Section 116 Rights to Inspect – What is it and how could it impact you?

Property management is a legal minefield, so it would be understandable if you hadn’t come across Right to Inspect before. Not only is there a huge amount of legislation in respect of the management of buildings, there is also the often overlooked legislation in respect of the corporate aspect of property management. Within the property management industry, lots of freeholders are companies, equally numerous buildings are managed by Management Companies, which means they’re all required to adhere to the Companies Act 2006.

Within the Companies Act 2006, Section 116 is particularly of interest, as it provides individuals with the Rights to Inspect. This is where someone can request the names and addresses of members within a company, which can ultimately enable them to establish who else lives within their block and at which address. They can then potentially use this information to establish whether there is an appetite from others to change the management of their block.

What must the request include?

  • The name and address of the individual making the request (if made by an individual).
  • If made by a company, it must contain the name and address of the individual responsible for making the request.
  • The purpose for which the information requested will be used.
  • Whether the information will be disclosed to any other person, including details of that person and how they will use the information.

It is also important to note, that such a request doesn’t have to identify itself as one. Therefore, any communication containing the information listed above, requesting the names and addresses of company members is subject to Section 116.

What if such a request is received?

The first place to look is Section 117 of the Companies Act 2006, as it tells you what needs to be done with such a request, but please be aware that time is of the essence when dealing with such requests. Ultimately upon receipt of the request you have 5 working  days to decide how to proceed, i.e. whether you comply with the request or apply to court for an order that the information requested does not need to be disclosed, as the request did not provide a proper purpose for doing so.

What is a proper purpose?

Unfortunately, there is little case law on this and therefore serious consideration needs to be given to the purpose of the request and such purpose must not be dismissed as being ‘not a proper’ purpose without expert advice.

What if we fail to respond or refuse?

Failure to respond or, failure to disclose the register of members where there is deemed to be a proper purpose is a criminal offence, that is committed by the company AND every officer of that company.

It is therefore essential that such requests are recognised and dealt with appropriately within 5 working days of the request being made. If there is any doubt about whether the request identifies a proper purpose seek immediate advice.

If you believe you may have received a Right to inspect request and require some expert advice, please do get in touch as quickly as possible and one of our experts will be happy to assist you.

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With hundreds of years’ worth of combined experience, our experts have dealt with nearly every leasehold property matter you can imagine. If you’re currently in need of legal support or advice, please get in touch.

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