In light of notorious share predator David Tweed’s success in gaining access to the AXA member register (see here) it’s worth summarising the current situation regarding access to the member register of mutuals.

Corporations Regulations 2001 Reg 2C.3.01 was inserted in 2007 to modify section 173 of the Corporations Act 2001  dealing with the right of access to a member register of building societies, credit unions and friendly societies. New subsections (1AA), (1AB), (3A) and (3B) were also inserted by Corporations Amendment Regulation 2007 (no. 9) in section 173 dealing with use of information on a register of members.

Under section 173, companies are required to provide a copy of their register of members within seven days to a person requesting access to the register and paying the required fee. Section 173 was modified in the case of building societies and credit unions when they became companies in 2001 but required further modification after the Capricornia Credit Union case (see below).

The Government has addressed the concerns of mutuals by requiring that where an applicant wishes to contact members and where a copy of the register has not been provided within 28 days of a person’s request for a copy, the company may (unless it reasonably believes the contact or material to be sent is not lawful) satisfy its obligations by providing the member register details to a secure third party provider such as a mailing house rather than the applicant directly.

The Regulation does not change the need for the applicant to have a lawful purpose for access but does provide a clearer process and member privacy safeguards. The Regulation also inserts a new ground on which a company can refuse access, namely the body is not satisfied that allowing the person to inspect or copy the register is in the interests of the members as a whole.

In what form must access be provided and what can you charge for access?

Whilst there is no guidance on what are the ‘reasonable costs" that can be charged for use of the mailing house a recent decision deals with the cost that can be charged for a copy of the member register.

In Direct Share Purchasing Corporation Pty Ltd v AXA Asia Pacific Holdings Ltd [2008] FCA 935 the Federal Court  reviewed the fee Direct Share Purchasing Corporation was obliged to pay Axa for a copy of its member share register (which was managed by Computershare).

AXA charged a fee of $17,195.39 for providing a CD Rom containing a PDF copy of the member register (rather than an Excel file as Direct Share requested). The file format was not an issue.

"Section 173(3) provides the company must give a person a copy of the register (or a part of the register) if a person asks for a copy and "pays any fee (up to the prescribed amount) required by the company". The Corporations Regulations 2001 (Cth) (the Regulations) specify that in the case of a register kept on a computer the fee that can be charged is "a reasonable amount that does not exceed the marginal cost to the company of providing a copy": reg 1.1.01 and sch 4, item 3(b). In other words, the fee must satisfy two conditions: (1) it must be a reasonable amount; and (2) the amount must not exceed the marginal cost to the company of providing a copy of the register."

The Court decided that a reasonable fee was $250 and ordered Axa to refund the difference.

Background

When corporate regulation of building societies, credit unions and friendly societies was transferred to ASIC in 2001, the Corporations Act had to be modified to deal with, for example, the concept of member shares, demutualisation and the right of access to the member register.

Part of the concern of mutuals was that, unlike other public companies, as customers needed to be members, disclosure of the member register also provided personal information about members in their capacity as customers. Security concerns were also raised for companies whose membership is concentrated in the defence or police sectors.

Subsection 173(3B) was inserted by reg 12.8.06 of the Corporations Regulations 2001 (Cth).The modification was  considered in Capricornia Credit Union Ltd v Australian Securities and Investment Commission [2007] FCAFC 79 .

DISCLOSURE: I advised Capricornia Credit Union in its action.