Dates for the implementation of the New Companies Act and Consumer Protection Act have finally been announced.

So it has now been made “formal” – there is going to be a delay in the implementation of the New Companies Act and Consumer Protection Act until April 2011.

It this a breather or just further opportunity to “get ones house in order”?

The delay is certainly an indication of the extent of the changes that are anticipated as a result of these pieces of legislation – both to the regulatory bodies that will be charged with monitoring (policing) compliance to the Acts, as well as to business that would do well to take full advantage of the next six months to;

–          Assess where they stand with regard the new requirements

–          Map out and prioritise areas that need to be addressed

–          Look at how the changes affect their specific business (in their specific context and sector)

–          Systematically (and strategically) make the necessary changes

–          Robustly record this process (the assessments, decisions and implementation)

Every business is going to need to pursue a higher level of corporate governance once the New Companies Act becomes effective. Every position in every business contains elements of corporate governance, therefore to some extent this is something that everyone (from the top down) needs to know about. In this way businesses can manage a large portion of the new business risks that are raised.

With regard to the Consumer Protection Act it is again essential to ensure that everyone in the business properly understands the implications of the Act on the business – and be able to identify the key elements that affect their position directly. Some positions will be more directly affected than others – but all are impacted in some way.

Here are some pointers to implementing a robust Corporate Governance framework for your business;

  1. Better understand both your external and internal business landscape by mapping;
    1. All legislation and regulations that impact your business in some way (this list should be in the region of 60 to 80 items long);
    2. All stakeholders, internal and external (anyone whom your business affects, or affects your business is to some degree a stakeholder);
    3. All Communication channels – again internal and external (link a responsible party to each channel);
    4. All Decision Making (in terms of accountability for decisions, responsibility in making decisions, parties that need to be consulted in the decision making process and everyone who needs to know about the decision)
    5. Fully understand the implication of the King III Code of Corporate Governance for South Africa;
      1. This Code applies to “all entities” – no-matter what size or structure;
      2. All entities need to either apply the recommendations, or apply practices that meet the same overarching goals (principles and elements) – and then explain what and why they have done what they have done – NO PART OF THE CODE CAN BE IGNORED;
      3. Ensure that certain basics are in place, this would include;

i.      Proper appointment of directors and decision makers in the business;

ii.      Separation of Ownership decision making from Operational decision making;

iii.      Proper Mandating of all people in the organisation (top to bottom);

iv.      Training of all directors on the impact and implications of these pieces of legislation (on the business and on them personally);

v.      Training in the King III Code for all people in management and above (wherever there is a need to robust application of the corporate governance principles)

This may sound like an onerous task but this additional 6 months before implementation of the New Companies Act and Consumer Protection Act could prove to be the gap we all need to ensure a smooth transition into the new business landscape.

For more information on this as well as further assistance in adapting to the changes please feel free to contact me on roger@sinkorswim.co.za.

One Response to “Dates for the implementation of the New Companies Act and Consumer Protection Act have finally been announced.

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