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Government takes aim at shysters
From: AAP February 03, 2010 5:16PM
SHYSTERS who trick vulnerable investors into selling their shares below market price are in the Government's sights.

Corporate Law Minister Chris Bowen wants restrictions placed on who can access a listed company's share register, but a corporate law expert says this proposal could disadvantage small shareholders.

The Government is targeting controversial entrepreneurs, like David Tweed, who profit by convincing naive shareholders to sell him their shares at less than market price.

Tweed's business is based on accessing a company's share register and using that information to send out low-value share offers.

The Government has released a discussion paper defining "improper purposes" for requesting a share register.

They include making an off-market offer to buy securities in a listed company other than for a takeover, gathering information on the personal wealth of shareholders, brokers seeking clients, and the solicitation of donations from shareholders by groups such as charities.

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Under the proposed changes, an individual would have to go to court if a company refused to hand over the list.
But the director of Melbourne University's Centre for Corporate Law, Ian Ramsay, said the definition of a takeover in the proposal would be hotly contested in court.

"It seems to go well beyond the David Tweed situation," Professor Ramsay said.

"There's going to be some lively debate ... defining what's a 'proper purpose'."

The proposal requiring individuals to go to court if a company refuses them access would also disadvantage small investors who have a dispute with directors.

"The cost of litigation is high," Professor Ramsay said.

The United Kingdom requires companies to dispute access to a share register in court, rather than individuals.

Chartered Secretaries Australia, which has campaigned for a"proper purpose" test for share-register access, said it had provided the Government with confidential data showing shareholder registers were sought primarily for marketing purposes.

A poll of CSA members in ASX Top 100 companies had found 95 per cent of requests for registers came not from shareholders but third parties seeking information for commercial gain, the professional body said.

Mr Bowen's spokesman said the government was still working out a penalty for the improper use of a share register.

"These penalties will be the subject of consultation when the proposals announced today become the subject of draft exposure legislation," he said.

The Government would continue to respect parties seeking to take over a company legitimately.

Submissions to the Access to Company Registers and Related Issues paper close on February 24.