule 1, Item 4]
1.18 Subsection 177(1) of the Corporations Act requires that information contained in a register must not be used to contact or send material to a person unless the information is relevant to the interest held by the person or is approved by a company.
1.19 Items 8 and 9 to Schedule 1 of the Bill make it an offence for a person to use the information obtained from a copy for an improper purpose or to disclose that information knowing it will be used for such a purpose. This offence is an offence of strict liability with a maximum penalty of 50 penalty units, which will operate as an appropriate deterrent for a breach of this provision. [Schedule 1, Item 19]
1.20 The penalty for a breach of subsection 177(1), which is an offence of strict liability, is currently 10 penalty units and/or three months imprisonment. Given the inherent similarities of these offences, it is appropriate that the penalties be consistent, and for this reason, the penalty for a breach of subsection 177(1) will be amended by the Bill to a maximum of 50 penalty units and will address the concern that imprisonment is not an appropriate sanction for an offence of strict liability. The provision will now comply with the Commonwealth Guide to Framing Offence Provisions . [Schedule 1, Item 19]
Application and transitional provisions
1.21 The provisions contained in this Bill commence on proclamation.
1.22 The amendments made to require applications to be made to a company for a copy of the register applies to requests made after commencement. The amendments made to prohibit improper uses of information obtained from registers applies to any uses of the information made after commencement, irrespective of whether the information was obtained prior to or after commencement. [Schedule 1, Item 18]
1.23 Amendments will be made to the Corporations Regulations, to provide improper purposes and to prescribe the form of an application for a copy of the register.