It just got a whole lot easier to do business in SA

New web platform makes it possible to register a company in minutes.
CIPC Commissioner Rory Voller says the launch of BizPortal will go a long way to improving the ease of doing business in SA. Image: Supplied

A little nugget of good news got drowned out by the depressing economic news of the last few weeks: SA is getting serious about making itself more attractive to do business.

In terms of the ease of doing business, SA has been in freefall for the last decade. It currently ranks 84 out of 190 countries in the World Bank’s Ease of Doing Business survey, having fallen from 34th a decade ago. Other African countries such as Kenya (56th place) and Rwanda (38th) have sailed past us. New Zealand, Singapore and Hong Kong are the most congenial countries for ease of doing business, occupying the top three slots in the rankings.

Read: Togo, Nigeria big winners in ease of doing business in Africa

SA is determined to muscle its way back into the Top 50 rankings.

The Companies and Intellectual Property Commission (CIPC) recently launched its BizPortal online platform which allows anyone to open a company in minutes for R175.

At the same time they can:

  • Register with the South African Revenue Service (Sars)
  • Open a business bank account
  • Get registered with the Unemployment Insurance Fund (UIF)
  • Get registered with the Compensation Fund, and
  • Get a B-BBEE certificate.

All of this takes just one day, without having to join a single queue.

Finance Minister Tito Mboweni trumpeted the launch of the new service in last week’s budget speech as part of a broader programme to address SA’s lagging international productivity. CIPC Commissioner Advocate Rory Voller says the launch of BizPortal will go a long way to improving the ease of doing business in SA.

BizPortal is able to achieve in hours what previously took weeks or even months.

It does this by linking up with databases hosted by the departments of home affairs and labour as well as Sars and other data providers.

For example, the Department of Home Affairs database is able to verify the identity of new company directors, or changes to existing directors. Previously, this had to be done by joining a queue and lodging documents at the CIPC offices around the country.

The CIPC was set up under the Companies Act to monitor and enforce compliance with the act and establish regulations aimed at reducing the risks of doing business in SA. It took over the functions of the old Companies and Intellectual Property Registration Office (Cipro), which earned a deserved reputation as a ‘black hole’ for losing company registration documents.

Mammoth task

The CIPC has a mammoth task to perform. There are two million companies in SA that are required to submit their annual financial returns to the commission each year. The majority of these are smaller companies for which audited financial statements are not required. A so-called ‘independent review’ by an accounting officer is sufficient for most of them. An independent review offers a lower level of assurance on financial statements than an audit, and can be compiled by an accounting officer rather than an auditor.

One of the main functions of the CIPC is to monitor company solvency and liquidity. In terms of the Companies Act, businesses may not trade in a commercially insolvent position (where a company has insufficient cash to pay its bills). Companies may be technically insolvent (where liabilities exceed assets) but are still able to pay their bills when they fall due.

Read: Irba reports Nova to Sars and CIPC

The CIPC is in the process of analysing the roughly 20 000 company financial statements received each year to achieve a detailed understanding of the country’s economic drivers, then making this available for a fee to the public.

In 2017 the CIPC announced that all companies would have to fill out a 24-question checklist to monitor compliance with the Companies Act, but last week decided to ditch the compliance checklist for smaller companies after lobbying from the accounting sector.

“There was an outcry from certain groups that this would add to the regulatory burden for smaller companies, and we decided this was not in the best interests of promoting the ease of doing business in SA,” says Voller.

“We understand that there is a cost to companies of complying with regulations, and this can be quite substantial for smaller businesses. We don’t want to be adding unnecessarily to these costs.”

Voller expects the launch of BizPortal and the relaxation of compliance obligations on smaller businesses to improve SA’s international ranking for the ease of doing businesses.

The World Bank’s Ease of Doing Business rankings are based on a range of factors, many of them outside the control of the CIPC, such as:

  • The ease of obtaining electricity connections and registering a property
  • The level of taxes payable and the costs of preparing tax returns
  • The ease of trading across borders
  • The efficiency of contract enforcement, and
  • The speed and cost-efficiency of resolving bankruptcies.

Voller says the CIPC has not completely shut the door on introducing a compliance obligation for smaller businesses in future, but if any such obligation is introduced, it will be far simpler and less costly than the 24-question list.

Voller was one of the drafters of the amended 2008 Companies Act, which has been hailed as among the best in the world.

Read: Companies regulator charges KPMG, McKinsey, SAP

Another proposed amendment in the works will require companies to disclose their beneficial ownership. This is something the Guptas exploited to the maximum, often hiding their beneficial ownership in offshore trusts and complex corporate structures.

 

Get access to Moneyweb's financial intelligence and support quality journalism for only
R63/month or R630/year.
Sign up here, cancel at any time.

AUTHOR PROFILE

COMMENTS   10

Sort by:
  • Oldest first
  • Newest first
  • Top voted

You must be signed in to comment.

SIGN IN SIGN UP

Awesome. A step in the right direction! Keep it up. We must get to the top 10. Why not number 1

Have they gotten rid of the B-BBEE requirements? And all the other stuff businesses must put up with?

I simply hope that this new innovation has been thought through thoroughly… I see dire unintended consequences down the line… Making easier should not mean laissez-faire. For one, I see the number of companies registered with CIPC shooting up by a 100 times the population of the country (5.5 billion companies registered)with less than 0.0001% actually trading or doing any viable business… Even a street hawker will be a company… What an administrative nightmare.

Apparently small companies do not have to lodge BBBEE reports anymore.

So, in effect BBBEE has been scrapped for small companies.

No it hasn’t. If a small company wants to do business with a large company it will still need to provide a statement of it’s BEE compliance (for the larger company to benefit from procurement recognition).

For BBBEE reports if your turnover is less than R10M an affidavit will suffice.

Yes, it became easier to walk into the ambush. They just camouflaged one of the trip-wires. It is easier to register a company. Once you’ve done that, you have entered the ambush.

Now, they will plunder your equity and management powers through BEE requirements. They will plunder your profitability through the Mining Charter and local beneficiation requirements. You will fund cadre deployment and the tripartite alliance through fees to inefficient and bankrupt SOEs. You will pick up the bill for unproductive and militant union members who are bribed with your money to vote for the ANC. They will extort redistributive rates and taxes from you in the bankrupt municipalities that do not deliver any services. They will syphon off your cash flow to support BEE companies with supply contracts at SOEs. Every person with political connections will be relying on your business-model for their personal cash flow.

They will use your taxes to compete with you in the business environment. You will basically be funding your largest competitor, the government. You will even be required to buy the bonds to fund SOEs. They will enable the construction mafia and zamma-zammas to loot your business while you are trying to make a living. These ANC-enabled looters are like the wild dogs that tear chunks of flesh off the wild animal they are chasing. This takes place within clear sight of Luthuli House.

Then, If you manage to turn a profit, they will expropriate it through the high company tax. If you manage to build equity they will confiscate it through Capital Gains Tax and estate duties. They will take your pension fund to bail out your competition if you are generating electricity or running an airline.

If you own a business in South Africa, you are a slave to Luthuli House. A business owner is an employee who is on duty for 24 hours per day, a slave without payment, without leave, no sick leave, no pension fund and no severance package.

Thank you, but no thank you. A CIPC portal won’t fool me!

Are you saying you’d prefer to earn your keep through formal employment where you are a slave to someone who might retrench you at the drop of a hat? (And are in any event a “slave to Luthuli House” if you earn a taxable income). Or are you saying that all private enterprise should cease because the ANC can’t keep its fingers out of the till?

Your comments are usually thoughtful and well-argued, but this time you seem to have pressed ‘Post’ before you had finished editing.

Thank you, Rob. I am saying that if you are a capitalist, a business owner, you are in the wrong place. A South African entrepreneur with an excellent business model is like a person who is trying to find his way in Chicago, while he is holding a map of New York. For the same amount of effort and risk, the entrepreneur will build ten times the amount of equity in a country that respects property rights. South Africa is the most socialist state on earth that is not in hyper-inflation territory yet. Businesses are moving offshore because this socialist government is stealing their equity. International investors are looking for opportunities elsewhere. They realise that the ANC policies are stealing their equity to buy votes. They don’t want to support socialism.

I am saying that we need free-market capitalism and the rule of law to enable entrepreneurs to build the economy. In the current environment, with the current economic system, very few business models are viable and no job in any sector is secure. Zimbabwe has an unemployment rate of 90%. We are heading in that direction.

Take a look at the local listed property sector relative to the USA property sector, or the JSE Industrial Index relative to the Dow Jones Industrial Index. How do you explain the 44% underperformance in Dollar terms? The money they steal is the least of the damage this government does to our economy. We are losing much more due to their socialist policies.

Cosmetic changes, at best.

From the article:

“In 2017 the CIPC announced that all companies would have to fill out a 24-question checklist to monitor compliance with the Companies Act, but last week decided to ditch the compliance checklist for smaller companies after lobbying from the accounting sector.”

And a few paragraphs further down:

“Voller says the CIPC has not completely shut the door on introducing a compliance obligation for smaller businesses in future, but if any such obligation is introduced, it will be far simpler and less costly than the 24-question list.”

They just can’t help themselves.

Fairy tale stuff.Not in Africa.

End of comments.

LATEST CURRENCIES  

USD / ZAR
GBP / ZAR
EUR / ZAR

Podcasts

NEWSLETTERS WEB APP SHOP PORTFOLIO TOOL TRENDING CPD HUB

Follow us:

Search Articles:Advanced Search
Click a Company: