The ref makes online lobbying for votes a member contact sport

If you thought that Australian Rules Football was a contact sport on the field, it has just become all about member email contacts in membership tussles.

Melbourne Football Club Ltd (Club) board announced its intention to review the Club’s constitution, appointed a committee to carry out the task, and held a number of surveys and member forums on the proposals.

The Club is a company limited by guarantee.

Lawrence (the member) and 4 other members of the Club formed an informal group styled as ‘Deemocracy’ and prepared a draft constitution incorporating their views on the Club’s governance arrangements. They placed a full-page advertisement in the Herald Sun newspaper ‘CALLING ON ALL OUR MFC MEMBERS’ to read the Democracy submission.

The member later requested a copy of the member register to provide all members with a copy of the draft constitution, together with a summary and explanatory notes.

Public companies limited by guarantee, such as the Club, must keep a register of members pursuant to the Corporations Act. Under section 169 of the Act, the register must include the name and address of all members, as well as the date on which each member was entered into the register. Anyone (including non-members) is allowed to inspect the register without providing reasons, but the requirements surrounding obtaining copies of the register are more restrictive.

Despite the Club’s initial reluctance, a members’ list was provided to the member under certain conditions, but it did not contain member email addresses.

The Club’s register of members was maintained through data requests and extraction from the Australian Football League electronic Ticketmaster’s membership and customer relationship management platform (Archtics).

The member then filed an application with the Court for a declaration that, pursuant to s 173 of the Corporations Act 2001 (Cth) (Act), the Club was to provide the member with a copy of the Club’s register in order to send an email to all voting members of the Club.

The Court identified the following issues for determination:

• Does the word ‘address’ in s.169(1) of the Act include any electronic addresses nominated by the member?
• Are the email addresses maintained by the Club on the Archtics system part of the Club’s register?

Does the word ‘address’ in s.169(1) of the Act include any electronic addresses nominated by the member?

The Court found that the requirement under s.169(1)(a) of the Act for the register to contain the member’s address includes an obligation to contain, not only the residential address but any address nominated by the member for the purposes of communications relevantly including electronic addresses.

The Court’s reasons were that:

• more than one address can be placed on the register;
• the principal purpose for a member nominating an address, or more specifically, an electronic address, is to permit communications and receipt of notices relevant to the company’s affairs;
• to limit address to a residential address would be to thwart the intention of the Act for a member to be able to communicate with members for an approved purpose, and some members rely on an electronic address for receiving communications; and
• it would be incongruous for the Act to permit a company to record one address in the official register but then record a second address on another register, particularly when it is the latter address that the company uses for the purpose of communications with its members.

The Court rejected the Club’s concerns about member privacy (at [53]):

“The legislature has permitted access to addresses of members of a corporation for proper purposes and prescribed penalties for unauthorised use. One may expect that there would be greater concerns about disclosure of residential addresses than email addresses.”

The second issue was not dealt with by the Court as the Club conceded that an order for inspection should be made if it is required by s 169(1) of the Act to record electronic addresses nominated by its members.

Consequences

Until a higher Court rules otherwise, if a company limited by guarantee member’s register includes their email address, then this can be required by another member for certain purposes.

The Act makes the following “prescribed purposes”, and they will not be valid reasons for seeking the member’s register:

• soliciting a donation from a member of a company;
• as a stockbroker, soliciting business from a member;
• gathering information about the personal wealth of a member; and
• making an offer for the sale of a financial product.

These usually do not apply to a nonprofit company limited by guarantee, and if the person does provide a specific reason, which is not one of the prescribed purposes, then the organisation will generally be obliged to disclose the register, even if it is against the organisation’s wishes.

Disclosing the member register to a member will generally come under an exception in the Privacy Act, as long as the organisation actually was required under the Corporations Act to disclose the information.

Article by:

Myles McGregor-Lowndes
Consultant
Email Myles