Rights of access to securities register

09 Jun 2016

The Supreme Court of Appeal clarified the rights of access which members of the public have to the securities register of a company in terms of the Companies Act, 2008 (Companies Act) in its recent judgement in Nova Property Group Holdings v Cobbett (20815/2014) [2016] ZASCA 63 (12 May 2016).

Members of the public have a more limited right of access to company records than that which shareholders of the company have. Section 26(2) of the Companies Act entitles a person who is not a holder of securities in a company to inspect or copy the securities register or the register of directors of the company, upon payment of a fee.

In this matter, certain companies resisted an application by Cobbett, a journalist, and Moneyweb to compel them to provide access to their securities registers, on the basis that such access may be refused on the grounds set out in the Promotion of Access to Information Act, 2000 (PAIA) and on the grounds of the “motive” of Moneyweb. The companies stated that they believed that Moneyweb was acting in furtherance of a “sinister agenda” and had embarked on a vendetta for the sole purpose of discrediting the companies and undermining their integrity.

THE SCA JUDGEMENT

The court held that section 26 makes it clear that the right of access conferred by section 26(2) is in addition to the rights conferred by PAIA and does not need to be exercised in accordance with PAIA. Furthermore, there is no requirement in section 26(2) that the request for access must be reasonable. The only mention of “reasonableness” is in section 26(9), which makes it an offence for a company to “fail to accommodate any reasonable request for access, or to unreasonably refuse access”.

The court concluded that section 26(2) clearly confers an unqualified right on members of the public and the media to obtain access to a company’s securities register. Accordingly, the motive with which a person seeks such access is irrelevant. The court went on to state that this unqualified right is “essential for effective journalism and informed citizenry”.

CONCLUSION

This is an important decision as there have, in the past few years, been at least four conflicting judgements on the proper interpretation of section 26(2).

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