“It is often thought that the financial statements of a private company are like the name implies ‘private’. But how private is this private and who has a right of access to such financial information?”

The financial statements of a private company, unlike that of a public company, are not a thing of public record. For many private companies, their financial information is very sensitive and goes to the heart of their business and operations, and for such reason, the company would not want just anyone to have access to their financial statements. So, who then has the right to access such financial records?

The management of a company is regulated by the Companies Act 71 of 2008 (“Companies Act”), which includes provisions pertaining to company records, including who may obtain access to these records. 

As a point of departure, it should be noted that a company is required to maintain, in terms of section 24 of the Companies Act, copies of all its financial statements for a period of no less than seven years or according to further periods as set out in section 24 after the financial statements for a particular year have been issued. It is advisable that these records be kept at the registered office of the company, in order to ensure the accessibility and proper control thereof.

The right to access such company records is set out in section 26 of the Companies Act, which provides that any person who holds or has a beneficial interest in the securities of a profit company has a right to have access to or to be furnished with a copy, of the annual financial statements of the company for their perusal.

Section 31 of the Companies Act sets out the rights of persons and entities that may access the financial statements of a company and provides that any person with a beneficial interest in any of the securities of a company is entitled to, without demand, be notified that the annual financial statements of the company have been published and on-demand to receive a copy of any of the financial statements, including the financial statements that were issued before the person became the holder of a beneficial interest in the company. Importantly, this does not mean that only a shareholder is entitled to access to the company records, but also includes any person who is able to prove a beneficial interest as a personal right.

This may include a judgment creditor of a company who may also, on demand, be furnished with the most recent annual financial statements of the company free of charge, in the event that the disposable property of the company is insufficient to satisfy the judgment debt.

Also, trade unions may access the financial statements of a company for purposes of initiating business rescue proceedings, provided that the Companies and Intellectual Property Commission grants permission subject to specific conditions being met.

In addition to the Companies Act, the Promotion of Access to Information Act 2 of 2000 (“PAIA”) which also applies to private companies, provides that a person has a right to access certain records of a private body for purposes of exercising or protecting a right and again subject to conditions and restrictions as set out in PAIA.

From the above, it should be apparent that the financial statements of a private company are accessible to persons and entities that have an interest in accessing these records if required for the exercise or protection of a right or if there is a beneficial interest in a company. It also means that access to this information is not open to just everyone. In summation one can summarize the right of access to financial statements in the phrase ‘if you can prove it, you can peruse it!’


Disclaimer: This article is the personal opinion/view of the author(s) and is not necessarily that of the firm. The content is provided for information only and should not be seen as an exact or complete exposition of the law. Accordingly, no reliance should be placed on the content for any reason whatsoever and no action should be taken on the basis thereof unless its application and accuracy has been confirmed by a legal advisor. The firm and author(s) cannot be held liable for any prejudice or damage resulting from action taken on the basis of this content without further written confirmation by the author(s).