Run on Numbers: The Companies and Intellectual Property Commission’s mission
The annual report of the Companies and Intellectual Property Commission (CIPC) of South Africa for the 2021/22 financial year is published by National Treasury.
However, the CIPC is a division of the Department of Trade and Industry and Competition (DTIC), under the leadership of Minister Ebrahim Patel.
The CIPC is one of the few state institutions that received a clean audit report from the auditor-general. Interestingly, the CIPC is not a registered company, as per its annual report.
The annual report of the Companies and Intellectual Property Commission (CIPC) of South Africa for the 2021/22 financial year is published by National Treasury.
However, the CIPC is a division of the Department of Trade and Industry and Competition (DTIC), under the leadership of Minister Ebrahim Patel.
The CIPC is one of the few state institutions that received a clean audit report from the auditor-general. Interestingly, the CIPC is not a registered company, as per its annual report.
In his foreword, the minister stated: “At the start of the year under review, the Department introduced seven Joint Key Performance Indicators to guide the work of entities. The CIPC focused on: • Building a modern, world-class regulator; • Promoting the ease of doing business; • Strengthening its regulatory capabilities; and • Leveraging its networks and data to expand its impact and those of its partners.“
- This breakdown will specifically focus on whether the CIPC is making any progress in making it easier to do business in the country. In Notice 19 of 2023 issued to customers, the CIPC stated that it had deregistered 647 853 companies and closed corporations. The total number of registered companies was only 1 800 and therefore this is a ridiculously huge percentage to be removed from the books. To put the registered entities’ relevance in perspective one must also gauge them by their turnover, which for the year under review, totalled R658 million, of which R432m was from Annual Returns filed by respective businesses. Its relevance is far greater than what is indicated by this number, as its mission statement starts with “With partners, we make it easy to do business in SA”.
- With annual filings varying from as low as 42% to as low as 47% over the past 5 years there is a definite question mark about why there is such a low compliance ratio. One reason is that the South African Revenue Service (Sars) is interested in financial information for tax purposes, and from a company point of view, the additional requirement imposed by the CIPC seems superfluous and cumbersome. In addition, creditors and banks will require financial reports when called for. A company cannot trade under insolvent conditions, but this does not seem to be a function the CIPC regulates.
- Some of the numbers in the CIPC annual report that reflected an unhealthy economy and pointed to other areas of concern for the CIPC:
- The number of active business rescue proceedings is at 296, the highest in the past 10 years, with a low of 113 recorded a decade ago.
- There has been a downward trend in the co-operative’s registration numbers over the past five years, from a high of 12 748 to just 4 403 in 2020/2021.
- Company registrations declined in 2021/22 (469 983) compared to 2020/21.
- Trademark registration declined from 32 174 only 4 years ago to the latest number, 14 941.
- Patents registrations show a downward trend in the past five years, with a sharp increase from 2020/21 to 2021/22. There is no clear trend as the latest year merely caught up with the extremely low registrations during the Covid period.
4. In the past financial year, the CIPC has moved to the Inline eXtensible Business Reporting Language (iXBRL) platform. iXBRL is the open international standard for digital business reporting, managed by a global not-for-profit consortium, XBRL International. XBRL is used across the world, in more than 50 countries. Millions of iXBRL documents are created every year, replacing older, paper-based reports with more useful, more effective and more accurate digital versions. If ever there was an example of how digitisation could promote effectiveness, increase productivity and demystify work, this platform encapsulates it all.
iXBRL is the open international standard for digital business reporting. It is used to deliver human-readable financial statements in a machine-readable, structured data format. It also provides a language in which reporting terms can be authoritatively defined. The terms can then be used to represent the contents of financial statements or other kinds of compliance, performance and business reports. iXBRL lets reporting information move between organisations rapidly, accurately and digitally.
5. The CIPC, through a representative, participated in a meeting with the International Taxonomy Consultative Group. Some of the issues discussed included “Digital reporting implications for the Exposure Draft Disclosure Requirements in IFRS Standards – A Pilot Approach. Some notable high-profile companies under investigation include South African Post Office SOC, Communicare NPC, Denel SOC, Attacq, Cipla Medpro, and Nova Property Group. The international XBRL consortium is supported by a massive number (more than 600 -members) of organisations, from the private and public sectors. The standard has been developed and refined over more than a decade. It supports every kind of conceivable reporting method while providing a wide range of features that enhance the quality and consistency of reports, as well as their usability. Well-known accounting and auditing platforms make use of the standard such as SAP, QuickBooks, SAGE, and XERO.
The CIPC has a solid platform to work from. One can only hope that they reinstate all of the 647 853 companies that it has de-registered since many of the companies did not receive notification of the impending de-registration. This can easily happen as, for example, company’s email address submitted years ago may have changed. The CIPC needs to communicate its function and bring it to the attention of the broader public for any employee of a company to understand their respective reporting roles as despite platforms, it remains people who populate the input data.
* Kruger is an independent analyst
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