Authored By: Shrreya Subban
University of Witwatersrand
Introduction
For decades, South African company law has treated the right to inspect a company’s internal records as a privilege reserved for those with a financial stake in the business. Shareholders could examine company documents, while everyone else was confined to the public securities register. Recent amendments to the Companies Act 71 of 2008 abandon this distinction entirely, providing an extension of the right to inspect a wide range company records (including the beneficial interest register and annual financial statements) to any person, regardless of whether they are shareholders of the company or not.
This is a significant departure from the shareholder-centred model that has historically defined the corporate transparency in South Africa, and it raises the concern of who this transparency is referred to. The amendments are not complete. Smaller, private, non-profit, and personal liability companies remain free from disclosing annual financial statements to non-members, with the threshold determined by the company’s “public interest score”. The result is a layered system in which the scope of the public accountability depends on the company’s size and economic significance, rather than on any settled principle of what the public is entitled to know of the businesses operating around it.
This article argues that South Africa’s extension of document access rights to non-shareholders should be understood as a deliberate, if incomplete, shift towards a public interest model of corporate transparency (one that is similar to the United Kingdom’s long-standing public register system instead of leaning towards the United States’ restrictive and shareholder-limited approach). The article will include the legal framework that’s sets out the amendments and their exemptions, the domestic context that considers the public interest score mechanism and its rationale, the comparative perspectives that examines the UK and the US models, and a critical analysis that evaluates whether South Africa’s layered approach strikes the right balance between transparency and confidentiality.
The Legal Framework
Company law within South Africa has never treated document access as an exclusive shareholder control aspect. When the Companies Act 71 of 2008 came into force, only shareholders (or people who had a beneficial interest in the company’s shares or other securities) could inspect and make copies of important company documents. This included directors’ records, annual financial statements, and minutes of meetings. Non-shareholders could still have access to the information, but it was very limited. They could inspect the register of shareholders and the register of directors, only if they paid a small fee. The Act did, however, allow a company to choose to give more access to its documents. It could do this through the Memorandum of Incorporation (MOI), which extended information rights to any person, regardless if they were shareholders or not. Non-shareholder access, in other words, was always legally possible, but this depended on individual companies permitting for this to occur.
The Companies Amendment Act 16 of 2024 changed this voluntary possibility into a mandatory entitlement, where it is no longer optional for companies to choose if non-shareholders have access to the company’s documents. Section 26, as amended, extends the right to inspect and copy a substantially wider range of company records, including the financial statements and the beneficial interest register, to any person, regardless of their status within the company. This is reinforced by a parallel transparency obligation, where companies are required to publicly provide the location of their records. This should be published by the company and the Intellectual Property Commission, so that the right of access is not undermined by simple inaccessibility.
This new right of access is not unlimited. There are still some exceptions and restrictions. The law preserves a tiered structure tied to a company’s “public interest score”, a complex measure of turnover, workforce size, third-party liabilities, and stakeholder numbers. Private, non-profit, and personal liability companies that fall below the relevant public interest score thresholds remain free from disclosing their annual financial statements to non-members. The law adjusts the level of transparency according to the company’s size and importance. For example, large companies that have a greater impact on employees, creditors, investors, and the public must disclose more information, and smaller companies are given more privacy and do not have to disclose as much information.
This amendment is not yet in force. Since the December 2024 commencement notice, the provisions dealing with expanded third-party document access were expressly excluded from the sections proclaimed operative, pending further regulation and a future commencement date. South African company law therefore currently sits in a temporary position where the reform exists in enacted legislation, but its legal effect remains suspended.
Domestic Context: The Public Interest Score Mechanism
The Public Interest Score is a central aspect of the amendment of the section 26 authority. The Public Interest Score is a measurement created by the Companies Act regulations and has been used for years to determine how much reporting, auditing, and regulatory oversight a company must comply with. This score is calculated annually by assigning one point for each employee, one point for every R1 million in third-party liabilities, one point for every R1 million in annual turnover, and one point for each beneficial shareholder. The resulting score determines the stringency of a company’s governance obligations. The larger and more economically significant a company is, the more legal obligations it must comply.
Under the amended section 26, this existing mechanism is adapted as the ‘guardian’ for non-shareholder document access. A company with a Public Interest Score less than 100 may refuse a third party’s request to inspect its internally prepared financial statements. A company with a Public Interest Score below 350 may refuse to give access to its independently reviewed financial statements. Only companies above the threshold of 350 are subject to the unqualified third-party access right introduced by the amendment. The reality is that the private and smaller companies will be unaffected by the expanded access regime, but the larger companies meeting or exceeding these thresholds will face mandatory disclosure to any requesting party, including competitors.
Because the amended section 26 imposes no restriction on who may request access and why they would request access, a competitor is as entitled to inspect a company’s financial statements as a creditor, journalist, or civil society organisation. Commentators have noted that this creates a tension with both the Promotion of Access to Information Act 2 of 2000, which permits refusal of requests likely to prejudice a company in commercial competition, and the Protection of Personal Information Act 4 of 2013, which governs the processing of personal information. This is a category that may encompass individually named director remuneration figures now required to be disclosed. It is because of this unresolved tension with existing privacy and access-to-information legislation that is understood to be the primary reason sections 25 and 26 of the Amendment Act have not yet been brought into force.
Comparative Perspectives: The UK and US Models
South Africa’s move towards broader non-shareholder access to company records does not occur in a legal vacuum. The two major corporate law systems (the UK and the US) have long adopted divergent approaches to the same question, and each offers instructive lessons for creating the path that South Africa is following.
The UK legal system prefers making company information widely available to the public, rather than keeping it private. Under the Companies Act 2006, corporate data relating to every limited company incorporated in the UK is made available to the public through the Company House Register, freely accessible online, without any charge or restriction. Previously, Companies House mainly stored information that companies submitted. Now, under the Economic Crime and Corporate Transparency Act 2023, it has strengthened the regime. Companies House can actively regulate with enforcement powers to verify fillings, reject inaccurate information, and impose financial penalties on non-compliant entities. The reason for this maximal transparency is explicitly stated in the government policy, in return for the benefits of limited liability, companies must be open and transparent about their affairs. The UK model imposes no threshold requirement based on the company size, a small company is subject to the same disclosure obligations as a listed multinational. The Public Interest score mechanism that South Africa relies on to classify its disclosure obligations is not equivalent to the UK.
In contrast, the US adopts a more restrictive approach. In Delaware, the jurisdiction of incorporation for the majority of the US companies, shareholder inspection rights are governed by section 220 of the Delaware General Corporation Law, which grants stockholders a qualified right to inspect the corporation’s stock ledger, shareholder list, and no other books and records upon written demand. Critically, this right is limited to shareholders. No equivalent statutory right of inspection is extended to member of the general public, creditors, or other non-shareholder third parties. Even shareholders who hold the right must satisfy a “proper purpose” requirement, which is to demonstrate a legitimate interest in the information sought, before access can be compelled. The US model thus treats corporate records as hypothetically private, with access only granted to those with a share in the company and only for legitimate reasons.
The contrast between these two models demonstrates a foundational policy choice, should transparency be the default, with confidentiality as the exception (the UK approach), or should confidentiality be the default, with access to the available only to those who can demonstrate a legitimate interest (the US approach). South Africa’s amended section 26 occupies an intermediate position. This extends access beyond shareholders, which moves away from the US model, but calibrates the access to the Public Interest Score mechanism and retains exemptions for smaller companies, not going as far as the UK in requiring companies to disclose information to the public. This article will now examine whether South Africa’s balanced approach successfully protects both the public’s interest in company transparency and companies’ interest in keeping sensitive business information private.
A Critical Analysis: Does South Africa’s Tiered Approach Strike the Right Balance?
South Africa’s amended section 26 attempts to navigate between the UK’s universal disclosure model and the US’s shareholder-confined approach by introducing a size-based threshold system. The Public Interest Score mechanism, in principle, a sensible calibration tool because it recognises that a private large company with significant economic footprint and broad stakeholder impact carries a qualitatively different accountability burden than a small family-owned business, for example. In this aspect, the layered approach reflects a more subtle policy judgement than either the UK or US model, neither of which makes any distinction based on company size when determining the scope of access rights.
The difficulty, however, lies in what the amendment does not address. As noted above, the amended section 26 imposes no “proper purpose” requirement on third-party requestors. This is not like the US model, where any person may demand access to a qualifying company’s financial statements without disclosing why they want information. This would create a vulnerability for companies above the Public Interest Score threshold, meaning a direct competitor is as legally entitled to inspect a company’s annual financial statements as a creditor seeking to assess solvency or a journalist investigating corporate wrongdoing. The amendment thus privileges transparency as an end in itself, without asking whether the purpose of the access request justifies the commercial exposure it creates.
This tension is created by the amendment’s uneasy relationship with two existing statutes. PAIA already provides a framework for balancing access to information against competing interests, including the right to refuse requests that would “prejudice a company in commercial competition. POPIA, in contrast, sets the rules for how organisations handle people’s personal information. The amended section 26, as currently drafted, does not expressly reconcile itself with either statute, leaving open the question of whether a company may lawfully decline a section 26 request by invoking PAIA’s commercial confidentiality ground, or whether the specific amendment overrides PAIA’s general framework. It is widely understood that this unresolved statutory conflict is the primary reason sections 25 and 26 have not yet been brought into force.
There is also a structural concern about the Public Interest Score thresholds. The thresholds of 100 and 350 points were not designed with third-party access rights in mind. They were developed for the purpose of determining auditing and reporting obligations, and their application to document access is essentially repurposed rather than purpose-built. A company with a Public Interest Score of 101 is subject to mandatory third-party disclosure of its financial statements, while a company with a score of 99 is entirely free from the mandatory disclosures, even if both operate in the same industry with similar market footprints. The bluntness of this threshold creates an arbitrary line that may not accurately reflect the genuine public interest in any particular company’s affairs.
The increasing effect is that the reform is moving in the right direction because South Africa has been less transparent than countries, such as the UK, in the past. However, the reform is not fully complete and this leaves important issues unresolved. The amendment promotes an important public interest in corporate accountability, without adequately equipping companies to manage the commercial risks that broad non-shareholder access creates, and without resolving the statutory conflicts that would arise in practice.
Proposed Solutions: A Calibrated Framework for South African Law
South Africa should bring sections 25 and 26 of the Companies Amendment Act 16 of 2024 into force, but not without first addressing the three gaps identified above. The following proposals are advanced to complete the reform.
First, a “proper purpose” requirement should be introduced for non-shareholder access requests. Borrowing selectively from the US model, third parties seeking access to a company’s financial statements under section 26 should be required to state the purpose of their request in writing at the time of application. This is not a limited threshold. A creditor assessing solvency, a civil society organisation investigating labour practices, or a journalist researching corporate governance would each satisfy it without difficulty. What it would prevent is speculative competitor intelligence-gathering dressed up as public accountability. A purpose requirement does not undermine the transparency objective of the amendment; it ensures that transparency serves a legitimate end rather than becoming a tool for commercial harm.
Second, PAIA and section 26 must be expressly reconciled. The legislature should amend PAIA or the Companies Act to clarify the hierarchy between the two statutes when a section 26 access request conflicts with PAIA’s commercial confidentiality ground. The most coherent solution would be to treat section 26 as establishing a presumption of access, rebuttable only where the company can demonstrate, on objective evidence, that disclosure would cause material prejudice to its competitive position, a standard that shows PAIA’s existing section 68 framework. This gives companies a meaningful but limited avenue to resist disclosure.
Third, the Public Interest Score thresholds should be recalibrated specifically for the purpose of third-party document access, rather than borrowed from the auditing and reporting context in which they were originally developed. A purpose-built threshold for access rights might incorporate sector-specific considerations, companies operating in regulated industries such as banking, insurance, or mining already face sector-specific disclosure obligations, and their Public Interest Score thresholds for public access could reflect this existing accountability burden rather than applying a single blunt numerical deadline across all sectors.
Together, these reforms produce a section 26 regime that is more transparent than the current position and is more commercially coherent than the amendment as presently drafted. South Africa need not choose between the UK’s universal disclosure model and the US’s shareholder-confined approach. A calibrated middle-ground framework, properly equipped with purpose requirements, statutory reconciliation, and sector-sensitive thresholds, offers a more defensible balance between the competing values at stake.
Conclusion
The question of who has the right to inspect a company’s records is a question about the purpose of corporate law itself. If companies exist solely to serve their shareholders, the logic of restricting document access to those with a financial stake is coherent. If, however, companies are understood as economic actors whose conduct affects a broader range of stakeholders (employees, creditors, communities, and the public) then a shareholder-only access regime is difficult to justify. South Africa’s Companies Amendment Act 16 of 2024 reflects a decisive legislative choice in favour of the latter view. By extending document access rights to any person, subject to a PI score threshold, the amendment signals that corporate accountability in South Africa is no longer a matter exclusively between a company and its shareholders. This is a welcome development, and one that brings South Africa meaningfully closer to international best practice as reflected in the UK model. The amendment is not, however, complete. Without a proper purpose requirement, express reconciliation with PAIA and POPIA, and purpose-built PI score thresholds, the reform risks being either judicially challenged or practically unworkable once brought into force. South Africa’s legislature should treat the delay in commencement not as an obstacle but as an opportunity to refine a reform that is directionally right, and make it legally watertight before it takes effect.
Reference(S):
Legislation
South African Legislation
Companies Act 71 of 2008 (South Africa)
Companies Amendment Act 16 of 2024 (South Africa)
Promotion of Access to Information Act 2 of 2000 (South Africa)
Protection of Personal Information Act 4 of 2013 (South Africa)
United Kingdom Legislation
Companies Act 2006 (UK)
Economic Crime and Corporate Transparency Act 2023 (UK)
United States Legislation
Delaware General Corporation Law, s 220
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