In terms of section 26 of the Companies Act a company is required to make its securities register available to all members of the public upon request. A request that is lodged under section 26 must be complied with within 14 days.
After the respondents’ refusal to comply with the requests lodged by amaBhungane, amaBhungane, represented by the Webber Wentzel Media Law Team, approached the North Gauteng High Court for an order that that the records should be delivered because section 26 of the Companies Act provides an absolute right of access to this information to all members of the public.
The respondents contended that their denial of access was temporary. They alleged that their shareholding structure was confidential because they intended to submit a bid for a tender in respect of which a component of the evaluation was their broad-based black economic empowerment rating, which would be revealed by their shareholder information.
In a judgment written by Judge Nicholls, the High Court found that it was evident from the legislation that the companies had to hand over the records. The court referred in particular to section 26(2), which provides that a person with no beneficial interest in a company has a “right to copy or inspect the securities register” and section 26(5) which says that where anyone submits a direct request for access (as amaBhungane had done), the company “must within 14 business days comply with the request”.
Importantly, the court found that the right provided in section 26 is in addition to the more general rights of access to information provided by the Promotion of Access to Information Act, No. 2 of 2000 (PAIA), and that there is no need to request this type of information through the PAIA procedure.
The court therefore found that section 26 of the Companies Act does confer an absolute right of access to the limited set of company information referred to in section 26. Judge Nicholls went on to note that even if a court had a discretion to refuse access, such discretion would only be exercised where the company could show exceptional circumstances, such as if the information was sought for an unlawful purpose, and that no such circumstances existed in this case.
The court therefore ordered the requested records to be handed over to amaBhungane. In addition, the court found that the respondents “have merely sought to delay and obfuscate and that they have no defence to the clear wording of the [Companies] Act”, and so made a punitive costs order against the respondents.
This is an important case for the media because it confirms that every company is compelled to hand over its securities register within 14 days of a request that is lodged under section 26 of the Companies Act. The only way that a company can resist handing over its securities register is if it can convince a court that exceptional circumstances exist that justify withholding the information. Furthermore, companies that engage in delay tactics and force the media to take them to court will potentially be faced with a punitive costs order.