La Lucia Sands Share Block Limited v Barkhan

La Lucia Sands Share Block Limited (a share block company) refused to provide its register of members to two of its members, Messrs Howard Barkhan and Errol Glasser. The respondents had requested the register in May 2006 through their attorney, as they intended to write to members offering to purchase their shareholding. La Lucia Sands and its directors (including attorney George Wolfe) refused on the basis that members did not want their addresses and private information divulged, and accused the respondents of being involved with Flexi Holiday Club in attempting a hostile takeover. Members passed a resolution supporting this refusal. After attempts to obtain the information failed, the respondents approached the KwaZulu-Natal High Court in terms of section 113(4) of the Companies Act 61 of 1973. By the time of the hearing, the respondents clarified they intended to approach both members and the board simultaneously. The appellants initially challenged the constitutionality of section 113 on privacy grounds but abandoned this before the Supreme Court of Appeal.

• Whether the court correctly exercised its discretion under section 113(4) of the Companies Act 61 of 1973 to order access to the register of members
• Whether section 113 of the Companies Act violated the right to privacy under section 14 of the Constitution (abandoned on appeal)
• Whether the request for information was for an unlawful purpose or in contravention of takeover regulations
• Whether the costs order against the appellants, including costs in favour of the Minister, was appropriate

The appeal was dismissed with costs. The first appellant (La Lucia Sands) was ordered to pay the respondents' costs. The order of the court below requiring La Lucia Sands to provide photocopies of its register of members to the respondents, or alternatively make it available for inspection, was upheld.

The binding legal principles established are: (1) Section 113 of the Companies Act 61 of 1973 creates a statutory right to access a company's register of members that does not require the requesting party to provide reasons or motivation for the request. (2) While a court has discretion under section 113(4) to refuse to compel access, this discretion is narrow and should only be exercised in special circumstances, such as where the information is sought for an unlawful purpose. (3) As a general rule, courts will make orders to give effect to statutory legal rights of access to company information. (4) The purpose of making an offer to purchase members' shares is a legitimate purpose that does not justify refusing access to the register of members. (5) Information in a company's register of members does not attract a reasonable expectation of privacy under the Constitution, as participation in the corporate sphere is not a private matter and there are statutory obligations of disclosure and accountability. (6) Share block companies are subject to the same disclosure obligations as other companies under the Companies Act, and their members are not entitled to greater protection against disclosure.

The court made several non-binding observations: (1) Courts should strive to promote swift and efficient justice, and a two-year delay in delivering judgment (as occurred in the court below) is undesirable. (2) Under the new Companies Act 71 of 2008, section 113 has not been repeated, and future requests for access to registers of members will likely need to be made under section 26 of that Act and the Promotion of Access to Information Act 2 of 2000, though the rationale for obtaining such information will probably continue to apply. (3) While courts may in appropriate circumstances not award costs against unsuccessful litigants in constitutional matters, this is particularly so where litigants are struggling financially and their personal circumstances are precarious - factors not present in this case. (4) The importance of the constitutional challenge to section 113 was "more illusory than real" given the clear precedent in Bernstein v Bester. (5) The court expressed difficulty understanding the appellant's submission that the Minister had not adequately assisted the court, finding the Minister's affidavit to be lucid and properly setting out the rationale for provisions like section 113.

This case provides important guidance on the interpretation and application of section 113 of the Companies Act 61 of 1973 regarding access to registers of members. It confirms that: (1) the general rule is to make such information available, with the court having only narrow discretion to refuse; (2) no motivation is required for requesting access; (3) share block companies are not entitled to greater protection than other companies; (4) company information does not attract constitutional privacy protection following Bernstein v Bester; (5) making offers to purchase shares is a legitimate purpose for accessing the register. The judgment also comments on the transition to the new Companies Act 71 of 2008, noting that while section 113 is not repeated, section 26 and the Promotion of Access to Information Act will govern future requests. The case reinforces the principle of transparency and accountability in corporate governance, and the importance of access to information in a constitutional democracy.