At That Point
  • home
  • our story
  • our services
  • your resources
  • SA Industry News

Recent CIPC warnings to state-owned companies raises the spotlight on public sector governance

25/9/2014

0 Comments

 
The recent warnings issued by the Company and Intellectual Property Commission to five state-owned companies demonstrate once again just how seriously boards need to take their governance role, says Parmi Natesan, Executive: Centre for Corporate Governance at the Institute for Directors in Southern Africa (IoDSA). 

As reported in Business Day Live, the CIPC warned the boards of the South African Express Airways, South African Forestry Company, South African Broadcasting Corporation, South African Post Office and the Central Energy Fund that they risked being declared delinquent or of being placed on probation if they failed to address their non-compliance with the Companies Act. 

A finding of delinquency will adversely affect the long-term reputation of these directors, effectively calling their fitness for office into question.   It could also results in these directors being disqualified in terms of the Companies Act, from taking up Directorship positions in the future.

“The CIPC has indicated that it intends to be proactive in holding these companies and their boards to account,” observes Natesan. Governance best practice, as denoted in King III Principle 6.1, is for the board to take ultimate accountability for ensuring compliance with laws and regulations. “Compliance with the law is not optional, and directors need to make sure that the companies that they are overseeing are doing so.”

Natesan points out that the IoDSA’s 2014 benchmark study of board performance shows that public-sector boards, by their own admission, are lagging those in the private sector in most areas. 

Aside from the board, Natesan says that in the public sector, the audit committee should play a big role in ensuring that the company, inter alia, complies with the applicable legislation. However, audit committees in the public sector generally need to be strengthened, as is indicated by the high percentage of public-sector entities whose financial statements are disclaimed annually by the Auditor-General—for example, only 48 percent of audited organisations obtained an unqualified audit opinion in 2011-12, while 94 percent were found to be materially non-compliant with legislation.  The CIPC said it is particularly concerned about irregular expenditure, which points directly to a lack of quality audit committee oversight. 

“The long and short of it is that audit committees have a vital role to play in assisting their  boards with discharging their duties as regards to compliance. In the public sector, particularly, audit committees sometimes face several challenges which make it difficult for them to adequately fulfil their responsibilities,” says Natesan. “As this latest development shows, boards in both the public and private sectors will bear the consequences of their audit committee’s lack of performance, and should thus be looking for ways to improve it—such as participating in the Public Sector Audit Committee Forum, a forum created to strengthen Audit Committees in the public sector.”

ENDS
​

MEDIA CONTACT: Cathlen Fourie, 012 664 2833, [email protected] 

For more information on the IoDSA please visit:
Website:  www.iodsa.co.za
Twitter:  @The_IoDSA
LinkedIn: The Institute of Directors in Southern Africa group 
0 Comments
    Welcome to the IoDSA Newsroom.
    IN THE MEDIA

    2023
    ​

    2 March
    Financial Mail: 5572bb70-29ab-48f8-b5df-79c7bb7f27dc.pdfIN 


    Archives

    May 2025
    February 2025
    November 2024
    August 2024
    July 2024
    March 2024
    January 2024
    November 2023
    October 2023
    September 2023
    August 2023
    July 2023
    June 2023
    May 2023
    April 2023
    March 2023
    February 2023
    January 2023
    November 2022
    October 2022
    September 2022
    August 2022
    July 2022
    June 2022
    May 2022
    April 2022
    March 2022
    February 2022
    January 2022
    December 2021
    November 2021
    October 2021
    September 2021
    August 2021
    April 2021
    February 2021
    November 2020
    October 2020
    September 2020
    August 2020
    June 2020
    May 2020
    April 2020
    March 2020
    February 2020
    January 2020
    November 2019
    October 2019
    September 2019
    August 2019
    July 2019
    May 2019
    April 2019
    February 2019
    January 2019
    November 2018
    September 2018
    August 2018
    July 2018
    February 2018
    January 2018
    December 2017
    July 2017
    June 2017
    April 2017
    November 2016
    August 2016
    July 2016
    June 2016
    May 2016
    April 2016
    March 2016
    February 2016
    November 2015
    September 2015
    August 2015
    July 2015
    June 2015
    April 2015
    March 2015
    February 2015
    October 2014
    September 2014
    August 2014

    Categories

    All
    702 Sun International CEO SleepOut™
    ABSA
    Accountability
    ACGN
    Advocate Fay Mukaddam
    Africa
    African Governance Showcase
    AGM
    Alex Granger
    Angela Cherrington
    Angela Oosthuizen
    Ansie Ramahlo
    Ansie Ramalho
    Audit Committees
    Auditor General
    Board
    Board Meeting
    Boards
    Budget
    Business
    CD(SA)
    Central Energy Fund
    CEO
    CEO Tenure
    Certified Director
    Chairman
    Chartered Director
    CIPC
    City Of Johannesburg
    Clover
    Companies Act
    COO
    Corporate Governance
    Corruption
    Cricket SA
    Delinquent Directors
    Director
    Directors
    Directors' Sentiment Index Report
    Disclosure
    Discrimination
    Dudu Myeni
    Economic Growth
    Eskom
    Eskom Board
    Ethics
    Executive Pay
    EY
    Fair Pay
    FEDSAS
    Fraud And Corruption
    Governance
    Governing Bodies
    Gupta
    Huge Group
    Institute Of Directors In South Africa
    Integrated Reporting
    IoDSA
    Johannesburg Property Company
    Karin Ireton
    King Code Of Corporate Governance
    King IV
    KingIV
    King IV Launch Conference
    Leadership
    Local Elections
    Management
    Mervyn King
    Mid-term Budget 2021
    Mini-budget 2021
    Municipalities
    Non-Executive Directors’ Fees Guide
    North West Cricket
    Parmi Natesan
    Politics
    Professionalising Directorship
    Property
    Public Sector Boards
    Ray Harraway
    Remuneration
    Remuneration Committee Forum
    Richard Foster
    SAA
    SABC
    SA Express
    SAPO
    School Governing Bodies (SGB)
    Service Delivery
    Shareholders
    Sikkie Kajee
    SME Growth
    Social Inequality
    SOEs
    South African Airlines
    South African Airways
    South African Forestry Company
    Stakeholders
    State Capture
    State-owned Enterprises
    State-owned Entities
    Succession Planning
    Sustainability
    Sustainable Development Forum
    The Ethics Institute
    The Institute Of Directors South Africa
    Transnet
    Trends
    Tsakani Maluleke
    UCT
    Vikeshni Vandayar
    Women
    Women's Day
    Zondo Commission

    RSS Feed

CONTACT US

office [at] atthatpoint [dot] co [dot] za
© COPYRIGHT 2025
ALL RIGHTS RESERVED
  • home
  • our story
  • our services
  • your resources
  • SA Industry News