The draft Companies Amendment Bill 2021 (“the Bill”) was published for public comment during October 2021, and aims to amend the existing Companies Act 2008 (“the Act”).
This Bill proposes certain amendments to section 26 of the Act which records what rights certain people have to access certain information about and records of a company. In this article I only deal with the rights of access in respect of profit companies, although section 26 also deals with non-profit companies.
The Definition of a ‘beneficial interest’: To understand the remainder of this article, it is necessary to know that the Act defines a ‘beneficial interest’, in summary, as when a person has the right to receive any distributions from securities, vote or direct how votes on securities are cast, and/or dispose or direct how securities are disposed of.
The Existing Section 26:
In its existing form, section 26 says, in summary, the following in respect of accessing information of profit companies:
1. a person who holds a ‘beneficial interest’ in any securities in a profit company has a right to inspect (for free) and copy (for a maximum of the prescribed fee), the following information:
a) the company’s memorandum of incorporation (“MOI”) and any amendments to it;
b) records of the Company that it is obliged to maintain under the Act;
c) reports presented to shareholders’ annual general meetings, and annual financial statements that are required by the Act;
d) notices and minutes of shareholders’ annual general meetings, all shareholders’ resolutions, and written communications sent to any class of securities of the company; and
e) the securities register of a company;
2. a person who does not hold a beneficial interest in any securities in a profit company only has a right to inspect (for a maximum prescribed fee) or copy :
a) the securities register; and
b) the register of directors (which register of directors you can already access for free on the online platform of the Companies and Intellectual Property Commission (“CIPC”));
3. a company’s MOI can record additional rights of access to information to those referred to above. (As an aside, it can be very important for shareholders who may not have ‘representation’ on the company’s board of directors to add additional access rights in the MOI such as to monthly or quarterly management accounts).
The Proposed Amendments to Section 26:
The proposed amendments to section 26 in the Bill would do as follows:
1. also give a person who holds beneficial interests in securities the right to inspect and copy the register of the disclosure of beneficial interests in the company;
2. also give people who do not hold beneficial interests in securities the right to inspect and copy:
a) the MOI (which can be accessed from CIPC anyway);
b) records of the Company that it is obliged to maintain under the Act;
c) annual financial statements that are required by the Act; and
d) the register of the disclosure of beneficial interests in the company.
3. possibly also give people who do not hold beneficial interests in securities the right to inspect and copy:
a) reports presented to shareholders’ annual general meetings; and
b) notices and minutes of shareholders’ annual general meetings, all shareholders’ resolutions, and written communications sent to any class of securities of the company,
although due to poor drafting of the Bill which we will propose is amended, it is unclear if this access would only be in respect of companies OTHER THAN private companies or personal liability companies where:
c) the annual financial statement is internally prepared and such company has a Public Interest Score of less than 100 ;or
d) the annual financial statement is independently prepared in a company with a Public Interest Score of less than 350.
4. clarify that is an offence not just for a company to fail to provide such access to information, but also for a director or prescribed officer of a company to do so.
Annual Return filed at CIPC to include Additional Information, and be available to Any Person:
The Bill also proposes to amend section 33 to oblige a company to file a copy of its securities register and register of the disclosure of beneficial interests with CIPC as part of its annual return, and oblige CIPC to make the entire annual return available to any person electronically. [This is being done to allow people to understand who the registered and ‘actual’ securityholders of companies are, and to follow the money and control up the chain to such persons.]
People need to note that the registers referred to above need only be submitted to CICP once annually, in a company’s annual return, and so will not necessarily be correct during any interim period.