Currently section 26 of the Companies Act 2008 provides only for holders of securities and beneficial interests in securities to have access to the notices and minutes of annual meetings, written communications sent generally to any class of security holders, resolutions adopted at a shareholders meeting and any documents made available in relation to such resolutions. The draft Companies Amendment Bill provides that any person can have unqualified access to these shareholder communications. This applies to all types of companies.
There is a real concern that this will be interpreted as granting the public a wide right of access to company information because the same provision providing for public access to the share register has already been interpreted as giving the public an absolute right of access (see Nova Property Group Holdings Ltd v Cobbett).
The concern is that many companies have to provide their shareholders with confidential and proprietary information usually recorded in shareholder communications and minutes of meetings. Providing the public with unqualified access to this information is too intrusive. There are circumstances where companies should be able to disclose information to their shareholders confidentially. The proposed public access could expose a wide scope of previously confidential company information, including internal financial information, trade secrets, intellectual property, profit margins, suppliers, customers, negotiations and strategies. Making such information publically available would not only undermine the confidentiality of the company but also give competitors access to the information.
It is necessary for South African incorporated companies to have a reasonable level of privacy in order to protect their proprietary interests and to compete on a level playing field with companies incorporated in other jurisdictions. If the amendment is adopted, companies will become more reluctant to disclose information to their shareholders.
I am of the view that the public’s right to access information in respect of shareholders meetings should be limited to any special resolutions adopted, as was the case under the Companies Act 1973. The public can always rely on the Promotion of Access to Information Act to access any other information required to exercise or protect their rights.