Companies' share register information is not restricted by new laws
While the Protection of Personal Information Bill (PoPI) and the Financial Markets Act 2012 (FMA) will have an influence on the way that companies and Strate respectively deal with personal information, another law allows shareholders and the public to ac
The FMA, which replaces the Securities Services Act 2004, came into operation on 3 June 2013. Among other things, the FMA regulates how self-regulatory organisations, such as Strate, deal with confidential information.
PoPI is expected to be enacted in 2013 and reaches further into the realm of confidentiality with the aim of promoting and protecting personal information. When personal information is processed by public and private bodies, the handlers of such information will have to abide by a set of principles to protect such personal information.
“While PoPI and the FMA guard or even restrict the processing or disclosure of personal information, such as details relating to shareholders, the Companies Act requirements are still applicable to the securities register information, which allows access to the information contained on such registers,” explains Maria Vermaas, the Head of Strate’s Legal & Regulatory division.
According to the Companies Act and its Regulations (Companies Regulation 32), a shareholder’s name, address and number of securities must still be contained in the securities register.
The Companies Act states that a company director has to disclose his or her trading activity in shares of the company on which they serve as a board member. Similarly, a shareholder that acquires a holding of 5% or more of the issued share capital in a listed company is, by law, expected to notify the issuer. The JSE, via its stock exchange news service (SENS), publishes the details of the company director’s trading activity as a result of this disclosure requirement. However, it does not publish the trading activities of all other institutional or private individuals.
This securities register is accessible by all interested parties – even members of the public and shareholders – as the Companies Act gives such parties the right to inspect and to get a copy of a company’s share register directly from the issuer. It is an offence for such issuer or company to fail to assist with a request for such access or to unreasonably refuse such access.
While this information is accessible to interested parties, concerns have been raised by data vendors in the market who are no longer able to receive shareholder information directly from Strate, as there are now restrictions placed on Strate because of the new laws.
“The way in which data vendors obtain information has changed as a result of the new legislation. While the Companies Act requires Strate to supply issuers with shareholder information, the FMA and PoPI do not allow Strate to give data vendors the information anymore. However, the information is still available to data vendors via the issuers. Strate has always supported the analytical services provided by data vendors, however, the FMA and PoPI legislation has put a constraint on this and we need to comply with the new legislation,” says Vermaas.
It is important to note that Regulation 32 of the Companies Act also prescribes further information to be contained in this share register. If a company issues or transfers securities to a person, then that person’s name, business, residential or postal address, email address if available, and an identifying number that is unique to that person has to be in the share register.
“Even though PoPI is aimed at promoting the constitutional right to privacy, it does not prevent Strate from performing the CSD functions in terms of the applicable law – Strate as the country’s CSD has an obligation to disclose securities register information to the issuers of these securities, which is not restricted by PoPI or the FMA,” concludes Vermaas.
