Company shareholders' information: Privacy vs public's right to information
A potentially precedent-setting dispute on the right to access information on unlisted firms' shareholdings came before the Supreme Court of Appeal.
A potentially precedent-setting dispute on the right to access information on the shareholding of unlisted companies came before the Supreme Court of Appeal in Bloemfontein on Tuesday.
The case involves a drawn-out battle between online financial news service Moneyweb and Nova Property Group, which owns properties originally acquired by Sharemax, an alleged ponzi scheme. Nova and associate companies have denied Moneyweb access to their share registers over a three-year period.
The disclosure process envisaged by the Companies Act should take about three weeks at most. The standard procedure is for interested members of the public simply to fill in a form asking companies for the opportunity to inspect their registers.
After Moneyweb took Nova to the Pretoria high court in 2013 for refusing to disclose, Nova applied for an interlocutory order demanding copies of Moneyweb records relating to the story, claiming it needed these to show the news service was driven by malicious motives.
In his ruling, Judge Neil Tuchten made the potentially devastating finding that the right of access to shareholder information is not absolute, and may be curtailed in certain circumstances.
The right is seen as being critically important in the fight against corruption and is used by investigative journalists, activists and researchers. At stake is the public’s right to information and the freedom of the media to pursue stories in the public interest.
For this reason, amaBhungane, the investigative journalism centre, joined in the appeal court hearing as a friend of the court.
AmaBhungane had helped secure the right to access share registers by making presentations to Parliament when the Companies Act was amended in 2010. Given this background, it was well placed to present evidence and argument on the legislature’s intention for the right to access to be unqualified.
Section 26(2) of the Companies Act provides that any person may inspect the shareholder register of any company within 14 business days of making the request. The provision is intended among other things to provide a quick and inexpensive way to scrutinise those who benefit financially from the delivery of goods and services to the public.
Journalists can play a crucial role in exposing this information in the public interest. The exercise of the right has been crucial to many investigative exposés, revealing collusion between the private sector and state officials, as well as corrupt business practice.
In his opening submission, amaBhungane’ counsel, Geoff Budlender SC, attacked the idea that the right to privacy – the basis of Nova’s case – allows companies to keep information about their ownership secret.
He argued that journalistic interest, and the corresponding right of the public to receive accurate information, outweighs the privacy right.
Fielding questions from a lively Bench, Budlender argued that the intended purpose of section 26(2) was to provide unfettered access.
Nova’s counsel, Jose Brett SC, pleaded the “absurdity” of regarding access to shareholder information as an unfettered right.
The judges queried this, pointing out that, in contrast to humans, juristic persons have a limited right to privacy and do not have the right to dignity. Brett also argued that the test of reasonableness gives companies the right to refuse access in certain circumstances, for example, if the request is made in an effort to harass or intimidate.
The Bench pointed out that it appears that section 26(2) of the Companies Act accords the public stronger rights than the Promotion of Access to Information Act.
Attacking the privacy arguments, Budlender drew the court’s attention to regulations under the Companies Act that allow owners to choose either to list their physical or postal addresses, and pointed out that they contain no requirement that the identity numbers of shareholders should be disclosed.
The information required is limited, and it was hard to see how it violates the right to privacy, he said.
Budlender added that the narrow scope of the legislation provides further safeguards against abuse.
Judgment has been reserved.
Karabo Rajuili is amaBhungane’s advocacy co-ordinator and as such was directly involved in the pursuit of the matter
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The M&G Centre for Investigative Journalism (amaBhungane) produced this story. All views are ours. See www.amabhungane.co.za for our stories, activities and funding sources.