Received a request for your register of relevant interest recently? Read on

If you’re reading this you probably now realise that Sorata is not just a small town in Bolivia, but a new company providing share ownership research and data analytics. It is also the company that has been largely responsible for a significant increase in the volume of requests being made to inspect and receive copies of the Register of Relevant Interests (RORIs) maintained by listed companies and responsible entities for listed registered schemes (together, Listed Entities) under section 672DA of the Corporations Act 2001 (Cth) (Corporations Act).  

This article sets out information on the key issues in connection with those requests to help you respond to them.

What are the issues you need to be aware of?

The requests have given rise to a number of technical issues. The main issues that have arisen are:

1. whether the requests need to be made for a proper purpose;
2. how to respond to a request for a “part” of the RORI and whether such a request is satisfied by providing the whole of the RORI;
3. where there is a request for a copy of the RORI, what form the copy needs to be provided in – hard copy or electronic (and where electronic, what format the files (Responses) are required to be in); and
4. whether the fee that the Listed Entity (or its service provider) is charging to produce a copy of the RORI complies with the Corporations Act and Corporations Regulations 2001 (Corporations Regulations).

Each of these issues is briefly canvassed below. They are not straight forward and we’d be happy to discuss them in more detail if you receive a request.

Obligation to maintain and provide copies of a RORI  

The beneficial ownership tracing provisions in Part 6C.2 of the Corporations Act require Listed Entities to keep information provided to them about the beneficial ownership of its securities under that Part (Responses) – this constitutes the RORI. ASIC’s regulatory guidance in respect of Part 6C.2 (Regulatory Guide 86: Tracing beneficial ownership) contains commentary on what ASIC considers would satisfy Listed Entities obligations to maintain a RORI (noting that this regulatory guide was last updated in 2007, and its commentary in respect of electronic RORIs is somewhat outdated).

Generally, current market practice is to maintain an index (along with the Responses) that (at a minimum) lists the name of the holders, the number of shares held, the date of the notice, the date of the response and the filename of the relevant Response. The purpose of this index is to allow a person searching the register to distinguish and locate separate Responses (which, in ASIC’s view, is a necessary feature of a RORI under section 672DA).

A person can request a copy of the RORI maintained by the Listed Entity. Importantly, and unlike requests for a copy of a company’s register of shareholders under section 173 of the Corporations Act, no proper purpose test applies to requests for RORIs. This means the Listed Entity must comply with the request within the specified timeframe set out in section 672DA(8) (provided that the relevant fee is paid by the requestor).

Requests for a “part” of a RORI

Section 672DA(8) provides that a person can request not just a copy of the register, but “any part of the register”.

On a plain reading, a person’s right to seek “any part of” the RORI enables the person to request only certain, specified information that is contained in the register. It is unlikely that providing the whole of the RORI is sufficient to comply with a request for a specific part of the RORI.

However, where there is a request for a part of the RORI, there is no obligation for a Listed Entity to analyse or reformat information provided to it under the beneficial ownership tracing provisions in order to comply with that request. Put differently, if complying with the request for a part of the RORI would involve the Listed Entity being required to conduct analysis, reformatting or manipulation of the Responses (rather than simply a filtering exercise), that request is unlikely to be a valid request for a part of the RORI under section 672DA(8).

Further, any request for a part of the RORI that requires sorting or filtering on the basis of a criteria or information that is not itself contained in the RORI would also not need to be complied with by the Listed Entity (for example, where a request was for the register sorted by geographical boundaries, nationality or some other field that does not need to be recorded in the register itself).

Sorata has made a significant amount of requests for specified “parts” of RORIs. Consistent with the analysis set out above, many Listed Entities are complying with these requests where they consider that to do so only requires a filtering of the RORI Responses (for example, a filtering by the date of the RORI Response or the date the Response was entered into the RORI).

Format of RORI copies

Generally speaking, there are three formats that copies of RORIs are being provided in by Listed Entities: hard copy; electronic copy with the Responses in “native” form (the form that the Responses are received in); or an electronic copy with the Responses in “PDF” form (that is, any Responses that are received in a form other than PDF form are converted into PDF form).

The vast majority of Listed Entities provide the RORI in electronic form. Whilst we consider that providing the RORI with Responses in PDF form would generally be compliant with Part 6C.2, it is important that, in the conversion of the Responses from native to PDF, all of the information in the Responses remains readable.

Based on our experience, most Listed Entities are now providing the RORI with Responses in native form, which is consistent with the requests that have been made for RORI Response to be provided in native form rather than in PDF form (which presumably allows the requestor to more easily analyse the information contained therein).

Fees for RORI copies

Listed entities are permitted to charge a fee for the provision of a copy of the RORI. For an electronic copy of the RORI, this amount must not be greater than “a reasonable amount that does not exceed the marginal cost to the company of providing a copy” (Schedule 4 of the Corporations Regulations 2001). This means that the fee that a Listed Entity charges must be both the same or less than the marginal cost to it and (separately) be a “reasonable amount”. The marginal cost could be assessed in two ways:

• the cost to the Listed Entity’s service provider in producing a copy of the RORI – i.e., how much does it cost for the service provider to share an electronic copy of the RORI?
• the cost the Listed Entity pays the service provider to produce a copy of the RORI.[1]

If the fee is the same or less than both of (a) and (b), then it is likely that the fee would not exceed the marginal cost to the Listed Entity. If the fee is the same or less than (a), it is also likely that there is an argument that the fee is reasonable (as, if the service provider is in the business of managing RORIs, that cost is likely to be similar to the market price or cost of producing a copy of the RORI).

Service providers of some Listed Entities have recently increased the fee charged for requests for RORIs (in one case, this fee has doubled), noting that the fees charged have largely stayed the same for 20 years (and so the increase does not necessarily mean that the fee exceeds the marginal cost to the Listed Entity/service provider).

Something else you should be aware of

Separate to the increase in RORI requests, Treasury has opened up consultation in relation to proposed draft legislation which is intended to enhance the disclosure of ownership of listed companies, including in respect of RORIs. The changes do not impact Listed Entities obligation to maintain a RORI, or the right of any person to obtain a copy of a Listed Entity’s RORI. The draft legislation does, however, expand the circumstances in which ASIC or a Listed Entity can issue a tracing notice, and dispenses with the fee to inspect the RORI for academics and journalists (currently, only members can inspect the RORI without charge).