Section 26 of the Companies Act No. 71 of 2008 (“Companies Act”) a person who holds or has a beneficial interest in any securities of a profit company or who is member of a non-profit company has the right to inspect and copy, without any charge for such inspection or upon the payment of no more than prescribed maximum charge for the copying of the following records of a company:

  • memorandum of incorporation;
  • register of directors;
  • reports to annual meeting and annual financial statements;
  • notices and minutes of annual meetings; and
  • the securities register of a profit company or the members register of a non-profit company.
  • Section 26 further provides that, in the context of a profit company, “any other person” has a right to inspect or copy the securities register of a company or the register of directors at a prescribed fee; and that person is entitled to inspect the register of directors during the business hours for an inspection fee of no more than ZAR 100 (one hundred Rand). It should be noted that the inspection hours and payment of the ZAR 100, only applies to “the register of directors of a company”, thereby excluding the fee mentioned to inspect or copy the securities register. The prescribed fee referred to make the relevant copies is not prescribed by the Companies Act as opposed to the prescribed inspection fee above.
  • A request for such information in terms of the Companies Act No. 71 of 2008 (“Companies Act”) may be made either by an attorney, or in person or via a designated person in writing.
  • The Companies Act does not qualify the word “copy” and it is suggested that the company can provide such a copy irrespective of the means by which it is made in order to comply with this section. There is in turn no specification or restriction on the means used to make the copy by the person desiring such a copy. We submit that in either case a standard photocopy should be sufficient.
  • It is important to note that section 26, insofar in relates to the rights of “any other person” that does not have a beneficial interest in a company, does not incorporate the right to access to the books of account and financial statement of the company.
  • Section 26(9) of the Companies Act provides that if a company fails to accommodate any reasonable request for access to, or to unreasonably refuse access to any record that a person has a right to inspect or copy in terms of section 26 (Access to company records) or to otherwise impede, interfere with, or attempt to frustrate, the reasonable exercise by any person of the rights of access to the company records, it constitutes an offence in terms of the Companies Act.
  • Section 76 (Standards of directors conduct) provides that a director of a company, when acting in that capacity, must exercise the powers and perform the functions of director –
  • in good faith and for a proper purpose;
  • in the best interests of the company; and
  • with the degree of care, skill and diligence that may reasonably be expected of a person –
    • carrying out the same functions in relation to the company as those carried out by that director; and
    • having the general knowledge, skill and experience of that director.Section 218 (Civil actions) provides that any person who contravenes any provision of the Companies Act is liable to any other person for any loss or damage suffered by that person as a result of that contravention.The Companies Act further provides that any person convicted of an offence in terms of the Companies Act, is liable to a fine or to imprisonment for a period not exceeding 12 months, or to both a fine and imprisonment.

Rights and possible actions against the directors and/or the company:

  • A complaint relating to an alleged contravention of the Companies Act may be reported to Companies and Intellectual Property Commission (“CIPC” or “Commission”) by completing a form 1, and sending it to the Commission.
  • A form 1 is a simple form requiring information such as:
  • the nature of the complaint;
  • if the conduct is still continuing;
  • if you would like the Commission to commence court proceedings in your name;
  • an attached document describing the conduct in question;
  • complainant contact details; and
  • generally such a complaint is not public record and you have the right to identify information that you believe is confidential.
  • The Commission then may proceed as follow:
  • they may choose not to investigate if the complaint appears to be frivolous, vexatious or does not allege any facts that would constitute grounds for remedy;
  • they can refer the matter, should it be more practical to do so, for resolution by mediation, conciliation or arbitration to the Companies Tribunal or an accredited entity or any other person;
  • they can direct an investigator or inspector to investigate the complaint; or
  • they can initiate the complaint on the own accord.
  • In terms of the Companies Act the Commission has the power to, inter alia:
  • issue a compliance notice;
  • apply for administrative fines;
  • refer matters to the National Prosecuting Authority (NPA), Companies Tribunal, other regulatory authorities concerned and/or for alternative dispute resolution;
  • issue a summons; or
  • issue and enter a search under warrant.
  • Please further note that complaints in terms of the Companies Act may not be initiated by, or made to, the Commission/CIPC, more than three years after the act or omission that is the cause of the complaint; or in the case of a course of conduct or continuing practice, the date that the conduct or practice ceased.