Nova Property Group Holdings v Cobbett (20815/2014) [2016] ZASCA 63 (12 May 2016).

Right of access to a company's securities register - unqualified or not?

Author

Ross Shepstone
August 07, 2024

The case revolves around the attempts by Moneyweb (Pty) Ltd and Mr. Julius Peter Cobbett, a financial journalist, to access the securities registers of Nova Property Group Holdings Ltd, Frontier Asset Management & Investments (Pty) Ltd, and Centro Property Group (Pty) Ltd (collectively referred to as "the Companies"). These companies are purportedly linked to the controversial Sharemax property syndication investment scheme.

Cobbett, commissioned by Moneyweb to investigate the shareholding structures of the Companies and report on his findings, requested access to their securities registers in July 2013, as per section 26(2) of the Companies Act 71 of 2008. The Companies refused access, leading Moneyweb to initiate legal proceedings to compel the Companies to provide the requested access.



The Companies, in response, issued notices under rules 35(12) and 35(11) to (14) of the Uniform Rules of Court, seeking documents from Moneyweb for the purpose of challenging the 'real motives' behind the request, alleging that Moneyweb was pursuing a 'sinister agenda' against them.

The High Court granted partial relief to the Companies, compelling discovery of certain documents but dismissing their application to compel under rule 35(14). The Companies appealed this decision, arguing that the documents sought were relevant to anticipated issues in the main application and that Moneyweb's motives were pertinent to their defense.

The Supreme Court of Appeal was tasked with determining whether the High Court's interlocutory order was appealable and, if so, whether section 26(2) of the Companies Act provided an unqualified right of access to the Companies' securities registers, irrespective of the requester's motives.

"The right to freedom of expression lies at the heart of democracy, and is one of a 'web of mutually supporting rights' that hold up the fabric of the constitutional order. Section 32(1) of the Constitution guarantees everyone the 'right of access to information held by the state'. Citizens and public interest groupings rely on this right to uncover wrongdoing on the part of public officials or for accessing information to report on matters of public importance. The Constitutional Court has noted that the media has a duty to report accurately, because the 'consequences of inaccurate reporting may be devastating.' It goes without saying that to report accurately the media must have access to information. Access to information is 'crucial to accurate reporting and thus to imparting information to the public.' While s 32 of the Constitution guarantees the right of persons to access relevant information, s 16 entitles them to distribute that information to others." (Paragraph [44])

The ratio decidendi of the Supreme Court of Appeal's decision in Nova Property Group Holdings v Cobbett is that section 26(2) of the Companies Act 71 of 2008 confers an unqualified right of access to a company's securities register to any person who follows the prescribed procedure for such access. The court determined that a person's motive for seeking access to the securities register is irrelevant, and the right of access is not subject to the provisions of the Promotion of Access to Information Act 2 of 2000 (PAIA).

The court emphasised that the Companies Act aims to encourage transparency and high standards of corporate governance, and as such, the legislature intentionally provided for an unqualified right of access to securities registers without the limitations and procedural requirements that are associated with PAIA. The court also noted that the Companies Act and its regulations contain safeguards to protect confidential information within the securities registers, thus addressing concerns about privacy.

The core legal principle established by the court is that statutory rights to information, specifically under section 26(2) of the Companies Act, must be interpreted in a manner that promotes transparency and access to information, which are fundamental to the exercise of freedom of expression and an informed citizenry. This principle aligns with the constitutional values of openness and accountability, especially in the context of corporate entities that operate within the public sphere.

In its reasoning process, the Supreme Court of Appeal referred to:

Bernstein & others v Bester NO & others [1996] ZACC 2; 1996 (2) SA 751 (CC). This case was cited to emphasise the principle that the activities of companies are not purely private matters and that there is an expectation of disclosure and accountability to shareholders, which impacts the public's right to access information.

Brümmer v Minister for Social Development & others [2009] ZACC 21; 2009 (6) SA 323 (CC). This case was used to highlight the importance of access to information for accurate reporting and the consequential impact on the public's right to be informed.

Midi Television (Pty) Ltd t/a E-TV v DPP (WC) [2007] ZASCA 56; 2007 (5) SA 540 (SCA). This case was cited for the principle that courts are generally reluctant to issue orders that amount to prior restraints on expression, and that the media cannot be precluded from accessing information based on the subject's concerns about potential negative reporting.

La Lucia Sands Share Block Ltd & others v Barkhan & others [2010] ZASCA 132; 2010 (6) SA 421 (SCA). This case was mentioned in relation to the interpretation of access rights under the previous Companies Act and the court's obiter dictum regarding the application of PAIA to requests for access under the Companies Act, which the court in the present case clarified was incorrect.