Transparency in the ownership of companies is increasingly being recognised as a vital tool in the fight against corruption, and unqualified public access is vital to upholding this transparency.
Such information can, for example, reveal the conflicting interests and political connections of shareholders.
Section 26 of the Companies Act provides that any member of the public, including the media, may inspect the shareholder register of any company. However, the recent high court ruling in the matter of Julius Peter Cobbett v Nova Property Group Holdings could dangerously erode the public’s right of access.
Cobbett, a journalist at Moneyweb, approached the High Court to force Nova Property Group companies to provide Moneyweb with access to their shareholder registers. Nova benefitted from the proceeds of the Sharemax investment properties, an alleged pyramid scheme. The identities of their majority shareholders remains unknown.
In an interlocutory judgment, the judge took the preliminary view that the right is qualified and that companies may have legitimate reasons not to disclose their ownership.
amaBhungane considers the court’s view to be potentially devastating to the public’s right to know. If confirmed, it will encourage some companies to refuse to disclose and to “dare” journalists or other parties seeking shareholder information to sue them. For most requesters, the cost and time involved in going to court would be prohibitive.
amaBhungane’s advocacy co-ordinator, Karabo Rajuili, said: “The right to access company shareholder registers has been vital to many of our reporters’ groundbreaking investigative stories. Transparency allows for public scrutiny of company ownership information. This is particularly important for understanding who stands to benefit from tenders and dodgy deals.”
The interlocutory judgment is now on appeal at the Supreme Court of Appeal. amaBhungane applied to be admitted as an amicus curiae in defence of the unqualified right, and were admitted in August last year.
At the SCA hearing on Tuesday, we intend to demonstrate through the legislative history of the Companies Act that Parliament intended the right to be unqualified. We will argue that qualifying this right will have the effect of eroding the constitutional rights of access to information and freedom of expression.
amaBhungane contributed to South Africa’s corporate transparency regime by ensuring, through representations to government and Parliament, that public access to share registers was preserved in the new Companies Act of 2008, as amended in 2010.
We also brought a high court application to compel a company that won a R2.6-billion Transnet tender, CSR-E Loco, to disclose its ownership. The judgment, which went in our favour, confirmed the unqualified nature of the right of access to share registers.
We have regularly exercised this right in an effort to build up our knowledge and in the pursuit of investigations. When companies refuse, we use the Companies and Intellectual Property Commission (CIPC) complaints mechanism, which is generally effective.
* AmaBhungane engages in advocacy under its mandate to help secure the information rights investigative journalists need to do their work