Enares Pty Limited v Nimble Money Limited, in the matter of Nimble Money Limited

Enares Pty Limited, the largest shareholder of Nimble Money Limited, sought access to Nimble's books and records under section 247A of the Corporations Act 2001 (Cth) to investigate Nimble's debt refinancing arrangements. The Federal Court of Australia was asked to decide whether Enares had established an objective basis for the inspection, and whether the court should exercise its discretion to grant access. The central legal issues were whether Enares had demonstrated a proper purpose for the inspection and if the court should grant access to the books and records under its discretion.

The court held that Enares had not established a proper purpose for the inspection. The applicant's purpose needed to be reasonably connected with the proper exercise of its rights as a shareholder. The court found that Enares' stated purpose for seeking access was not objectively connected with the proper exercise of its rights as a shareholder. Instead, the court observed that Enares' purpose seemed to be more aligned with its own interests, such as exploring alternative financing options and potentially taking control of the company. This purpose was not in line with the proper exercise of shareholder rights, which are typically related to understanding the company's financial position and ensuring its proper management.

In reaching its decision, the court noted that the concept of "proper purpose" in this context means a purpose reasonably connected with the proper exercise of the rights of a shareholder as a shareholder. A purpose unrelated to the applicant's status as a shareholder, inherently improper, or both, would not establish good faith and proper purpose. The court also emphasised that the requirement for an objective basis for intervention is not a low threshold but rather a substantive and not fanciful requirement. Enares had failed to meet this requirement, as its purpose was not properly connected with the proper exercise of its rights as a shareholder.

Based on the findings, the court dismissed Enares' application for access to Nimble's books and records, with costs awarded against Enares. The court's refusal of the relief sought by Enares underscores the necessity for shareholders to demonstrate a proper purpose for seeking access to a company's books and records, aligned with their rights as shareholders.