Article issued by CGF Research Institute and Deloitte

There is no doubt that the use of intellectual property in the global marketplace is a major facet of business today and its collective worth runs into figures which are uncountable.  So what exactly is intellectual property and why is it increasingly gaining recognition, particularly for company asset registers and balance sheets?

Best described, intellectual property -- or simply IP -- refers to the creations of the mind.  IP provides a powerful tool and valuable means if used correctly within business; however you must either own the IP or have permission to use it.  These creations can be found for example, within inventions, literary and artistic works, symbols, names, images and designs which are used in commerce and they are in deed what actually cause the commerce ‘wheels to spin’, generating lots of money.

The World Intellectual Property Organisation (WIPO) divides IP into two categories, namely Industrial Property which includes inventions, patents, trademarks and industrial designs; whilst Copyright covers amongst other, literary and artistic works, architectural designs including the rights attached to performing artists and producers in their performances and programmes.

Indeed, as people have realised the importance attached to the inherent value of IP, so many have scrambled to apply themselves and their talents with the hope that their creations will provide them some form of recognition, be this monetary or not.  Of course not all individuals share the same values of good ethics and hard work and they will steal the creations from the true owner, claiming these to be their own.

Editorial by CGF Research Institute (Pty) Ltd and Escrow Europe (Pty) Ltd

Any company which is reliant on intellectual property (IP) belonging to third parties exposes itself to potential risk that needs to be appropriately managed. Particularly where this use of IP (such as proprietary software and systems) is related to critical business processes, functions and services. Moreover, keeping a business healthy requires prudent risk management processes and procedures which must be vigorously implemented and followed.  These risk management ‘ingredients’ are, amongst other, the basic foundations for a sustainable, well governed business.  That said, many companies -- particularly those who offer products and services -- unwittingly expose their company to unnecessary risk because they have limited or no control over the IP, which is owned by third parties, and is necessary for the ongoing generation of their revenues.

“Even though you may be a diligent and hands-on executive, you might be overlooking a critical aspect of your company's business and its supply chain by unintentionally exposing the company to a high level of operational risk”, says Terry Booysen, the CEO of the well known governance research organisation, CGF Research Institute.
 
Clearly, while many executives may only see technology and or it’s software as just another component of their business, the reality today is that IT and software indeed have become the entire backbone upon which business operates across the world.  Of course with the increased accountability placed upon the board and its executive management to manage all its company’s risks -- be these operational, legal or procedural -- company officers can no longer afford to dismiss the importance of managing the risk in the event where a third party software supplier can no longer supply its services for which the company has a critical dependency. Such an exposure, particularly in light of the imminent new Companies Act 2008 and King III scheduled this year, will quickly attract personal liability for those companies and their officers who show scant regard for this potential risk.

In the past decades, this exposure has been exacerbated by the effects that globalisation and the dissipation of boundaries across industries have had on the pursuit of operational efficiencies and competitive advantage.

Article by CGF Research Institute (Pty) Ltd and ContinuitySA (Pty) Ltd

The King III report on corporate governance has been finalised and is due to be released in March this year and South African business leaders will be compelled to re-evaluate many areas of their businesses, most particularly their governance, risk and compliance operations.  Moreover, combining this with the new Companies Act 2008 which takes effect in June 2010, company executives will need to be in a position to implement changes to satisfy these new provisions in their organisations, while also finding ways to ensure their modifications have the desired impact.  And while King III’s predecessor, King II, was mandatory for listed companies on the JSE, King III has a significantly further reach as the code for good governance will now be applicable to all legal business entities, thereby enforcing more executives to apply a far more concerted effort toward its compliance.

Says Terry Booysen, CEO of CGF Research Institute, “Good intentions are not good enough any more when it comes to corporate governance.  Executives can find themselves in serious trouble if they do not ensure their business conduct and operations meet the provisions of what is expected from the likes of King III, the new Companies Act, Competitions Act, class actions and many other legal and regulatory measures due this year, which are designed to improve the manner in which we conduct business locally and abroad. The old adage of “you can't manage what you can't measure” is therefore more prevalent in South African business today than ever before. “
 
The only way to ensure that companies meet the new governance standards is for boards to appoint directors who are equipped to deal with these additional responsibilities whilst providing them the authority to implement and oversee the changes.  These leaders will need to ensure each area affected by the new laws and governance recommendations is continually up to standard.

Read more ...  (Measured continuity is good governance)
Read more ... (CSA CM – square brochure)

Article by CGF Research Institute (Pty) Ltd and Escrow Europe (Pty) Ltd

To stay in business -- or continue offering a service -- commercial and governmental institutions are often entirely dependent on software over which they have limited or no control.

Even though you may be a diligent and hands-on executive, you might be overlooking a critical aspect of your company's business and inadvertently exposing the company to a high level of operational risk if your company’s core, mission-critical processes, functions and/or services are dependent on software which you do not own but license to use from third parties.

Clearly, you are therefore subject to conditions or events beyond your organisation’s control.

At the outset, reliance on third parties who supply your organisation its critical mission software may not appear to be a problem, but companies must take into account that such software is often subject to maintenance agreements and ongoing support by the software supplier.

In other words, be aware that your company could be affected by an unforeseen development impacting on the software supplier’s business.

Article by CGF Research Institute (Pty) Ltd and Cura Software

The global financial meltdown has left in its wake an environment of greater scrutiny of organisations with substandard compliance and ethics programmes.  Directors, officers and members of the board who neglect their fiduciary duty will be held accountable due to the increase in and enforcement of legislation.  Organisations typically view compliance as an additional process or silo function operating alongside their risk functions, rather than a strategic business objective which is integrated within the organisation’s risk management structures. This fragmented approach limits visibility across the entire organisation. Failure to manage compliance risk can be due to lack of time and resources, expertise, change management process and most importantly; failure to entrench compliance processes into the business’ operations and embed compliance within the corporate culture i.e. making compliance a function of line management.  Compliance has traditionally been measured using generic tools that are ubiquitous in day to day operations. The use of Excel spreadsheets and Word documents are commonplace, but gathering the data is time consuming and cumbersome, often requiring multiple iterations to achieve a workable set of data. Understandably, collating the data and aggregating the reports to a group level is limited by the nature of the tools used.

Article issued by CGF Research Institute (Pty) Ltd

It can be argued that good governance starts within each individual who takes responsibility for their own actions; these actions will generally be based upon the values each individual attaches to their own set of personal beliefs.  Naturally, our values may be strongly influenced by the "collective" in which we exist.   And so, in the case of a family, community or even a business environment, a leader -- be this of the human or even the animal species -- is expected to set the example for his subjects, setting an example of what is acceptable behavior and what is not.  Let’s call this the universal law for good governance such where there is an accepted understanding that we do unto others as we would have had done to ourselves.

Clearly then, it becomes imperative that our leaders, be they fathers of families, church leaders, school heads and even the CEOs of business, must lead by impeccable example through their own actions when they wish to see the change they espouse from their leadership positions.

Of course in South Africa, we have various examples of leaders, some better known and accepted by our society than others.  One iconic and undisputed leader that springs to mind, and known all over the world is our very own Madiba -- our county’s first democratically elected black president -- who set the stage for being the world’s ultimate and finest leader, demonstrating his unwavering commitment and principles attached to ensuring that all the county’s citizens, both black and white would be free.  We agree; Nelson Mandela, Henry Ford, JP Getty, Eli Lilly and Bill Gates are some of the world’s most recognised heroes who stood for freedom and democracy.  Each one of them went to extraordinary lengths to prove their humanitarian points. Equally, Mother Theresa and Mahatma Ghandi were known worldwide for their compassion for the oppressed, poor, sick and needy.

Article issued by CGF Research Institute (Pty) Ltd and Deloitte

As the world economy will continue to have its roller coaster rides -- where some people spiral into a state of frenzy and others thrill in ecstasy -- similarly, one finds the same sort of turbulent experiences when discussing mergers and acquisitions (M&A).  For some, the M&A "ride" can be opportunistic -- even fantastic -- whilst the same may not necessarily be true for the other parties on the same roller coaster ride.

There are many complexities involved when a bidding company is interested in another, be this friendly, or hostile.  However there are very clear rules found within our legislation, namely those of the Companies Act of 1973, the Securities Services Act of 2004, the Competitions Act of 1998 and its amendments as well as the JSE Listing Requirements; all of which must be diligently followed in order to protect all the parties affected by such a transaction. Moreover, changes in the legal and regulatory framework have added significantly to the legal complexities of M&As.  Merger law continually evolves in line with changing economic and industry cycles, as well as legislative developments in areas such as taxation, competition law, environmental compliance and black economic empowerment.

Editorial issued by CGF Research Institute (Pty) Ltd

The media is increasingly reporting on the manner in which CEOs are being exposed through their careless leadership qualities, questionable managerial styles and poor decision making abilities, all of which inevitably contributes to scepticism about their bona-fides as corporate citizens amongst an organisation’s stakeholders, locally or internationally. Clearly, as in the case of the infamous and "indestructible" Titanic, the bridge and its captain (the board and CEO) are to be held accountable for plotting the course of the ship’s charter, or in the business case, the organisation’s strategy and end results.  However, if the engineers in the engine room are not on board - if they do not heed the instructions of its captain - the ship is almost certainly doomed.

Naturally, the passengers (stakeholders) suffer the fate of the impasse that may exist between the captain and the engineers.  This mostly has devastating results.  Accordingly, it is an absolute imperative that the leader of any mission, charter or organisation is chosen on merit, knowledge and experience.  This will ensure that the stakeholders do not only feel comfortable with their leader, but are indeed confident as their captain navigates the organisation past the treacherous icebergs.

Alarmingly, many of South Africa’s major public state-owned enterprises (SOEs) find themselves in turbulent seas with their charters in total disarray.  To make matters even worse, the engineers are ignoring the direction of their captain’s leadership; the passengers (stakeholders) are totally disenchanted with the "oceanic experience" and the arrogance of their captains.  Drawing further references to the Titanic disaster, the citizens of South Africa - the country’s biggest stakeholder constituency - cannot be blamed for their grave concern regarding the implications attached to poor leadership as cited in the media. This includes Eskom, Landbank, Transnet, Armscor, SABC, Denel and SAA.

Editorial issued by Spescom Limited

The new Consumer Protection Act (CPA) was passed in 2008 and appeared in the Government Gazette in April of this year, and the first phase of the Act is due to be introduced on 29 April 2010. This first phase primarily revolves around the establishment of the National Consumer Commission, a body that will be empowered to investigate public complaints, issue compliance notices and refer matters to the National Consumer Tribunal that had previously been established under the National Credit Act. The second phase will come into effect in October 2010, and will require the implementation of the majority of other provisions of the CPA.

Editorial issued by CGF Research Institute (Pty) Ltd and Werksmans (Incorporating Jan S. de Villiers)

There is no longer any doubt that being a director, and charged with common law and legislative duties, is serious business in South Africa as new laws, regulations and business codes continue to flood the business landscape. Not only are directors being "squeezed" for better performance with higher delivery expectations recommended through reports such as King III on Corporate Governance, they are also being swamped by more litigious legislation such as the Competition Act of 1998 and the recently approved Competition Amendment Act of 2009.

Article issued by CGF Research Institute (Pty) Ltd

Media headlines regularly depict the collapse of governance within large organisations, with articles citing poor management controls and corporate greed as reasons.

As regulations and legislation relating to governance within South Africa intensify, so too the controls within companies are beginning to tighten.  With the ever-increasing focus on ‘reforming’ unacceptable business practices, it should come as no surprise that  casualties are occurring more often, with directors of companies being increasingly held personally accountable for business malpractices or oversights.  Recent acts such as the Competitions Act (and its amended Bill which is expected to be signed by President Zuma soon) will see directors being fined up to R 500 000 in their personal capacity, and or face jail sentences up to 10 years where they have contravened certain provisions of the Act.

Editorial issued CGF Research Institute (Pty) Ltd and the Proudly South African Campaign

Consumer Protection Act empowers consumers - businesses to beef up practices to meet requirements

The new Consumer Protection Act 68 of 2008 (CPA), which was gazette on 29 April 2009, and which is scheduled for implementation in two phases, will put more power in the hands of consumers.  As an affirmation of their strategic partnership in promoting responsible business practice, the Proudly South African Campaign, together with CGF (Corporate Governance Framework) Research Institute (Pty) Ltd, a strategic partner of Proudly South African, have again joined forces to sensitise businesses on the importance of coming to grips with the provisions of the CPA in ensuring sustainable business development and growth.  “A lack of knowledge in applying the Act could cost a business dearly.  Courts are given comprehensive powers to grant orders dealing with any contravention of the Act.  Should a business be convicted for contravening the act, it may face a hefty fine or even imprisonment!  Service or product delivering businesses, amongst others, are likely to require specialist advice to ensure that they are complying with the provisions of the CPA”, says Terry Booysen, CEO of CGF Research Institute (Pty) Ltd.

Editorial issued by CGF Research Institute (Pty) Ltd and Eversheds

Expect tough opposition - Are you ready for the CPA?

One might call the new Consumer Protection Act 68 of 2008 (CPA), which was gazetted on 29 April 2009, the ‘mother of all consumer acts.’  The CPA will to a large extent be introduced in two parts such that its first phase introduction, which is scheduled for April 2010, will primarily see the establishment of the National Consumer Commission which will be the body that is empowered to investigate public complaints, issue compliance notices and refer matters to the National Consumer Tribunal which was established under the National Credit Act.  The second phase will see the majority of the other provisions of the CPA becoming effective on October 2010 and requiring implementation.  Virtually every business in South Africa will feel the affect of the Act.  Indeed, South African consumers will be amongst the world’s most protected buyers.  Service or product delivering businesses, amongst others, will in all likelihood require specialist advice to ensure that they are complying with the provisions of the CPA.  Lack of knowledge of the full application of the Act could cost a business dearly.  Courts are given wide powers to grant orders dealing with any contravention of the Act and if businesses are convicted for its contravention, they may face hefty fines or even imprisonment.

Says Terry Booysen, CEO of CGF Research Institute (Pty) Ltd, “Businesses will be required to assess and duly amend their business models, strategies and service delivery methods in order to meet the timing set out in the CPA.  Simone Monty, a director of Eversheds and specialist in the CPA confirms that, in addition, documentation and agreements, instructions and manuals will all need revision. The cost implications will in many instances be sizeable and perhaps totally unexpected, particularly considering that the CPA applies to “every transaction” occurring within the Republic that involves the supply and or the promotion of any goods and services between businesses and their customers.

Editorial issued by CGF Research Institute (Pty) Ltd and Routledge Modise (in association with Eversheds)

South Africa has experienced a lot of change since the abolishment of the old apartheid regime and since 1994 many new laws have been established to protect the rights of its people.  Fundamentally, the basic rights of people are protected through our Constitution (Bill of Rights) where each citizen is afforded the right to, amongst others, health, safety, housing and security.

“Within our Constitution, referring specifically to the provisions contained within Section 38, citizens as a group are provided the right to approach a competent court when they believe their rights have been infringed or threatened,” says Terry Booysen, CEO of CGF Research Institute (Pty) Ltd. Commenting further, Booysen says that whilst the Constitution - as an ‘instrument’ - can be used by citizens to seek relief from the courts when citizens feel aggrieved, our country is also being formally introduced to additional ‘instruments’, provided through the legal system, that will provide ordinary citizens the right to approach the courts as a ‘class’, in cases where they believe corporate businesses or any other type of organisation has done them wrong.

Editorial issued by CGF Research Institute (Pty) Ltd and Proudly South African Campaign

The New Companies Act 2008 places emphasis on corporate governance compliance for all companies, including CCs.
Proudly positioning small companies for competitiveness, success
The truism - change is the only constant - certainly rings true for all South Africans. Since the advent of our first fully-inclusive democracy in 1994, accompanied by the increased exposure to global markets and influences, individuals and businesses alike have had to contend with an unprecedented pace of change, both in the social and business arena.

But, for many South Africans, transformation means much more than merely adopting an “adapt or die” attitude. Businesses, especially, that have embraced change as a positive force for renewal and innovation, have been rewarded with greater competitiveness and sustained growth.

Editorial issued by CGF Research Institute (Pty) Ltd and Savage Jooste & Adams Inc.

For as long as people will be people, and our differences of character and opinion remain, we can and always will be assured of the certainty of conflict or dispute that will arise between two parties.  Throughout history, mankind has dealt with conflict in various ways - ranging from the extreme and barbaric medieval slaughter of innocent by-standers caught in the conflict, to modern day warfare controlled by computers and sophisticated artillery.  Whilst the image of warfare conjures thoughts of immense grief, in more modern-day times, businesses and their leaders need not be sparked to extreme measures when faced with conflict or a dispute.

Article issued by CGF Research Institute (Pty) Ltd

The underlying principles of good corporate governance have been around for centuries. However, the ever-increasing realisation that good governance is critical to sustainable business growth and that business is, indeed, accountable to its stakeholders, has placed good corporate governance firmly on the agendas of governments, institutions and businesses around the globe.

“Meeting the requirements of good governance demands that the phrase, ‘good governance’ should be corporately encapsulated and driven from the top of governments, businesses and their people”, says Terry Booysen, CEO of CGF Research Institute and author of a captivating article - A case for good governance, past, present and future.  In this interesting editorial, he highlights the evolution of governance, especially in South Africa and with reference to the groundbreaking home-grown reports on corporate governance - King I, II & III and its core principles.

Why is it that organisations spend thousands of Rands with legal experts, wanting the best legal advice and assistance to draft a contract, yet after its completion, the contract is not managed?
Contracts in all forms and sizes are the foundation of a modern business - they provide the framework by which the organisation manages its relationships between its customers, suppliers, partners, as well as its employees. “Most often, a single contract has the ability to affect many departments within the organisation.  The terms and provisions can have a devastating impact across the marketing, sales, procurement, finance, administration, risk management, manufacturing, information technology and service delivery areas if not managed correctly, “ says Terry Booysen, CEO of CGF Research Institute (Pty) Ltd.

No business in the world can operate in a vacuum - there have to be buyers and sellers within a market where there is a desire to trade. Understandably, for trade to occur there must be some sort of infrastructure that can facilitate such trade, including willingness and trust between the interacting parties.
If business and its trade is based upon willing buyers and sellers who are able to trade within a conducive environment, more obstacles seem to be blocking municipal government officials from much needed support from willing and able companies, in a bid to assist local government develop and improve service delivery and infrastructural development.

The past 8 months have seen immense turbulence in the financial markets. All over the world, investors, corporates and individuals have been deeply shocked by the economic melt-down as the world recession becomes more evident.  Large banks, such as Lehman Brothers, have disappeared from the landscape, whilst icons such as Royal Bank of Scotland (-28 Billion GBP in 2008) & AIG (-61.7 Billion USD in the last quarter) have announced massive losses and have required government bail-outs and huge assistance with their toxic assets. The stock markets have taken a brutal knock and literally trillions have been wiped off the balance sheets of the financial markets.

Undoubtedly the world is in a crisis which political and economic analysts predict will continue for months, perhaps even years to come. Far from a series of events that affect only certain parts of the world, the current sub-prime crisis is certainly being felt by most South Africans in one way or another. “Whether it’s an economic recession, political uncertainty, crumbling infrastructure, lack of skills, social unrest, failing health standards or any combination of these events, 2009 in South Africa has already surfaced as a year where predictability of our economic and social issues are no longer so certain,” says Allen Smith, CEO of ContinuitySA.

It is becoming increasingly important for the top structures of an organisation, and more particularly non technically savvy directors and their management, to understand the language of IT and the people who drive the IT within their organisations. Moreover, as technology advances unabated, the divide between the business-minded and the technologically-minded people is not only difficult to reconcile, it is also exacerbated by the ‘silo mentality’ that often exists between the business and IT functions in many organisations still today.

The uncertainty that unfolded last year within the B-BBEE (Broad-Based Black Economic Empowerment) verification industry when the accreditation process for BEE verification agencies was temporarily suspended has been laid to rest. SANAS (South African National Accreditation System) has announced the re-instatement of the accreditation process and the lifting of the suspension following the reaching of agreement between itself (SANAS) and the Department of Trade and Industry (dti) on certain technical aspects. The suspension occurred in July 2008 after the dti had published the Verification Manual in the Government Gazette, highlighting discrepancies between the gazetted dti Verification Manual and the SANAS R47-02 verification document.

In South Africa Broad Based Black Economic Empowerment (BBBEE) is not an option to be lightly considered and then discarded.  It is a moral and legislative imperative, as much as it is a common-sense strategic tool for business success and overall economic and social prosperity.  "BEE encompasses the truly Proudly South African attitude and way of life", says Manana Moroka, CEO of Proudly South African.  "It means unreservedly investing in the development, empowerment and capacitating of all people so that we can grow as individuals and as a Nca!tion - both economically, intellectually, ethically and socially.  For any business leader with insight, BBBEE simply makes good business sense.  It certainly does not leave room for tokenism, or the enrichment of a few.  It is a common-sense instrument which, if applied with circumspection and insight, holds the promise of great financial and societal rewards - the empowerment of all", she enthuses.

Infrastructure development and maintenance are critical to economic growth. Developing countries across the globe which have a need for infrastructure development and maintenance are increasingly recognizing the value of engaging private business to achieve developmental aims.  A sound infrastructure is also in the best interest of private business.  Hence Public Private Partnerships, commonly known as PPPs, are increasingly being considered as an effective way of developing infrastructure, while at the same time assisting in the transfer of much needed skills.