Q&A
Disclosure requirements under section 793 of the Companies Act 2006 are triggered when a notice is served under section 793 of the Companies Act 2006. A person who is served with a notice must provide information concerning relevant interests.
Interests to be disclosed
Disclosure requirements under section 793 of the Companies Act 2006. Under section 793, a UK public company can investigate the identity of any person it knows, or suspects, is (or was at any time in the preceding three years) ‘interested’ in its shares by sending a notice requiring the person to confirm certain information, such as details of its interest in the shares; or any agreement between two or more persons that includes provision for the acquisition by any of them of interest in shares where the agreement contains mutual obligations or restrictions (esp. as to exercise of shareholder rights) as defined in s. 824.
There is no precise statutory definition of interest. According to the judge in the leading case heard by the Supreme Court (Eclairs Group Ltd and Glengarry Overseas Ltd v JKX Oil & Gas PLC) – “The definitions of “interest” cast the net very wide. Interests can be of any kind, and in the course of broadening that concept trusts (including, apparently, discretionary trusts) are penetrated, family relationships are elided (section 822, which I have not set out), voting control is included, pre-acquisition agreements are included (if the shares are purchased) and the corporate veil is (to a degree) pierced (see s 823).
The definitions of “interest” acknowledge the wide variety of ways in which a person can in a real, rather than purely technical, way be said to have an interest. It would be inconsistent with that approach to construe section 793 in narrow way.
It is intended to enable the company to get information which it does not otherwise have, and which relates to interests which would otherwise be hard to identify or ascertain.
Penalties for failure to disclose
It is a criminal offence to fail to comply with a s. 793 notice or to make a statement which the person knows to be false in a material way; or recklessly make such a statement (unless the recipient of the notice can prove the requirement to give information was frivolous or vexatious). A company will often have powers in its articles of association to disenfranchise a shareholder failing provide the required information.
Expert advice is recommended if investors are unsure how to respond to a s. 793 notice; or if they are not sure if a s. 824 agreement exists.
