Cipro’s powers make lawyers nervous
The new powers of enforcement granted to the Companies and Intellectual Property Commission, which replaces the embattled Companies and Intellectual Property Registration Office (Cipro) via next month’s new Companies Act, is making corporate lawyers nervous.
While Cipro merely had a filing and access function, it managed to place itself at the epicentre of a fraud pandemic via the reported facilitation of scams ranging from tax fraud to out and out company hijacking.
A leading corporate lawyer from a leading law firm, said on Tuesday that if Cipro couldn’t even perform elementary functions properly “how on earth they are going to police and enforce the Act, I don’t know”.
“It makes one a little nervous,” he said.
The new Companies Act replaces the 1973 version and has been a decade in the making, though its implementation was delayed from the first of this month to May 1 due to dithering by the Department of Trade and Industry and the Presidency in signing it off. With 24 hours to go before its scheduled April implementation, it emerged Minister Rob Davies was out of the country and had not yet signed the regulations that accompanied the Act. And President Jacob Zuma’s office had not even received all of the relevant documents to be signed by him either.
It is now expected the Act will be implemented on the first of next month.
That may indeed happen, but he says “Cipro and the DTI have a long way to go before they get their act together, especially on the new process of enforcement”.
In a shift to a new “enlightened shareholder value model”, the new Act makes significant changes to the law as it attempts to promote “new” small business, usher in more shareholder activism and better protection for stakeholders, like employees and trade unions, and improve business rescue practices.
Another key change is the establishment of a Takeover Regulatory Panel (TRP), which will have more powers and functions than the largely toothless Securities Regulation Panel (SRP). As the SRP did not have enforcement powers it needed to go to court each time to get provisions enforced.
The Act also creates a Companies Tribunal and a Financial Reporting Standards Committee. Social and Ethics Committees will also need to be set up by most bigger companies. – I-Net Bridge
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