Who can access the financial statements of private companies in South Africa

It is assumed that the finances of private companies are private, but that privacy has limits with certain people and entities outside of the business allowed access by law.

A legal opinion from Wright Rose-Innes outlines who can access the financial statements of private companies and under what circumstances.

The Companie Act 71 of 2008 require private companies to maintain copies of all their financial statements for at least seven years.

These statements are not a thing of public record, but they are required to be readily accessible.

Section 26 of the Companies Act outline who is allowed access to the financial statements of private companies.

Under this section, any person who holds shares in a company or who has a beneficial interest in the company has a right to have access to a copy of the financial statements.

• These persons or entities, under Section 31, are entitled to, without demand, notification of the publication of the financial statements and receive a copy of the statements.
• On-demand, these persons or entities are entitled to the financial statements that were issued before they had a beneficial interest in the company.

Thus, the financial statements of a company are not only accessible to shareholders but are also accessible to any person or entity who is able to prove beneficial interest.

This includes, for example, creditors who may request the financial statements of a company to which they have loaned money.

Trade unions are also allowed access to the financial statements of a private company for purposes of initiating business rescue proceedings – provided that they are granted permission by the Companies and Intellectual Property Commission.

Wright Rose-Innes point out that the Promotion of Access to Information Act 2 of 2000 outlines additional persons and entities that may access the financials of a private company.

Under this Act, a person or entity has a right to access certain records of a private company for purposes of exercising or protecting a constitutional right.

It is subject to particular conditions and restrictions set out in the Act.

Ultimately, access to private companies’ financial statements is limited to those with a beneficial interest in the company and those who have an interest in accessing them to protect or exercise a constitutional right.

Access to private financial statements is summed up by Wright Rose-Innes in the phrase, “if you can prove it, you can peruse it”.