Who rules the roost on access to and protection of personal information relating to shareholders and directors?
Section 26(1) of the Companies Act, 71 of 2008 ("Companies Act"), provides that –
a person who holds or has a beneficial interest in any securities issued by a profit company, or who is a member of a non-profit company, has a right to inspect and copy the information contained in the records of the company and which information may include, inter alia, the company's memorandum of incorporation and any amendments thereto, director records, and the company's annual financial statements.
Section 26(2) of the Companies Act provides that –
a person not contemplated in subsection (1) above (i.e., a person who does not hold or have a beneficial interest in any securities of such a company) has a right to –
- inspect or copy the securities register of a profit company; or
- the members 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.
Despite the above, attention must be given to the Protection of Personal Information Act, 4 of 2013 ("POPIA"), and the obligations placed on "responsible parties" to protect "personal information". The question arises whether the provisions of section 26(2) of the Companies Act are affected in the sense of them being restricted or curtailed by the new privacy laws promulgated under POPIA, specifically in relation to the disclosure of personal information contained in a securities register or register of directors.
Considering that the Companies Act provides for a right of inspection that may appear to conflict the protections covered under POPIA (as POPIA contains a range of provisions regulating the processing of personal information, which in terms of the definition of "processing" in POPIA includes the recording, storage and dissemination of personal information), one must first evaluate section 26(2) of the Companies Act, and then deal with POPIA and how the provisions of section 26(2) of the Companies Act and POPIA are to be reconciled.
In Nova Property Group Holdings Ltd and Others v Cobbett and Another 2016 (4) SA 317 SCA ("Nova Group"), the Supreme Court of Appeal ("SCA") considered the "question of the proper interpretation of section 26(2) of the Companies Act and, in particular, whether it confers an unqualified right of access to the securities register of a company".
The salient facts in Nova Group, which are relevant to this article, are that Moneyweb (Pty) Ltd ("Moneyweb"), a financial media company, in the course of investigating a property-syndication scheme, relied on section 26(2) of the Companies Act in seeking access to the securities registers of a number of companies involved in the scheme. This access was refused by the companies, prompting Moneyweb to apply to the High Court for an order compelling the companies to provide access to their respective securities registers for purposes of inspection and copying.
It must be kept in mind that although POPIA was assented to on 19 November 2013 (save for sections 1, 39 to 54, 112 and 113, which sections came into effect on 11 April 2014), the bulk of POPIA came into effect on 1 July 2020 and full compliance was required by 1 July 2021. Bearing in mind this difference in timelines between the Nova Group judgment and POPIA's commencement, the SCA in Nova Group did not consider the consequence, if any, of POPIA on the interpretation of section 26(2) of the Companies Act. Therefore, the effect of the Nova Group judgment having taken place before the full implementation of POPIA means that, subject to any future impact that POPIA may have on section 26(2) of the Companies Act, Nova Group remains the authoritative judgment regarding the interpretation of section 26(2) of the Companies Act.
The SCA in Nova Group concluded that section 26(2) of the Companies Act provides an unqualified right of access to securities registers and that, for the purposes of this article, the Companies Act still holds firm. Facts and considerations with which the SCA had regard to include the following –
- both the SCA and the Constitutional Court have recognised that the manner in which companies operate and conduct their affairs is not a private matter
- the Companies Act gives specific recognition to a culture of openness and transparency in section 7, which lists the core objectives of the Companies Act, with section 7(b)(iii) expressing one of the objectives of the Act being to "[encourage] transparency and high standards of corporate governance as appropriate, given the significant role of enterprises within the social and economic life of the nation"
- section 26 of the Companies Act is enacted with precisely these objectives in mind, in recognising that the establishment of a company is not purely a private matter and may impact the public in several ways. It therefore seeks to impose strong rights of access in respect of very specific but ultimately limited types of information held by the companies, and section 26 must, therefore, be interpreted in accordance with this purpose. Section 26(1) of the Companies Act confers a right of access to information in respect of various kinds of information to a person who holds a beneficial interest in any securities issued by a profit company, or who is a member of a non-profit company, while section 26(2) confers a narrower and more specific right of access to all other persons
- in regard to the interaction between section 26(2) of the Companies Act and the provisions of the Promotion of Access to Information Act ("PAIA"), section 26 of the Companies Act makes it clear that the right conferred by section 26(2) is additional to the rights conferred by PAIA and does not need to be exercised in accordance with PAIA
- the approach of the legislature in conferring the rights of access to information in section 26(2) of the Companies Act, in addition to the rights conferred by PAIA, is consistent with section 39(3) of the Constitution, which provides that "the Bill of Rights does not deny the existence of any other rights or freedoms that are recognised or conferred by common law, customary law or legislation, to the extent that they are consistent with the Bill"
- whereas PAIA is a general statute, regulating access to innumerable types of information held by a wide range of bodies, with various different types of interests at stake, section 26(2) of the Companies Act confers a specific right in respect of one type of information only, namely, securities registers and directors' registers
Despite judgment in Nova Group having been handed down around five years ago and that the SCA did not consider the effects of POPIA at the time, section 11(1)(c) of POPIA permits processing of personal information where it is necessary to comply with a legal obligation of a responsible party. Section 26 of the Companies Act, by conferring on any person other than a shareholder a right to inspect the securities register of a company, by implication imposes a duty on the company to afford such a person access to allow them to exercise the right. As such, our view is that disclosure of the information contained in section 26(2) of the Companies Act also complies with an obligation imposed by law on the company and, on account of section 11(3)(a) of POPIA, a data subject (such as a shareholder whose personal information appears in the securities register) may not object to the disclosure thereof.
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