Showing posts with label New Companies Act. Show all posts
Showing posts with label New Companies Act. Show all posts
Monday, January 10, 2011
Saturday, December 25, 2010
Necessary "Evil"
In an article posted in the New Age Newspaper on the 14th of December 2010 unions are purported to seek a total ban on Labour Brokers in South Africa and that the demands are building in strength and momentum. So much so it has been dubbed “The Mother of all Battles”. The method to be used by the Unions is the demand for Section 189 of the Labour Relations Act to be repealed. This section directly deals with temporary employment. Although one does have empathy for the plight of the Unions, in the article they specifically mention Labour Broker’s unwillingness to do salary deductions for unions, and the so-called extorted workers one has to review the impact that such critical changes will have in the job creation front.
One has to understand that life has to occur in balance. Once the one side of the scale is packed to heavy life responds by acting “aggressively” to balance the scale. A typical example of how life and people in South Africa has responded to heavy handed government intervention is in the illegal cigarette market which, at least according to British American Tobacco’s advertising campaign, is spiraling out of control and has suddenly become the largest funder of other more violent and “less profitable” crimes like robbery, gun running and drugs. Is the assumption that this is like a gateway crime.
We cannot at all be surprised by the growth of this “market segment”, as approximately 50% of cigarette turnover (not profit) is passed on to government in the form of exorbitant sin taxes. These excessive taxes make it virtually impossible for competitors to enter into the market with cheaper alternatives, without breaking the law. Therefore heavy handed government involvement has created an economy conducive to trading, smuggling and selling illegal cigarettes whilst protecting and building a monopoly state in this R 25 Billion per annum industry.
Indulging me to use the above as an example, one has to ponder if such over protectionism in the labour market will have a positive or negative effect and what the direct effect will be on job creation. All our major job creation industries are currently shedding jobs at a massive scale. In Novembers figures an approximate 18,000 jobs was shed in the formal industry(Banking and Manufacturing the largest culprits). However agency work or labour brokering (governed by Section 189) has been creating jobs at a rate of 5%+ per annum. Is this not already a sign that an over regulated environment is creating opportunities for business men in South Africa? Is it not proof that additional regulation may, as in the cigarette industry, cause a form of illegal labour operations? Before you laugh out loud, be prudent in considering the fact that the Mafia controlled US Cities and even states, due to the ”ownership” of unions.
It cannot be ignored that about 7% of South Africa’s workforce is currently employed in the Labour Brokering environment and that this amount is only set to grow, if left to operate. However if this industry is going to be declared illegal would the Private Sector, in reality, absorb these employees? What would business to do repair the scales of balance? Another point that is prudent to investigate is true and honest temporary employment. If Project Management, the agricultural industry or contract based businesses are not going to be allowed to align their staffing strategy with their actual demands, which by default varies from time to time, it may very well cause these industries immense damage and, at least in my mind, cause these industries to seek alternatives to employing people. Items like mechanization, automation and technology deployment would become the leading factor in business success and not staff deployment and training. This does not show a rosy picture for the blue collar worker the union is so set to protect, or at least protect salary deductions from.
In conclusion, it should be considered whether the “evil” of labour brokering is not a “necessary evil” to stimulate our economy’s most dire demand, job creation. Maybe better and focused regulation of temporary workers and labour brokers would be a more viable option. Maybe more emphasis on training and social investment by these firms may protect our economy from the short term damage of job losses, whilst encouraging future growth for our unemployment figures.
One has to understand that life has to occur in balance. Once the one side of the scale is packed to heavy life responds by acting “aggressively” to balance the scale. A typical example of how life and people in South Africa has responded to heavy handed government intervention is in the illegal cigarette market which, at least according to British American Tobacco’s advertising campaign, is spiraling out of control and has suddenly become the largest funder of other more violent and “less profitable” crimes like robbery, gun running and drugs. Is the assumption that this is like a gateway crime.
We cannot at all be surprised by the growth of this “market segment”, as approximately 50% of cigarette turnover (not profit) is passed on to government in the form of exorbitant sin taxes. These excessive taxes make it virtually impossible for competitors to enter into the market with cheaper alternatives, without breaking the law. Therefore heavy handed government involvement has created an economy conducive to trading, smuggling and selling illegal cigarettes whilst protecting and building a monopoly state in this R 25 Billion per annum industry.
Indulging me to use the above as an example, one has to ponder if such over protectionism in the labour market will have a positive or negative effect and what the direct effect will be on job creation. All our major job creation industries are currently shedding jobs at a massive scale. In Novembers figures an approximate 18,000 jobs was shed in the formal industry(Banking and Manufacturing the largest culprits). However agency work or labour brokering (governed by Section 189) has been creating jobs at a rate of 5%+ per annum. Is this not already a sign that an over regulated environment is creating opportunities for business men in South Africa? Is it not proof that additional regulation may, as in the cigarette industry, cause a form of illegal labour operations? Before you laugh out loud, be prudent in considering the fact that the Mafia controlled US Cities and even states, due to the ”ownership” of unions.
It cannot be ignored that about 7% of South Africa’s workforce is currently employed in the Labour Brokering environment and that this amount is only set to grow, if left to operate. However if this industry is going to be declared illegal would the Private Sector, in reality, absorb these employees? What would business to do repair the scales of balance? Another point that is prudent to investigate is true and honest temporary employment. If Project Management, the agricultural industry or contract based businesses are not going to be allowed to align their staffing strategy with their actual demands, which by default varies from time to time, it may very well cause these industries immense damage and, at least in my mind, cause these industries to seek alternatives to employing people. Items like mechanization, automation and technology deployment would become the leading factor in business success and not staff deployment and training. This does not show a rosy picture for the blue collar worker the union is so set to protect, or at least protect salary deductions from.
In conclusion, it should be considered whether the “evil” of labour brokering is not a “necessary evil” to stimulate our economy’s most dire demand, job creation. Maybe better and focused regulation of temporary workers and labour brokers would be a more viable option. Maybe more emphasis on training and social investment by these firms may protect our economy from the short term damage of job losses, whilst encouraging future growth for our unemployment figures.
Saturday, May 29, 2010
How to calculate your break even
Many business owners do not understand the financial side of their business and actually do their best to avoid it, as it is perceived as a complex and dificult process. In this article the author aims to address just one of the most business criticial financial analysis that needs to be done for you to better understand your business. Whether you are in financial services, selling products wholesale or run a consulting business. Knowing when your business actually breaks even is extremely critical. What is the break-even point? The break even point is defined as the point where business sales or revenues (your income) is equal to your business expenses. Therefor there is no profit made nor no loss incurred at the break-even point.
This figure is imperitive for any business owner in the managing of the business since the break-even point is the lowest limit of profit when setting prices and determining business margins. Obviously the break-even point becomes very important when calculating a strategy for net profit or quoting on new projects or even introducing new products to your business. Calculating your break even amount is actually extremely simple, you merely calculate your operational expenses. However I believe it is prudent to take the following factors into consideration when calculating your break even and I have my own little break even calculator, although it may not be academically correct it has worked well in every business I saw it introduced. Break Even = Operational Expenses + Contigency Provision + Cost of Re-Capitalisation + Minimum Entrepreneurial Fee required. Now lets unpack that in a little more detail:
Operational Cost = The total running cost of your business.
Contigency Provision = An amount of money you put aside to isnure break even in the immidiate future. Either by being able to use it to address some unforseen circumstances or to have surplus capital available to "cover" yourself.
Re-Capitilisation = How do you cope with growth? How do you replace that machine you bought cash. You recapitlisation savings is used to insure that when old machines are reduntant you do not need to suddenly scramble for cash.
Entreprenerial Fee = The minimum entrepreneurial fee is the minimum amount required by the entrepreneur to keep himself going. Do not place your wanted income hear, but the minimum income required.
Now that you have a true break even margin you need to work out how you are going to get there. This is done by calculating your break even margin.The break-even margin is a ratio and this ratio shows the gross-margin factor for a break-even condition. The formula is also fairly simple. You take your total expenses and divide by net revenues and multiply this by 100 to get a percentage. This ratio is extremely helpful when setting your selling prices, in the tendering process and when negotiating contracts with vendors and accounts.
By understanding your business break-even point and the required break-even margin business owners can truly understand the impact of decisions. In purchasing, costs can be lowered by bulk purchasing, negotiating price/ terms or finding new suppliers. Revenues can be improved by increasing value to the customer or offering non-price concessions. It must at all times be remembered that increasing profits by simply increasing margins, therefore selling price, could be a very risky strategy. Unless the consumer perceives higher value from the product or service, the consumer may not be willing to pay these higher prices.
This figure is imperitive for any business owner in the managing of the business since the break-even point is the lowest limit of profit when setting prices and determining business margins. Obviously the break-even point becomes very important when calculating a strategy for net profit or quoting on new projects or even introducing new products to your business. Calculating your break even amount is actually extremely simple, you merely calculate your operational expenses. However I believe it is prudent to take the following factors into consideration when calculating your break even and I have my own little break even calculator, although it may not be academically correct it has worked well in every business I saw it introduced. Break Even = Operational Expenses + Contigency Provision + Cost of Re-Capitalisation + Minimum Entrepreneurial Fee required. Now lets unpack that in a little more detail:
Operational Cost = The total running cost of your business.
Contigency Provision = An amount of money you put aside to isnure break even in the immidiate future. Either by being able to use it to address some unforseen circumstances or to have surplus capital available to "cover" yourself.
Re-Capitilisation = How do you cope with growth? How do you replace that machine you bought cash. You recapitlisation savings is used to insure that when old machines are reduntant you do not need to suddenly scramble for cash.
Entreprenerial Fee = The minimum entrepreneurial fee is the minimum amount required by the entrepreneur to keep himself going. Do not place your wanted income hear, but the minimum income required.
Now that you have a true break even margin you need to work out how you are going to get there. This is done by calculating your break even margin.The break-even margin is a ratio and this ratio shows the gross-margin factor for a break-even condition. The formula is also fairly simple. You take your total expenses and divide by net revenues and multiply this by 100 to get a percentage. This ratio is extremely helpful when setting your selling prices, in the tendering process and when negotiating contracts with vendors and accounts.
By understanding your business break-even point and the required break-even margin business owners can truly understand the impact of decisions. In purchasing, costs can be lowered by bulk purchasing, negotiating price/ terms or finding new suppliers. Revenues can be improved by increasing value to the customer or offering non-price concessions. It must at all times be remembered that increasing profits by simply increasing margins, therefore selling price, could be a very risky strategy. Unless the consumer perceives higher value from the product or service, the consumer may not be willing to pay these higher prices.
Wednesday, May 26, 2010
A Dynamic Group that cares
Yesterday I had the privilege, nay honour of doing a seminar to the people of Dynamic Vision Optometrist network on Finance for non financial people. I would like to say that it was without a doubt one of the most pleasant experiences in my training career.
Not only did I enjoy listening to a couple of other dynamic speakers that have an incredible passion towards their business but I was fortunate enough to get an insider’s view of how this industry ticks and works. The most impressionable part of the experience was the caring nature of all the parties attending. Caring for their patients, caring for other and caring deeply about their businesses, and it was reassuring to see this high level of care and passion in such a large organisation.
I would again like to thank Dynamic Vision for the opportunity and the kind words after my little accident the morning.
You guys are fantastic.
Not only did I enjoy listening to a couple of other dynamic speakers that have an incredible passion towards their business but I was fortunate enough to get an insider’s view of how this industry ticks and works. The most impressionable part of the experience was the caring nature of all the parties attending. Caring for their patients, caring for other and caring deeply about their businesses, and it was reassuring to see this high level of care and passion in such a large organisation.
I would again like to thank Dynamic Vision for the opportunity and the kind words after my little accident the morning.
You guys are fantastic.
Tuesday, March 16, 2010
Up and coming
My new website will be launching soon. Please watch this space for new information, I look forward to getting my 2010 underway and assisting you, my business friends, with advice, training and support where you would like that I can assist.
Please feel free to contact me if you require any additional information.
Please feel free to contact me if you require any additional information.
The pleasantries of the unpleasant
Owning and running your own business can sometimes be as much fun as a root canal and with the constant changes it feels like we are running to the dentist every second day asking him to please provide us with this liberating procedure over and over again.
From Eskom kindly giving us an electrical epidural in price hikes, exorbitant sin taxes making the basic pleasures, like smoking a cigarettes to avoid insanity, un affordable for most of us “other fellla’s”. One can be excused for thinking that most of us should rather spend our time in a hospital for the clinically insane. We are banging our heads against a brick wall anyway !
But let’s face it, once you had your own business you struggle to find an incentive (apart from the massive luxurious thing called a pay check) to go back to the 8-5 breaker of innovation.
But then every now and again a light appears, and then we understand the reason why we chose this insane life. For the couple of people that know me and have been privy to the last couple of months of corporate sabotage and obvious and blatant attempts to block my business and its sale. Will know that I was seriously considering the that en-suite room at the local clinic for the insane. More shockingly the rider on the white horse did not come in any expected form, but from a segment of the industry that I always regarded as my opponents. A trade union. Yes, you heard me correctly a trade union.
To close off, thank you to all that supported my during this last couple of months. Thanks to all that was considerate and understanding and even empathetic. Now we are going to enjoy the spoils of our labour and the reward for coping during this time.
P.S. – This may be personal but I thought it prudent to share.
From Eskom kindly giving us an electrical epidural in price hikes, exorbitant sin taxes making the basic pleasures, like smoking a cigarettes to avoid insanity, un affordable for most of us “other fellla’s”. One can be excused for thinking that most of us should rather spend our time in a hospital for the clinically insane. We are banging our heads against a brick wall anyway !
But let’s face it, once you had your own business you struggle to find an incentive (apart from the massive luxurious thing called a pay check) to go back to the 8-5 breaker of innovation.
But then every now and again a light appears, and then we understand the reason why we chose this insane life. For the couple of people that know me and have been privy to the last couple of months of corporate sabotage and obvious and blatant attempts to block my business and its sale. Will know that I was seriously considering the that en-suite room at the local clinic for the insane. More shockingly the rider on the white horse did not come in any expected form, but from a segment of the industry that I always regarded as my opponents. A trade union. Yes, you heard me correctly a trade union.
To close off, thank you to all that supported my during this last couple of months. Thanks to all that was considerate and understanding and even empathetic. Now we are going to enjoy the spoils of our labour and the reward for coping during this time.
P.S. – This may be personal but I thought it prudent to share.
Friday, January 29, 2010
Using the Small Claims Court
In many cases a lot of us feel like justice is far from reach. It feels like we have no recourse against poor workmanship, friends lending money and even in the case of micro business, defaulting creditors. To prove my point, how many times have you decided not to act on a claim of R 4000-00 or so because the lawyers costs more....?
Little of us know about the cheap, easy and simple process available to all South African citizens needing civil/financial recourse. This prince coming to save us from the evil micro bad guys is found in the form of the small claims court, and as stated it is available to all SA citizens.
So how does it work? Simple the small claims court allows smaller civil disputes to be resolved with out the expensive and slow process of taking normal civil action using the magistrates court. It operates outside of business hours and the "judge"is a practicing attorney. You do not need a lawyer, in fact they are not allowed! You do not need to speak legal! You do not need to file expensive papers in latin of "high" english. All you need is to contact your local small claims court, obtain the relevant notice drafts and wallah you and the person you have a dispute with can slug it out (man-2-man) in the small claims court where an attorney will give a judgement that is just as powerful as that of the magistrates court.
Who can use the small claims court? Any natural person with a claim smaller than R 7,000-00 (this amount is being reviewed) can approach the small claims court for relief.
What can a person sue for?. Any civil dispute, in other words any dispute that has a desired end result of financial relief. Broken equipment, bad workmanship, debt, outstanding invoices (only in the case of Sole Proprietors & Partnerships, no CC's or Companies).
Who cannot sue?. A juridictional entity is not allowed to seek relief from the small claims court. Again in more simple terms no CC's, companies or trusts. That said as an individual you can call your dispute to the small claims court against any legal entity.
What can I not sue for?. As a legal entity (CC, PTY or trust) you cannot approach the small claims court. You cannot approach the small claims court for financial relief higher than R 7,000 and you cannot send your lawyer on your behalf. The aim of the court is to resolve small disputes between individuals to insure justice is accessible to all.
What happens if my claim is more than R 7,000?. In the event that your claim is fractionally higher than the prescribed limit, as stated it us currently under review, you can choose to forfeit your right to the balance. As an example: If your past room mate leaves your house without paying his portion of the rent and the lovely fella also decided to take the washing machine causing you damages of R 8,350-00. You can approach the small claims court and choose to forfeit your right to the balance. If you therefor get a successfull verdict the judgement will only be for R 7,000-00.
Who do you approach to have a dispute settled by the small claims court?. Any good attorney or legal services company will be able to provide you with the contact details of the small claims court in your area. Do not use intermediaries or consultants, it is a total waste of money. However if you want consult with an attorney about the process and facts of your case.
Little of us know about the cheap, easy and simple process available to all South African citizens needing civil/financial recourse. This prince coming to save us from the evil micro bad guys is found in the form of the small claims court, and as stated it is available to all SA citizens.
So how does it work? Simple the small claims court allows smaller civil disputes to be resolved with out the expensive and slow process of taking normal civil action using the magistrates court. It operates outside of business hours and the "judge"is a practicing attorney. You do not need a lawyer, in fact they are not allowed! You do not need to speak legal! You do not need to file expensive papers in latin of "high" english. All you need is to contact your local small claims court, obtain the relevant notice drafts and wallah you and the person you have a dispute with can slug it out (man-2-man) in the small claims court where an attorney will give a judgement that is just as powerful as that of the magistrates court.
Who can use the small claims court? Any natural person with a claim smaller than R 7,000-00 (this amount is being reviewed) can approach the small claims court for relief.
What can a person sue for?. Any civil dispute, in other words any dispute that has a desired end result of financial relief. Broken equipment, bad workmanship, debt, outstanding invoices (only in the case of Sole Proprietors & Partnerships, no CC's or Companies).
Who cannot sue?. A juridictional entity is not allowed to seek relief from the small claims court. Again in more simple terms no CC's, companies or trusts. That said as an individual you can call your dispute to the small claims court against any legal entity.
What can I not sue for?. As a legal entity (CC, PTY or trust) you cannot approach the small claims court. You cannot approach the small claims court for financial relief higher than R 7,000 and you cannot send your lawyer on your behalf. The aim of the court is to resolve small disputes between individuals to insure justice is accessible to all.
What happens if my claim is more than R 7,000?. In the event that your claim is fractionally higher than the prescribed limit, as stated it us currently under review, you can choose to forfeit your right to the balance. As an example: If your past room mate leaves your house without paying his portion of the rent and the lovely fella also decided to take the washing machine causing you damages of R 8,350-00. You can approach the small claims court and choose to forfeit your right to the balance. If you therefor get a successfull verdict the judgement will only be for R 7,000-00.
Who do you approach to have a dispute settled by the small claims court?. Any good attorney or legal services company will be able to provide you with the contact details of the small claims court in your area. Do not use intermediaries or consultants, it is a total waste of money. However if you want consult with an attorney about the process and facts of your case.
Monday, December 28, 2009
Have a merry 2010
To all my friends and associates. I wish a fantastic 2010. May the winds of good fortune blow behind you with such vigour that your ears whislte.
Thursday, December 10, 2009
Leading by Example
We all lose faith in our idols and they all disappoint us at some stage. Let’s look at world golfing sweetheart Tiger, who by latest count, is already 11 over par with extramarital affairs, Joost “powdering” his nose and a myriad of senior people drunk driving suburbia into a “non-walled” community. However I do think it is prudent that we look at ourselves. We literally gulp up gossip and so called failure of moral value stories but when a Government companies are crumbling left right and centre we just shrug and say something like “This is Africa”.
Julius Ceaser, was renowned and respected for the many battles he fought in the front lines, draped in his customary (very visible) red cloak. Many battles was perceived as lost till Julius arrived with a couple of men and turned the spirit of his soldiers and by that, the outcome of the battle. South Africa is currently fighting a battle against poverty, low moral fibre, despondency and a reputation of fraud and quick fix mentalities. In the forefront on this is the catastrophic board failures at the SABC, Transnet, Athletic SA and basically every state owned enterprise. Is this still the overflow of the Zuma/Mbeki power shift leaving us destitute and confused or is it just pure poor management and poor corporate governance. The more prudent question in fact should be when is our leaders going to put on a red cloak and turn public moral and allow us to win this battle.
Corporate Governance??? This is one of the new buzz words that is uttered over our airways, business corridors and board rooms. However can we see proper corporate governance within our institutions? The red cloak in this instance can be worn in the form as the newly published King III report and the simple application of it. With so many new boards being elected in and so many interim boards heading our transport infrastructure, judiciary, our television broadcasts and even our sports the implementation and application of proper corporate governance via King III should be simple mind set to entrench in these new boards. With the promulgation of the New Companies Act, which is due to come into effect in 2010, we as a general public should actually challenge the Government to take the proverbial tree out of their own eyes before investigating the small thorn in the private sectors eyes.
So to conclude. Make proper ethical, transparent and honest business the norm of government institutions. Make open communication with ALL stakeholders mandatory and stop hiding behind bureaucracy and eloquent language. Is it not the very government that made Plain Language a requirement under the National Credit Act, The Companies Act of 2009 and the Consumer Protection Act.
Julius Ceaser, was renowned and respected for the many battles he fought in the front lines, draped in his customary (very visible) red cloak. Many battles was perceived as lost till Julius arrived with a couple of men and turned the spirit of his soldiers and by that, the outcome of the battle. South Africa is currently fighting a battle against poverty, low moral fibre, despondency and a reputation of fraud and quick fix mentalities. In the forefront on this is the catastrophic board failures at the SABC, Transnet, Athletic SA and basically every state owned enterprise. Is this still the overflow of the Zuma/Mbeki power shift leaving us destitute and confused or is it just pure poor management and poor corporate governance. The more prudent question in fact should be when is our leaders going to put on a red cloak and turn public moral and allow us to win this battle.
Corporate Governance??? This is one of the new buzz words that is uttered over our airways, business corridors and board rooms. However can we see proper corporate governance within our institutions? The red cloak in this instance can be worn in the form as the newly published King III report and the simple application of it. With so many new boards being elected in and so many interim boards heading our transport infrastructure, judiciary, our television broadcasts and even our sports the implementation and application of proper corporate governance via King III should be simple mind set to entrench in these new boards. With the promulgation of the New Companies Act, which is due to come into effect in 2010, we as a general public should actually challenge the Government to take the proverbial tree out of their own eyes before investigating the small thorn in the private sectors eyes.
So to conclude. Make proper ethical, transparent and honest business the norm of government institutions. Make open communication with ALL stakeholders mandatory and stop hiding behind bureaucracy and eloquent language. Is it not the very government that made Plain Language a requirement under the National Credit Act, The Companies Act of 2009 and the Consumer Protection Act.
Monday, October 5, 2009
People, Planet & Profit
The new King III report puts a much larger emphasis on so called Triple Bottom Line reporting for businesses. Business is not just about making money anymore as it is about how you make the money and whether you take from the people and planet or give to the people and planet.
Obviously as King III applies to all entities it is placing a bigger burden on smaller business to also comply to these codes and therefore we are seeing a bit of resistance to King III. That said King III has an apply or explain approach and therefore I am off the opinion that this approach makes it accessible to most businesses. But what does apply or explain mean? This basically means that you need to apply your mind on how you can comply, do the best you can do to comply and explain why you can’t do more. So basically it is a soft and positive approach rather than the traditional comply or else like in the US system. With the recent global meltdown I am sure we can debate for hours on the success of the more aggressive approach taken by the US government in governance.
I do however believe we need to ask ourselves a more prudent question. Is it good business to comply to King III? Well let’s not debate the legal issues around it but the pure advantage that it will offer you, if any. I think the answer is a resounding YES. Most of us as directors spend 110% of our time working IN our businesses focussing on our functional role within the company and we don’t spent any time working ON our businesses focussing on strategic and long term visions. When complying and applying King III into your business you will force yourself to spent at least some time ON your business and just in that the advantage of compliance is massive.
In conclusion, every change brings opportunity and risk and compliance to King and THINKING about Poeple, Planet and Profit will give more opportunity to you to manage your business effectively. Non compliance only brings risk. So my opinion is: Lets apply King III.
To find out more about King III, the New Companies Act or the Consumer Protection Act please visit http://www.sinkorswim.co.za/
Obviously as King III applies to all entities it is placing a bigger burden on smaller business to also comply to these codes and therefore we are seeing a bit of resistance to King III. That said King III has an apply or explain approach and therefore I am off the opinion that this approach makes it accessible to most businesses. But what does apply or explain mean? This basically means that you need to apply your mind on how you can comply, do the best you can do to comply and explain why you can’t do more. So basically it is a soft and positive approach rather than the traditional comply or else like in the US system. With the recent global meltdown I am sure we can debate for hours on the success of the more aggressive approach taken by the US government in governance.
I do however believe we need to ask ourselves a more prudent question. Is it good business to comply to King III? Well let’s not debate the legal issues around it but the pure advantage that it will offer you, if any. I think the answer is a resounding YES. Most of us as directors spend 110% of our time working IN our businesses focussing on our functional role within the company and we don’t spent any time working ON our businesses focussing on strategic and long term visions. When complying and applying King III into your business you will force yourself to spent at least some time ON your business and just in that the advantage of compliance is massive.
In conclusion, every change brings opportunity and risk and compliance to King and THINKING about Poeple, Planet and Profit will give more opportunity to you to manage your business effectively. Non compliance only brings risk. So my opinion is: Lets apply King III.
To find out more about King III, the New Companies Act or the Consumer Protection Act please visit http://www.sinkorswim.co.za/
Monday, September 28, 2009
Property Syndication and King III
Although King III was only “launched” on the 1st of September this year we have to already start asking whether the Property Syndication is gearing towards the compliance of King III. That said it may even be extremely prudent to ask if they have ever been King I or II compliant. As the aim of the King reports was directly related to Public and Listed companies.
A lot has been said about the Property Syndication industry with a wave of allegations made against the operators. Some warranted and some maybe not. I believe that most of the attacks have been along the wrong avenue. We have seen some esteemed writers hammering the syndication industry about shareholder communication, so called inflated returns and poor and expensive management principles. Although these items are obviously extremely relevant and more than just idle points of discussion I believe that more emphasis should be placed on whether property syndication promoters subscribe to the King II and now King III rules of governance.
The basic reality is that most may not even know of the King reports. For example the directors of the now defunct Blue Everest Investments never even attempted to subscribe to King I and II and I believe that this was due to ignorance to its existence. Is that an excuse? I don’t think so, Asset Manager City Capital also never attempted compliance to King. Why not? Is it pure ignorance from the public, the promoters and from brokers alike? Is it that the so called governing body ,the Public Property Syndication Association better known as the PPSA, does not even mention compliance of King in their constitution? Or is it because we never demanded it?
In an industry that is bombarded by negative press brokers still keep selling their products and we are led to believe that it is merely the high commission being paid that motivates selling the products. I am however of the opinion that the concept behind the industry is solid and could be a fantastic investment for investors, but only if the syndication industry is more aggressively regulated by us, the public. Having an FSB number is no longer enough to protect the public, as clearly evident in the Capital Investments debacle. Capital Investments was/is a fully licensed Asset Manager and millions of rands are alleged to have been lost in this investment platform.
The focus for the immediate future should be to look at items like proper governance, ie. King III and the broker industry should demand compliance to these codes.
To find out more about the New Companies Act, King III and the Consumer Protection Act please visit www.sinkorswim.co.za
A lot has been said about the Property Syndication industry with a wave of allegations made against the operators. Some warranted and some maybe not. I believe that most of the attacks have been along the wrong avenue. We have seen some esteemed writers hammering the syndication industry about shareholder communication, so called inflated returns and poor and expensive management principles. Although these items are obviously extremely relevant and more than just idle points of discussion I believe that more emphasis should be placed on whether property syndication promoters subscribe to the King II and now King III rules of governance.
The basic reality is that most may not even know of the King reports. For example the directors of the now defunct Blue Everest Investments never even attempted to subscribe to King I and II and I believe that this was due to ignorance to its existence. Is that an excuse? I don’t think so, Asset Manager City Capital also never attempted compliance to King. Why not? Is it pure ignorance from the public, the promoters and from brokers alike? Is it that the so called governing body ,the Public Property Syndication Association better known as the PPSA, does not even mention compliance of King in their constitution? Or is it because we never demanded it?
In an industry that is bombarded by negative press brokers still keep selling their products and we are led to believe that it is merely the high commission being paid that motivates selling the products. I am however of the opinion that the concept behind the industry is solid and could be a fantastic investment for investors, but only if the syndication industry is more aggressively regulated by us, the public. Having an FSB number is no longer enough to protect the public, as clearly evident in the Capital Investments debacle. Capital Investments was/is a fully licensed Asset Manager and millions of rands are alleged to have been lost in this investment platform.
The focus for the immediate future should be to look at items like proper governance, ie. King III and the broker industry should demand compliance to these codes.
To find out more about the New Companies Act, King III and the Consumer Protection Act please visit www.sinkorswim.co.za
Monday, September 21, 2009
Are Financial Advisors ready for the new challenges?
The New Companies Act brings opportunity the Consumer Protection Act brings some additional strain whilst the proposed Protection of Private Information Bill will place additional strain on marketing methods and additional responsibility on database management within the financial services practice. This is a clear indication that 2010 and 2011 is going to be a very interesting time for financial advisors and business owners alike.
That said, I had to ask the question are Financial Advisors ready for these paramount changes and the opportunity and challenges that it holds. The extremely interesting part is in a quick survey, conducted with 40 companies that have attended the Sink or Swim Seminars, only about 15% of them had a active relationship with a financial advisors and most of these were merely related to pension funds and medical aids on not to any other business critical issues.
Even more over I was surprised that in a phone call to about 20 brokers only one offered business risk insurances, and I am not referring to asset insurance. Now the question I have is why don’t business owners have relationships with financial advisors and why don’t financial advisors focus on providing these key risk insurance instruments to their client base.
In recent years we have seen how the pendulum have swung in favour of the consumer and I have to wonder if Financial Advisors will now also be found wanting if their clients are not properly insured for these business critical risks. Never mind the massive opportunity that lies in this market segment.
That said, I had to ask the question are Financial Advisors ready for these paramount changes and the opportunity and challenges that it holds. The extremely interesting part is in a quick survey, conducted with 40 companies that have attended the Sink or Swim Seminars, only about 15% of them had a active relationship with a financial advisors and most of these were merely related to pension funds and medical aids on not to any other business critical issues.
Even more over I was surprised that in a phone call to about 20 brokers only one offered business risk insurances, and I am not referring to asset insurance. Now the question I have is why don’t business owners have relationships with financial advisors and why don’t financial advisors focus on providing these key risk insurance instruments to their client base.
In recent years we have seen how the pendulum have swung in favour of the consumer and I have to wonder if Financial Advisors will now also be found wanting if their clients are not properly insured for these business critical risks. Never mind the massive opportunity that lies in this market segment.
Wednesday, September 16, 2009
2010 and beyond
Nostradumus, in his lost book of images, allegedly predicted the end of the world and humankind in 2012. Although I am no psychic nor do I care much for predictions it does not take much psychic powers to predict the end of the business world as we know it in 2010 for South African business people.
The promulgation of two critical acts namely the Consumer Protection Act and the New Companies Act does change everything we know about corporate and business law in South Africa but even more over the more aggressive prosecution of the Employment Equity Act and the criminalisation of the Competitions Act is also set to make your life as company director more strenuous and just plain scary.
It is rumoured that the commission has been instructed to fine a minimum of 270 companies during 2010 for non compliance to the Employment Equity act and to prosecute aggressively whilst critics believe that the criminalisation of the competitions act will have extremely negative effects on business. Another portion of the New Companies Act is Section 6,Business Rescue and Compromise with creditors, and I am off the opinion that it will have a massive impact, at least in the short term, on the credit environment in South Africa. Where does this leave company directors?
Simply it places a huge burden on company directors and officers and does open them to a tsunami of potential litigation, regulatory fines and stakeholder scrutiny. Therefore I am of the opinion that Financial Advisors are going to play a more vital role in the daily business life of directors. In a recent “survey” done by Sink or Swim only 15% of the respondents have a trusted and active relationship with a financial advisor. Similarly in a couple of phone calls to brokers it became apparent that they do not offer nor understand business and intangible insurance products that they require.
Now the important questions that we need to answer is, can I as a financial advisor be held liable if my clients business is not properly insured for these risks? Is it the prudent move to avoid the issue? Am I ready for the changes? Financial Advisors already have a tough time with the need to comply to FICA, POCA, FAIS and soon the consumer protection act. How will this impact your business and the inherent risk that you take in your daily activity.
To find out more about the New Companies Act and the Consumer Protection Act visit http://www.sinkorswim.co.za/
The promulgation of two critical acts namely the Consumer Protection Act and the New Companies Act does change everything we know about corporate and business law in South Africa but even more over the more aggressive prosecution of the Employment Equity Act and the criminalisation of the Competitions Act is also set to make your life as company director more strenuous and just plain scary.
It is rumoured that the commission has been instructed to fine a minimum of 270 companies during 2010 for non compliance to the Employment Equity act and to prosecute aggressively whilst critics believe that the criminalisation of the competitions act will have extremely negative effects on business. Another portion of the New Companies Act is Section 6,Business Rescue and Compromise with creditors, and I am off the opinion that it will have a massive impact, at least in the short term, on the credit environment in South Africa. Where does this leave company directors?
Simply it places a huge burden on company directors and officers and does open them to a tsunami of potential litigation, regulatory fines and stakeholder scrutiny. Therefore I am of the opinion that Financial Advisors are going to play a more vital role in the daily business life of directors. In a recent “survey” done by Sink or Swim only 15% of the respondents have a trusted and active relationship with a financial advisor. Similarly in a couple of phone calls to brokers it became apparent that they do not offer nor understand business and intangible insurance products that they require.
Now the important questions that we need to answer is, can I as a financial advisor be held liable if my clients business is not properly insured for these risks? Is it the prudent move to avoid the issue? Am I ready for the changes? Financial Advisors already have a tough time with the need to comply to FICA, POCA, FAIS and soon the consumer protection act. How will this impact your business and the inherent risk that you take in your daily activity.
To find out more about the New Companies Act and the Consumer Protection Act visit http://www.sinkorswim.co.za/
Thursday, September 10, 2009
Consumer Protection Bill and the Services indusrty
The Consumer Protection Bill will set the benchmark in responsible marketing for service providers in South Africa.
The consumer protection Act, due to be promulgated in October 2010 in South Africa, is aimed at setting a national benchmark for high standards of marketing and responsible sales and advertising. The act affords a myriad of protections to the consumer with a strong emphasis on the previously disadvantage participants that have been exploited by some business sectors.
Companies providing service to the public have to start now to get themselves in line with the new Act as the consequences of not being in line could be dire.
The consumer protection Act, due to be promulgated in October 2010 in South Africa, is aimed at setting a national benchmark for high standards of marketing and responsible sales and advertising. The act affords a myriad of protections to the consumer with a strong emphasis on the previously disadvantage participants that have been exploited by some business sectors.
Companies providing service to the public have to start now to get themselves in line with the new Act as the consequences of not being in line could be dire.
Just some important provisions in the act for service providers
- A contract would be interpreted in favour of the consumer, in the event of ambiguity allowing for more than one reasonable interpretation. Although this reflects the existing law, it is now an unalterable right.
- Any exclusion within the contract would be measured against whether a reasonable person in the position of the consumer would have expected such exclusion, taking into account the contract's contents, the manner in which it was presented and the circumstances around concluding it. Contract exclusions must to be drawn to the consumer's attention.
- Service Providers will not be allowed to take advantage of the fact that the consumer is unable to understand the terms of the contract being concluded with it as a result of either physical or mental disability, illiteracy, ignorance or inability to understand the language of the contract.
- The Terms of the contract may be ruled as unfair, unjust or unreasonable if they are excessively one sided, contain terms so adverse to the service provider as to be inequitable, or if the consumer was misled by the service provider company.
The terms of the contract must be in writing and in plain language (see definition of plain language at bottom).
In conclusion, the New Companies Act places a huge responsibility on service providers to act responsibly with there consumers and to ensure that all contracts are easily understandable and properly explained.
To find out more about the New Consumer Protection Act visit www.sinkorswim.co.za for seminar dates.
Plain Language – In essence plain language means that you should write documents (advertising or other) in such a manner that it can be understood by the lowest potential target market.
Wednesday, September 9, 2009
King III Anounced
“Governance in the past was about board effectiveness, currently it is risk management whilst the future of governance is King III” Lindie Engelbrecht of IODSA (Institute of Directors South Africa).
On the 8th of September Webber Wentzel in association with IODSA gave us a brief overview on the newly launched King III and the methodology and mindset behind creating it. The two most powerful messages, in my humble mind, was the fact that King III has taken an “apply or explain” approach and the fact that we in South Africa will now enter into an “All inclusive stakeholder environment”. The key question is was does this mean.
Apply or explain effectively destroys the “tick the box” concept as was the norm in compliance and governance. This change in mindset from “do or else” is definitely an aim at giving governance a more positive approach. The part that I personally enjoyed the most was the fact that it now forces company officers and directors to actually think about every aspect of King III in their compliance. Thus not comply or explain, but the apply your mind and explain what and how you did it.
It is international standards that all stakeholders in companies are regarded as important in the business. However the shareholders rights come first !!! The New Companies Act changes that all together. All stakeholders are now equal and their rights are protected in line with Constitution and the Bill of Rights.
Overall King III is not only a new international benchmark in corporate governance but also a progressive look at responsible directorship and elevating the position of directors into a more and more professional world.
Fore more information about King III and The New Companies Act please visit www.sinkorswim.co.za
On the 8th of September Webber Wentzel in association with IODSA gave us a brief overview on the newly launched King III and the methodology and mindset behind creating it. The two most powerful messages, in my humble mind, was the fact that King III has taken an “apply or explain” approach and the fact that we in South Africa will now enter into an “All inclusive stakeholder environment”. The key question is was does this mean.
Apply or explain effectively destroys the “tick the box” concept as was the norm in compliance and governance. This change in mindset from “do or else” is definitely an aim at giving governance a more positive approach. The part that I personally enjoyed the most was the fact that it now forces company officers and directors to actually think about every aspect of King III in their compliance. Thus not comply or explain, but the apply your mind and explain what and how you did it.
It is international standards that all stakeholders in companies are regarded as important in the business. However the shareholders rights come first !!! The New Companies Act changes that all together. All stakeholders are now equal and their rights are protected in line with Constitution and the Bill of Rights.
Overall King III is not only a new international benchmark in corporate governance but also a progressive look at responsible directorship and elevating the position of directors into a more and more professional world.
Fore more information about King III and The New Companies Act please visit www.sinkorswim.co.za
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