Plain Language is now a requirement under the National Credit Act, The Consumer Protection Act as well as the Companies Act of 2008. The only problem is that the definition, as contained in these acts, are in anything but plain language. Although writing a document in plain language sounds incredibly simple, it is however not that simple.
All South African Banks made a commitment to distribute their documents in plain language years ago, with a self imposed target for October 2000. Now not to venture a guess, but I dont get my correspondence in what I term as plain language. So why is it so difficult to write a document in plain language?
Well firstly lets look at the authors, and lets face facts most of them are legal professionals. From the first day at varsity they get taught to write all there documents in Legal English (a sepreate subject for your LLB). This is basically to teach students to write in "high" language and to create ambigious statements, allowing multiple interpretations. So is it our tertiary education system letting us down or is it the ego of our legal profession? I will leave that decision up to you.
That said the important thing that all of us must recognise is that Plain Language correspondence is no longer a mere virtue. It is a requirement in terms of 3 seperate pieces of legislation. This changes the ball game dramitacally within the corporate business world.
S0 I would like to humbly request the legal profession, tertiary eduction services and business owners to focus correspondence and training to write correspondece towards plain language. Paying a fine, having a contract rescinded or losing accreditation is just not worth looking clever in my mind.
Tuesday, November 3, 2009
Friday, October 16, 2009
Ignorance or Ignoring
King III, the good for proper corporate governance, was published on the 1st of September 2009 and the codes apply to all entities. This is very different to the old King I and King II reports that was only applicable to public or listed entities. The question I however want to ask today is whether the property syndication industry are working along these ethical guidelines.
I firmly believe that they are probably not. This, to me, is evident from the constitution and guidelines of the Public Property Syndication Association (PPSA) that does not mention compliance to any of these codes. Two of the syndication companies I have had dealings with namely Blue Everest Investments and City Capital (Capital Investments), both of which are now defunct never conformed to King I or King II and it did directly apply to them as public companies. Further the Financial Services Board (FSB) also does not mention it at all as one of the 1.8 licence requirements.
Now the next question we have to ask is why? Is it ignorance or just ignoring it. Is it because the cost of compliance is excessive? Well before you answer that question for yourself, let’s look at why compliance to these codes are, at least in my opinion, important.
The King reports are all about conducting an ethical and transparent business. It is about disclosing all the facts to all stakeholders, giving access to required information, it is about accountability of company directors, it is about thinking of others. The codes also places strong emphasis on independent directorship and active shareholder participation. In conclusion it is about playing open transparent cards and honest commentary to everyone involved and respected writers like Bruce Cameron and Deon Basson has been claiming that is the last thing that they are doing.
Now that you have some information to make up your own mind on why the property syndication industry may not be applying these codes let’s focus on being active in demanding the application of the codes. Financial Advisors, Regulators and the public in general should demand the application of King III in all syndicated companies and fractional ownership schemes so that we insure that it is not avoided by ignorance. This will then make it extremely clear which promoters is ignoring ethical, transparent and honest business practices.
If you want to find out more about King III, the New Companies Act or the Consumer Protection Act visit http://www.sinkorswim.co.za/ or contact john@sinkorswim.co.za
I firmly believe that they are probably not. This, to me, is evident from the constitution and guidelines of the Public Property Syndication Association (PPSA) that does not mention compliance to any of these codes. Two of the syndication companies I have had dealings with namely Blue Everest Investments and City Capital (Capital Investments), both of which are now defunct never conformed to King I or King II and it did directly apply to them as public companies. Further the Financial Services Board (FSB) also does not mention it at all as one of the 1.8 licence requirements.
Now the next question we have to ask is why? Is it ignorance or just ignoring it. Is it because the cost of compliance is excessive? Well before you answer that question for yourself, let’s look at why compliance to these codes are, at least in my opinion, important.
The King reports are all about conducting an ethical and transparent business. It is about disclosing all the facts to all stakeholders, giving access to required information, it is about accountability of company directors, it is about thinking of others. The codes also places strong emphasis on independent directorship and active shareholder participation. In conclusion it is about playing open transparent cards and honest commentary to everyone involved and respected writers like Bruce Cameron and Deon Basson has been claiming that is the last thing that they are doing.
Now that you have some information to make up your own mind on why the property syndication industry may not be applying these codes let’s focus on being active in demanding the application of the codes. Financial Advisors, Regulators and the public in general should demand the application of King III in all syndicated companies and fractional ownership schemes so that we insure that it is not avoided by ignorance. This will then make it extremely clear which promoters is ignoring ethical, transparent and honest business practices.
If you want to find out more about King III, the New Companies Act or the Consumer Protection Act visit http://www.sinkorswim.co.za/ or contact john@sinkorswim.co.za
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/
Friday, September 11, 2009
The New Companies Act opens opportunity for Financial Advisors
The New Companies Act, due to be promulgated in 2010, is changing the face of corporate business in South Africa and as we all know change brings opportunity. The aim of the act is to modernise and streamline current outdated legislation as well as promoting good corporate governance in association with King III which is now applicable to all entities.
The New Act also places a very strong emphasis on continuity planning and liquidity of a company as well as allowing stakeholder scrutiny for the extraction of capital from a company. This places a much larger emphasis on company insurances and company investments.
Insurance: Traditionally people insure tangible items a lot easier than the intangible ones. Although the act does not radically change the role of directors it does bring to the forefront the roles and responsibilities. “New” needs that will be more evident to directors will for example be Key Man insurance, Litigation Insurance and Contingent Liability Insurance. Business Rescue will also make directors view Credit Insurance with a much more positive view.
Investments: Traditional investment products will now also play a much stronger role in the mind of the smaller business owners as items like deferred compensation for key management and staff as well as capitalisation plans will be taken a lot more seriously.
Whilst The Consumer Protection Act will place more pressure on brokers and insurers the New Companies Act opens up a more responsible client to the insurance broker.
To learn more about the New Companies Act and King III visit www.sinkorswim.co.za
The New Act also places a very strong emphasis on continuity planning and liquidity of a company as well as allowing stakeholder scrutiny for the extraction of capital from a company. This places a much larger emphasis on company insurances and company investments.
Insurance: Traditionally people insure tangible items a lot easier than the intangible ones. Although the act does not radically change the role of directors it does bring to the forefront the roles and responsibilities. “New” needs that will be more evident to directors will for example be Key Man insurance, Litigation Insurance and Contingent Liability Insurance. Business Rescue will also make directors view Credit Insurance with a much more positive view.
Investments: Traditional investment products will now also play a much stronger role in the mind of the smaller business owners as items like deferred compensation for key management and staff as well as capitalisation plans will be taken a lot more seriously.
Whilst The Consumer Protection Act will place more pressure on brokers and insurers the New Companies Act opens up a more responsible client to the insurance broker.
To learn more about the New Companies Act and King III visit www.sinkorswim.co.za
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