In our article "Corporate transparency and the right to information" published in the July 2016 issue of without prejudice (pages 8 and 9), we discussed the Supreme Court of Appeal's (SCA) finding in Nova Property Group Holdings Ltd and Others v Cobbett and Another 2016 (4) SA 317 (SCA). That is, that s26(2) of the Companies Act (71 of 2008) confers an absolute and unqualified right on members of the public and, importantly, the media, to access the securities registers of profit companies and, accordingly, that the motive for seeking such access is irrelevant.
In summary, two financial journalists, Moneyweb (Pty) Ltd and Julius, sought to compel Nova Property Group Holdings Ltd and two other companies to comply with a request to inspect and copy their securities registers in terms of s26(2). The Companies denied the journalists access on the basis that their motives for seeking access were for unlawful and improper purposes. The SCA ultimately held that the journalists had an unqualified right to access the respective securities registers, and that their motives were irrelevant.
Unsatisfied with the SCA's finding, the companies brought an application for leave to appeal to the Constitutional Court on the basis that the
SCA erred in its interpretation of s26(2). They argued that the SCA failed to promote the spirit, purport and objects of the Bill of Rights as is required in terms of s39(2) of the Constitution. They submitted that providing the public with unqualified access infringes not only a shareholder's, but also a company's, constitutional right to privacy and, therefore, fails to promote the Bill of Rights.
The Companies accepted that, as a general rule, to give effect to the spirit of openness and transparency, the public should have access to the securities registers of profit companies. However, they contended that such a rule should be subject to qualification in certain limited circumstances. In making this submission, the Companies argued that privacy considerations and motives should play a vital role in determining whether the public should be permitted access to a company's securities register. They argued that, for instance, access should be limited in circumstances where it may result in reputational or financial prejudice to the company or its shareholders, or where the person seeking access intends to use the information for unlawful or improper purposes.
Unsurprisingly, and as alluded to in our previous article, the companies further submitted that an unqualified right of access to personal information would be inconsistent with the objectives of the Protection of Personal Information Act (4 of 2013) (POPI) and that the protection of personal information offered by POPI will prevail over the manner in which personal information is processed under s26(2) of the Companies Act.
The Constitutional Court dismissed the companies' application for leave to appeal on 28 September 2016, on the basis that it lacked prospects of success. It is, however, unclear whether, and to what extent, the Court considered the merits of the companies' submissions made in respect of POPI, as POPI is yet to become fully operational.
Given the far reaching consequences of the SCA's decision, s26(2) may very well be tested again against POPI when it becomes fully operational. In addition, there remains scope for s26(2) to be challenged on a Constitutional basis, as (though strongly alluded to) no express findings were made by the SCA or Constitutional Court.
Steyn is an Associate and Manilal a Candidate Attorney with Baker & McKenzie. The article was supervised by Darryl Bernstein, a Partner.