Sports Direct have taken the outrageous decision to take a shareholder to court because he asked to see the share register.
Rangers fan Mark Dingwall bought a single share in Sports Direct International and then requested a copy of their share register. Their company secretary replied asking why he wanted the register and Dingwall explained:
Mr Cameron Olsen, The Company Secretary, Sports Direct International, Monday 16 February 2015
Dear Mr Olsen, Thank you for your letter of the 9th February requesting me to explain the purpose of my request to obtain the shareholders register. As you will be aware, Section 116 of the Companies Act enables a shareholder to request a copy of the company’s register of members where this constitutes a proper purpose. As a shareholder I am concerned over the bad publicity the company has been receiving over its use of zero hours contracts and the retail agreements in place with RIFC plc which have also caused a large amount of detrimental publicity which may damage the share price.
I wish to canvass my fellow shareholders as to whether they would be willing to support resolutions to end the use of zero hours contracts and to review the terms of the retail agreements with RIFC plc to ensure that these generate sales revenue that benefits shareholders; rather than the current agreements which whilst appearing to be favourable are generating low sales volumes due to the level of hostility amongst the public to what are viewed as unfair terms.
I look forward to receiving the register so that I can canvass my fellow shareholders to ensure that we are able to ensure that the business does not continue to be involved in contracts which damage the long term interests of shareholders.
Regarding the requested fee of £65, my understanding is that as a member of the company, under Section 116, that this information should be available for free. I have laid out the appropriate section below:
Rights to inspect and require copies
(1) The register and the index of members’ names must be open to the
(a) of any member of the company without charge, and .
If my understanding is incorrect, or the company feels this is too great a financial encumbrance, then I will, of course, send a cheque subject to your advice.
I would prefer the copy of the register to be in electronic form.
That very same day the Sport Direct lawyers made an application to the Companies Court in London seeking the following –
1/ That the Claimant shall not comply with the request of Mr Mark Dingwall by letter dated 3 February 2015 for a a copy of the Claimant’s register of members.
2/ That they “shall not comply with any future request (whether made by Mark Dingwall or any other person) to inspect the Claimant’s register of members or for a copy of that register where the only purpose given for the request is to enable members to be contacted, without identifying the subject matter and purpose of such contact:
3/ Mark Dingwall do pay the Claimant’s costs, such costs to be assessed if not agreed.
The hearing is set for 11.30 on 14th April.
Mark Dingwall writes:
‘I can understand a company not wishing to hand out it’s share register willy-nilly but the principle is that sensible shareholders dis-satisfied with the performance of a company should be able to seek out other shareholders and canvass their opinions. In my original request I undertook not to share the register with anyone else and not to contact the shareholders regarding anything other than the company’s affairs.
By moving to strike out my request; and specifically to set the precedent that neither I nor any other shareholder can in the future obtain a copy of the register; Sports Direct are seeking to remove one vital right whereby shareholders can seek to enforce their rights by lobbying other investors in the company.
I have had some free advice so far but with the 14th April looming I think engaging a lawyer would be the sensible way to go. FF.com exists on a hand to mouth basis – we have no rich and mysterious backers nor plentiful sources of income. If we can settle outside of court or are otherwise successful then the balance will, of course, be donated to charitable causes after consultation with the donors.’
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