ACCESS TO A COMPANY’S SHARE REGISTER – by Don Mahon

“The question isn’t “What do we want to know about people?” It’s “What do people want to tell about themselves?”” – Mark Zuckerberg

The Companies Act 71 of 2008 (“the Act”) makes provision for any person to access a company’s share register. Section 26(2) of the Act states as follows:

A person not contemplated in sub-section (1) has a right to inspect or copy the securities register of a profit company, or the member’s register of a non-profit company that has members, or the register of directors of a company, upon payment of an amount not exceeding the prescribed maximum fee for any such inspection.

Sub-section (1) applies to persons who hold or have a beneficial interest in any securities issued by a profit company or who is a member of a non-profit company. This article is limited to persons other than those referred to in sub-section 1.

A case which is presently pending in the Supreme Court of Appeal calls into consideration the question of whether the right afforded to members of the public under section 26 of the Act is immutable or whether a company is entitled to refuse access to its share register on the basis that the information is sought for an unlawful purpose.

The Act accords no other right to inspect or to obtain or make a copy of or extract from the register of members (or any of those referred to above) beyond those accorded by this section. See       Henochsberg on the Companies Act 71 of 2008: Commentary on section 26; In re The Balaghât Gold Mining Co Ltd [1901] 2 KB 665 (CA).

Section 32(2) of the Constitution of the Republic of South Africa Act 108 of 1996 (“the Constitution”) obliges the State to enact national legislation to give effect to the right of any person to access information that is held by another person and that is required for the exercise or protection of any rights. That legislation is the Promotion of Access to Information Act No. 2 of 2000 (“PAIA”). See the Preamble to PAIA; Investigating Director of the Investigating Directorate; Serious Economic Offences v Gutman 2002 (4) SA 230 (SCA); SA Metal & Machinery Co (Pty) Ltd v Transnet Ltd [2003] 1 All SA 335 (W)

A request for access to records of a private body may be refused on one or other of the grounds contemplated in s 68 (1) of PAIA. A person aggrieved by a refusal to provide the requested information may, in terms of s 78 of PAIA, apply to Court for the appropriate relief provided for in s 82, after having exhausted the internal appeal procedure envisaged by s 78 (1).

Under PAIA, if a request is made for information held by a private body, the requester must state the nature of the right he seeks to protect and provide an explanation why the information (record) is required for the exercise or protection of that right. See          PAIA, s 53 (1) (d)

Accordingly, while the examination or enquiry may be private, it is submitted that the records thereof are subject to the provisions of PAIA. See La Lucia Sands Share Block v Barkhan 2010 (6) SA 421 (SCA)

It is submitted that, to the extent that the relevant legislation entitles a person to an invasion of a company’s privacy through access to its share register, such an invasion can only be justified in circumstances which are reasonable. To the extent that any person seeks to limit the company’s right to privacy enshrined in section 14 of the Constitution, such a limitation would not be reasonable in circumstances where this is done in furtherance of an improper motive.

In La Lucia Sands Shareblock Ltd and Others v Barkhan and Others 2010 (6) SA 421 (SCA) the Court stated as follows:

“For completeness, I record that the New Companies Act 71 of 2008 has been assented to but has not yet come into operation … It appears that in future the provisions of the Promotion of Access to Information Act 2 of 2000 will have to be employed by non-members seeking access to the register of members. The rationale set out above for obtaining information contained in the register of members will probably continue to apply, notwithstanding that the request for information will now have to be made in terms of that Act.”

In terms of PAIA, a request for access to records of a private body may be refused on one or other of the grounds contemplated in section 68(1) of PAIA. In terms of that section, access to a record of a company may be refused if the record:

  • contains financial, commercial, scientific or technical information, other than trade secrets, of the company, the disclosure of which would be likely to cause harm to the commercial or financial interests of the company;
  • contains information, the disclosure of which could reasonably be expected:
    • to put the company at a disadvantage in contractual or other negotiations; or
    • to prejudice the company in commercial competition.

It is therefore arguable that a refusal to provide a person with access to a company’s share register is justified on the basis of the provisions of section 68 of PAIA.

Notwithstanding the aforegoing, however, it is submitted that quite apart from the application (or otherwise) of PAIA, in respect of the powers of a court to compel compliance with section 26, it has a discretion to grant or refuse the relief sought and may decline to make an order where, for example, it has been shown that the information is sought for some unlawful purpose. See        La Lucia Sands Shareblock Ltd and Others v Barkhan and Others 2010 (6) SA 421 (SCA); Bayoglu v Manngwe Mining (Pty) Ltd 2012 JDR 1902 GNP; Pelling v Families Need Fathers Limited [2002] All ER 440 CA at 447d; Henochsberg on The Companies Act 71 of 2008, Commentary on section 26 at page 114 (10)

This is borne out by the fact the section 26(9) of the Companies Act makes it an offence for a company to fail to accommodate any reasonable request for access or to unreasonably refuse access when faced with a request under section 26. SeeSection 26(9) of the Companies Act 71 of 2008

This implies that a company may refuse to comply with a request under section 26(2) under circumstances where it is reasonable to do so. Where the request is made for an unlawful purpose, it would be reasonable to refuse to comply therewith.

In order to counter this argument, reliance has been placed on a judgment of Nicholls, J in M&G Centre for Investigative Journalism NPC v CSR-E Loco Supply (Pty) Ltd case number 23477/2013.

It is submitted, however, that on a proper construction of the judgment of Nicholls J, a person’s right of access to company’s share register is absolute only in the absence of exceptional circumstances where, for example, access is sought for some unlawful purpose. If this qualification cannot be attached to the view of Nicholls J, then it must respectfully be submitted that the judgment is wrong and falls to declared as such in the pending matter before the Supreme Court of Appeal.

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