This article considers whether members of the public have a right to access a company’s company records such as its securities and directors registers. We explore the scope of section 26(2) of the Companies Act 71 of 2008 (the Act) which grants members of the public rights to access these documents.
In order to encourage transparency and the accountability of companies, section 26(2) of the Act grants a person (who does not have a beneficial interest in a company) a right to inspect or copy the securities and directors registers provided that certain procedures are followed. This right only deals with access by persons without beneficial interests in the company. It therefore does not include the shareholders’ right in section 26(1) to access a broader range of company records such as the company’s Memorandum of Incorporation, the records in respect of the company’s directors, the notices and minutes of annual meetings, annual financial statements and the securities register of a profit company.
Until recently there was uncertainty on whether the right of members of the public to access a company’s registers was unqualified or not. In the recent case of Nova Property Group Holdings v. Cobbett, South Africa’s Supreme Court of Appeal (SCA) settled this issue by holding that the right to inspect and copy the company’s registers is unqualified. The applicant for information therefore does not have to establish its motive behind the application or its reasonableness.
Importantly, certain procedural requirements must be followed by the applicant for information, including paying a prescribed fee (which must not exceed R100) and making a formal request for information by completing and delivering a prescribed form to the company. The request may be made for a reasonable period during business hours by a direct request to the company either in person or through an attorney or other personal representative designated in writing. Alternatively, to this procedure, the request may be made in accordance with the Promotion of Access to Information Act 2 of 2000 (PAIA). For the purposes of this article, we shall not deal with the alternative processes available under PAIA.
A company that receives a form requesting its securities or directors registers must comply with the request (within 14 (fourteen) business days of delivery of the form) by providing the applicant an opportunity to inspect or copy the register. In terms of section 26(9) of the Act, it is an offence for a company to fail to accommodate any reasonable request for access, or to unreasonably refuse access, to information that was requested. It is important to note that the reference to reasonableness does not qualify the applicant’s right to access the registers.
As the right of any member of the public to access a company’s securities and directors registers is unqualified, it is a useful mechanism for members of the public to access such documents. The procedural requirements are not complex or burdensome on the person requesting the documents and the company is required to respond to the request within a relatively short period. Unfortunately, the right is only limited to the company’s securities and directors registers and does not include other corporate records. The accuracy of the registers depends on whether the company kept them up to date. For other company records besides the registers, the procedures envisaged under the PAIA may be used to access these records. Accordingly, when requesting company records, it is suggested the rights to access the company’s registers under section 26(2) must be considered alongside PAIA if one requires comprehensive access to company records.