‘Commission has greater powers’

‘Commission has greater powers’
April 2011
Independent Newspapers

The commission replacing the fraud-tainted Companies and Intellectual Property Registration Office (Cipro) will have wider powers to investigate and resolve matters speedily, Trade and Industry Minister Rob Davies said on Monday.

“In terms of the existing act... you have got to go through the criminal justice system,” Davies told media in Midrand after the launch of the Companies and Intellectual Property Commission (CIPC).

This meant dealing with fraud and other misdemeanours was a “long, cumbersome” process.

Cipro, which registers businesses and intellectual property rights and maintains related registers, has been plagued with problems with fraud including tax fraud and company hijacking.

The new Companies Act, to be implemented on May 1, gives wider powers to the newly established CIPC, which is a merger of Cipro and the Office of the Company and Intellectual Property Enforcement.

“The new enforcement powers are probably the biggest difference,” said commissioner-elect of CIPC Astrid Ludin of the difference between the 1973 Companies Act, and its replacement, the Companies Act 71 of 2008.”

Zodwa Ntuli, deputy director general at the department of trade and industry, said the commission's enhanced inspection powers would make it easier for the CIPC to deal with the hijacking of companies, for example, and to proactively institute investigations.

“The current framework doesn't give you the powers to do that... police have to investigate fraud. Now we can do it administratively.”

Both criminal and administrative penalties could then be imposed.

“This allows for quicker justice and restitution,” Davies added.

The new act attempts to “decriminalise” various offences where it would be better to deal with the problems through administrative processes.

“At the moment, where criminal penalties apply, it is difficult to get adequate redress through the criminal justice process,” Davies said.

By decriminalising it, it makes the legislation “more enforceable”.

Davies was expecting the new act to be implemented on May 1, after some delays. However, President Jacob Zuma still had to sign it and the final draft had to be published.

The minister said both of these processes were imminent.

“It's not a given, but there is no indication otherwise,” he added.

He described the new act as a piece of world-class, path-breaking legislation.

“We will be delivering to the South African economic community a piece of legislation that is path-breaking, is world quality and I believe stands second to none to similar laws in the rest of the world.”

Davies said the head of a foreign business chamber had told him that “foreign investors have looked at this legislation and said it is top notch legislation”.

He said the government had “gone above and beyond the call of duty in meeting the legitimate concerns of all stakeholders”.

Some of the concerns were “hugely hyperbolic” and had “anticipated Armageddon when no such thing is going to happen”.

Davies said there was no need to “spend more time debating hypothetical scenarios”, which may or may not affect minorities.

It was time to implement the new act.

“As we implement, we are committed to sorting out problems as they arrive,” he said, adding that the government would learn by doing.

The CIPC was “in a state of readiness to take off and give effect to these directives”, Davies said.

Ludin said she would spend her first few months as commissioner focusing on education, followed by compliance.

Although the commission would be “inheriting the challenges that Cipro is experiencing”, she said this was an “opportunity to enhance the effectiveness and efficiencies of the organisation”.

She set the commission the goal of being the best regulator in the country.

The CIPC will be responsible for registering companies, promoting awareness of company and intellectual property law, and monitoring compliance of financial reporting standards, among others.

The new act has been widely debated and criticised for inconsistencies, unintended consequences and drafting errors. - Sapa