(CIPC) Strategy 2013 - 2018

STRATEGY 2013 - 2018

COMPANIES & INTELLECTUAL PROPERTY COMMISSION

CIPC STRATEGY 2013 – 2018 ‘COURSE CORRECTION AND OPTIMISATION!’ 2

TABLE OF CONTENTS

Table of Contents

Acronyms ................................................................................................................................. 3

FOREWORD BY THE EXECUTIVE AUTHORITY ............................................................................. 4

1. INTRODUCTION ................................................................................................................. 6

2. CIPC’S STRATEGIC INTENT .................................................................................................. 9 2.1 Vision .................................................................................................................................................................................. 9 2.2 Mission ............................................................................................................................................................................... 9 2.3 Corporate Values ............................................................................................................................................................ 9

3. Legislative and OTHER mandateS ..................................................................................... 10 3.1 CIPC’S LEGISLATIVE Mandate ................................................................................................................................... 10 3.2 The Policy context ....................................................................................................................................................... 12

4. SITUATIONAL ANALYSIS ................................................................................................... 15 4.1 performance environment ....................................................................................................................................... 16 4.2 organisational environment ..................................................................................................................................... 23

5. CUSTOMER NEEDS AND EXPECTATIONS ........................................................................... 26

6. THE CUSTOMER VALUE PROPOSITION ............................................................................. 30

7. cipc’s business model ...................................................................................................... 31

8. strategic planning process ............................................................................................... 35

9. STRATEGIC goals .............................................................................................................. 35

10. STRATEGIC OBJECTIVES ................................................................................................ 36 10.1 PROGRAMME 1: BUSINESS REGULATION AND REPUTATION ....................................................................... 36 10.2 PROGRAMME 2: innovation and creativity promotion ................................................................................... 37 10.3 PROGRAMME 3: service delivery and access ..................................................................................................... 37

11. resource considerations ............................................................................................... 41 11.1 ASSUMPTIONS .............................................................................................................................................................. 41 11.2 Projected expenditure by programme ................................................................................................................. 44 11.3 Projected revenue ....................................................................................................................................................... 45

12. LINKS TO THE LONG-TERM INFRASTRUCTURE AND OTHER CAPITAL PLANS ................... 46



ACRONYMS

Abbreviation Description

CC Close Corporation

CIPC Companies and Intellectual Property Commission

CIPRO Companies and Intellectual Property Registration Office

CIT Corporate Identity Theft

DAC Department of Arts and Culture

DHET Department of Higher Education and Training

DIRCO Department of International Relations and Cooperation

DST Department of Science and Technology

IK Indigenous Knowledge

IP Intellectual Property

IPAP Industrial Policy Action Plan

MoU Memorandum of Understanding

MTEF Medium Term Expenditure Framework

MTSF Medium Term Strategic Framework

NDP National Development Plan - 2030

OCIPE Office of Companies and Intellectual Property Enforcement

SARS South African Revenue Service

the dti The Department of Trade and Industry

WIPO World Intellectual Property Organisation

WTO World Trade Organisation

Note: Customer is spelled with a capital C throughout the document to highlight the new focus of CIPC on Customer Service and Excellence.



FOREWORD BY THE EXECUTIVE AUTHORITY

‘The National Development Plan is a plan for the country to eliminate poverty and reduce inequality by 2030 through uniting South Africans, unleashing the energies of its citizens, growing an inclusive

economy, building capabilities, enhancing the capability of the state and leaders working together to solve complex problems.’

National Planning Commission

The South African economic environment has in recent years been severely impacted by the global economic downturn. This has lead to the loss of jobs on an unprecedented scale, many of these jobs in South Africa’s already fragile manufacturing sector. Through the New Growth Path and the National Development Plan, government will positively address many of the challenges and opportunities facing our country. The dti’s primary purpose in supporting government’s overall strategy is to ‘Create Decent Employment through Inclusive Economic Growth’. Through this we aim to contribute to the New Growth Path’s target of creating 5 million decent jobs by 2020, whilst simultaneously raising the growth rate and reducing inequality. All of this would be wishful thinking if we did not purposefully develop an efficient, enabling environment that balances good governance and effective regulation with the economic flexibility that allows business to flourish. The Companies Act, 2008 (Act 71 of 2008) establishes a modern enabling environment for companies. It creates a forward-looking regulatory framework that provides for simple, easy company registration, enhanced governance and clarity on disclosure standards for businesses. While the law creates the framework and the instruments, its implementation is largely in the hands of the institutions established by the Act, namely the Companies and Intellectual Property Commission, the Companies Tribunal, the Takeover Regulation Panel and the Financial Reporting Standards Council. In order to achieve the objectives of the Companies Act, 2008, it is imperative that the world-class legislation is matched by world-class implementation. The Companies and Intellectual Property Commission (CIPC) was established in May 2011. Although a new entity, CIPC incorporated the former Companies and Intellectual Property Registration Office (CIPRO) and a unit in the dti’s Corporate and Consumer Regulation (CCRD) division, namely the Office of Companies and Intellectual Property Enforcement (OCIPE). In today’s globalized, hypercompetitive economy, a nation’s wealth is significantly influenced by its business activity, the economic inclusion of its citizens as well as its’ level of innovation, as measured by the Intellectual Property that is developed and registered by its citizens. CIPC therefore has another important element to its mandate. It administers, regulates and protects South Africa’s Intellectual Property assets in accordance with the provisions of a range of legislation enacted over a number of decades. Creating an enabling environment for Intellectual Property has been the subject of much research and legislative reform and this process will continue to gain momentum in the next five years.



Since its inception, CIPC has faced many challenges. These have included ICT systems unable to cope with organisational requirements, a large backlog of company registration applications and an organisational culture that has been insufficiently oriented towards service delivery. In its first year of operation the CIPC has focused on addressing these challenges and should be congratulated on the successes it has achieved. Company registration backlogs have been eradicated, business processes have been innovated, IT systems have been stabilized and enhanced and service standards were successfully implemented. These initiatives have all contributed to establishing a solid foundation for the world-class implementation of the Companies Act, 2008 as well as the other laws it administers. ‘The National Development Plan aims to eliminate poverty and reduce inequality by 2030. South Africa can

realize these goals by drawing on the energies of its people, growing an inclusive economy, building capabilities, enhancing the capacity of the state, and promoting leadership and partnerships throughout

society.’ National Development Plan – 2030

CIPC is committed to contributing to the achievement of these goals. It too is drawing on the energies of its people, building sustainable institutional capacity and promoting partnerships, inside and outside of the public sector. It has reviewed its corporate strategy, its operational model, culture, structure and strategic relationships. Initiatives are underway to further grow and develop the CIPC’s human capital. All of this will contribute significantly to the creation of an enabling environment to support the full implementation of all legislation that falls within the CIPC’s mandate. This Strategy sets out the journey that CIPC will embark upon over the period 2013 to 2018 to achieve world class implementation of the objectives set out in the Companies Act, 2008, and to provide an enabling and facilitative environment for entrepreneurship, investment and innovation in the broader South African society. It is in line with the dti’s objective of ‘Ensuring an economy that benefits all.’ I look forward to seeing the results of the implementation of this plan. __________________ Dr Rob Davies Minister of the dti

PART A: STRATEGIC OVERVIEW

1. INTRODUCTION

“Enabling private sector growth – and ensuring that poor people can participate in its benefits – requires a regulatory environment where new entrants with drive and good ideas, regardless of their gender or ethnic origin can get started in business and where firms can invest and grow, generating

more jobs.” (Janamitra Devan - World Bank-International Finance Corporation)

CIPC is engaged in a process of rapid, fundamental transformation. It is imperative for it to respond to the needs of its globalised, fast changing environment in order to both deliver value to its stakeholders and remain relevant to South Africa’s developmental and economic needs. This transformation process has to happen at the same time that CIPC delivers on its immediate imperatives - to implement a balanced regulatory regime and to serve its Customers efficiently and effectively.

In order to increase the scope of CIPC’s role in the economy (as envisaged in the Companies Act, 2008) and to play a meaningful role in the new legal dispensation impacting business entities and intellectual property in South Africa, CIPC identified, as one of its key priorities, the need to improve its credibility with Customers and other stakeholders. To give effect to this, four initiatives have been identified, namely:

Improving the reliability and integrity of the information in CIPC’s registries;

Improving the relevance and value of CIPC’s services to its Customers and stakeholders

Improving compliance with the laws that CIPC administers.

Demonstrate CIPC’s economic impact

Despite the challenges experienced since it was first established in May 2011, much progress has been made in addressing registration backlogs, poor employee morale and inefficient business operations. A strong foundation has been laid for CIPC to move forward with both confidence and pride. Through the introduction of on line registration of companies, it has commenced the process of enabling electronic transacting that will in time greatly improve operational efficiency, accuracy and Customer responsiveness. IT systems have been stabilised with improved functionality, greater security and enhanced bandwidth. This remains a priority focus for the CIPC going forward. Improved oversights and controls have lead to a marked reduction in the number of company hijackings experienced, although the CIPC remains vigilant in this regard. Business Rescue has also been successfully introduced and a number of entities are currently undergoing the Business Rescue process. Internally the CIPC has grown in confidence and competence with a better alignment of business processes resulting in improved workflow and greater efficiency. The administration of filing processes has been developed into one seamless, integrated process that supports and best meets Customer’s requirements. This has contributed to an improvement in the overall image and reputation of the organisation.



In line with the New Growth Path and National Development Plan – 2030, CIPC has established a foundation of commitments, beliefs and aspirations that underpins its work. These include that:

We are strongly committed to making a difference in South Africa’s economy. We believe that we can provide entrepreneurs and innovators with the efficient, world-class business entities and intellectual property vehicles they require to grow and leverage their assets and investments and to thereby contribute to sustained economic growth.

We believe that, through our regulatory activity and our focus on financial disclosures, good governance and brand management, we will contribute to building the global reputation of South African businesses for integrity, credibility and reliability. This will increase South Africa’s global competitiveness and enhance South Africa’s reputation as an attractive destination for capital investments.

We are committed to improving the governance environment by providing the investigations and enforcement action required to ensure compliance with the legislation that falls under our mandate.

We are committed to improving the quality and integrity of our data to ensure that our information can reliably guide investment decisions.

We will support our inventors, artists and indigenous communities through offering a basket of services. These will start with creating awareness around the opportunities that exist for protection of products that are the outcome of their innovation and creativity.

We will give effect to the new legislation by recording the indigenous knowledge of various communities across the country. We will embark on educational campaigns to ensure that beneficiaries know how to work with CIPC to record, register, maintain and protect their knowledge, inventions and art forms.

The current CIPC focus is around ‘optimisation and course correction’. Much has been done to ensure that CIPC has ‘caught up’ on the implementation of many of the core areas of focus within its mandate. In the coming strategic period CIPC will continue to invest in the development of its people and in providing the tools and the enabling environment required to deliver high performance. Today’s data intensive, round the clock, globalised business environment requires the appropriate technology investments that allow for intelligent work, informed decision making and seamless, engaging, satisfying and consistent Customer experiences. CIPC is carefully evaluating the investments that will be required, as well as the strategic partnerships that will assist it in delivering on its strategic objectives. CIPC recognizes that it will achieve its goal of organisational excellence over time and that the journey will be based on consistent and continuous improvement in its service delivery and product offering. In the next phase of its strategic journey, CIPC will focus on:

Encouraging good governance and credible corporate citizenship through the continued issuing of compliance certificates to entities that meet the set criteria. The certificate could potentially be used



as a single source for integrated financial statements, BBE status, tax and other forms of compliance evaluation and reporting.

Significantly expanding its compliance monitoring functions. Education and awareness will be primarily focussed on creating a culture of compliance, greater transparency and higher standards of corporate conduct.

Through focused strategies, education and partnership initiatives with other enforcement agencies, CIPC will focus on the protection of important assets such as intellectual property products and brands from being misappropriated.

Improving its direct services to Customers through a number of channels – a Call Centre which has been reorientated to ensure timely call answer and high resolution rates, private and public sector partnerships and enhanced access to services through facsimile transmission and e-mailing facilities

Implementing the CIPC organisational structure through matching of people with positions and the implementation of a Human Resource strategy and competency framework.

Implementing a programme to develop teams and teamwork

Expanding collaboration and co-operation with other regulators and government agencies such as SARS, NIPMO etc

Developing a research capability to better understand the needs of companies and other entities and to identify the underlying reasons, challenges and opportunities presented by registration and de-registration

This focused action agenda will build a strong foundation for the CIPC to contribute to the achievement of the National Development Plan’s Vision 2030 and to the overall transformation of the South African economy.



2. CIPC’S STRATEGIC INTENT

2.1 VISION

The Vision of CIPC is to be the gateway to sustainable formal economic participation and investment for

all in South Africa.

2.2 MISSION

The Mission of CIPC is to unlock value in businesses and intellectual property by:

Providing easy, accessible and value-adding registration services for business entities, intellectual

property rights holders and regulated practitioners;

Maintaining and disclosing secure, accurate, credible and relevant information regarding business

entities, business rescue practitioners, corporate conduct and reputation, intellectual property rights

and indigenous cultural expression;

Increasing awareness and knowledge of company and intellectual property laws, inclusive of the

compliance obligations and opportunities for business entities and intellectual property rights holders

to drive growth and sustainability, as well as the knowledge of the actual and potential impact of

these laws in promoting the broader policy objectives of government;

Taking the necessary steps to visibly, effectively and efficiently monitor and enforce compliance

with the laws that CIPC administers.

2.3 CORPORATE VALUES

As an important cornerstone of desired culture, an agreed set of values was developed through consultation and engagement with all relevant organisational stakeholders. These values will inform the behaviour of CIPC’s employees going forward. The following core values will inform every aspect of CIPC’s work to ensure that it delivers a better service to entrepreneurs, innovators and creators:-

Table 1: CIPC values

Value What it means

Passion for service We work as one to seamlessly serve our customers with passion, commitment and dedication.

Integrity We live out fairness, impartiality and respect in all of our actions as individuals and as an organisation.

Empowerment We recognize the value of our employees and partners and provide them with the discretion and tools to effectively deliver on their responsibilities.

Accountability We hold one another accountable for our commitments. We are responsible and responsive in the execution of our duties.

Collaboration We believe in the power of teams, teamwork and collaborative effort to deliver exceptional service and to execute our duties effectively.



3. LEGISLATIVE AND OTHER MANDATES

3.1 CIPC’S LEGISLATIVE MANDATE

CIPC administers all or parts of fifteen (15) pieces of legislation relating to corporate and intellectual property regulation. Its mandate encompasses companies, close corporations, co-operatives, trade marks, patents, designs, aspects of copyright legislation and enforcement of rules and regulations in most of these areas of law. CIPC’s primary institutional mandate is derived from the Companies Act, 2008, which establishes CIPC as a juristic person.

Table 2 summarises the legislative mandate of CIPC in terms of each law it administers. The table also indicates the sectoral application, if any, of the administered law.

Table 2: Summary of the legislative mandate of CIPC

Legislation Mandate Sector

Companies Act, No 71 of 2008 Register companies, business rescue practitioners and corporate names, maintain data, regulate governance of and disclosure by companies, accredit dispute resolution agents; educate and inform about all laws, non-binding opinions and circulars, policy and legislative advice

Economy-wide

Close Corporations Act, No 69 of 1984

Maintain data, regulate governance of and disclosure by close corporations

Economy-wide

Co-operatives Act, No 14 of 2005

Register co-operatives, maintain data, regulate governance of and disclosure by co-operatives

Economy-wide

Share Block Control Act, No 59 of 1980

Regulate conduct and disclosure by share block schemes

Economy-wide

Consumer Protection Act, No 68 of 2008

Register business names Economy-wide

Trade Marks Act, No 194 of 1993

Register trade marks, maintain data, resolve disputes Economy-wide

Merchandise Marks Act, No 17 of 1941 (Unauthorised Use of State Emblems Act, No 37 of 1961)

Prevent and enforce the unauthorised use of state emblems

Economy-wide

Patents Act, No 57 of 1978 Register patents, maintain data, publish patent journal, administer Court of Commissioner of Patents

Economy-wide

Designs Act, No 195 of 1993 Register designs, maintain data, resolve disputes Economy-wide

Copyright Act, No 98 of 1978 Provide non-binding advice to the public Creative industries



Legislation Mandate Sector

Registration of Cinematography Films Act, No 62 of 1977

Register films, maintain data Film industry

Performers Protection Act, No 11 of 1967

Accredit Collecting Societies; regulate their governance, conduct and disclosure

Music industry

Intellectual Property Laws Amendment Bill of 2010

Record and register IK, administer the National Trust and Council for IK, accredit dispute resolution agencies

Creative industries

Counterfeit Goods Act, No 37 of 1997

Conduct and co-ordinate search and seizure operations, oversee depots

Economy-wide

South Africa is a member of a number of important Treaties and Agreements and ensuring compliance with South Africa’s obligations in terms of these Treaties or Agreements. CIPC administers these treaties on behalf of South Africa. These Treaties and Agreements include the:

Paris Convention;

Patent Co-operation Treaty;

Berne Convention;

Budapest Treaty; and the

TRIPs Agreement.

It is anticipated that South Africa will conclude accession to the Hague Agreement and the Madrid Protocol in the near future, which will require of CIPC to administer those Treaties as well. CIPC therefore has a substantial legislative compliance role in diverse areas of law. The mandate can be summarized as the registration of corporate entities, the protection of their identity and reputation and the regulation of their conduct and disclosure, as well as the registration and protection of intellectual property rights. While registration is at the heart of the mandate, it must serve a higher purpose and contribute to the broader policy context. This is the challenge that has confronted corporate and intellectual property registries around the world, as many have struggled to remain economically relevant. For that reason, CIPC has paid particular attention to its policy context in order to gain an understanding of its broader mandate.



3.2 THE POLICY CONTEXT

CIPC derives its policy mandate from the policies of its responsible department, the dti. The key policies and strategies of the dti relevant for CIPC are: -

the dti Medium Term Strategic Plan 2011 - 2014;

Industrial Policy Action Plan 2012 – 2014;

Strategy on the Promotion of Entrepreneurship and Small Enterprise;

Corporate Law Reform Policy;

Policy on Indigenous Knowledge;

Co-operatives Development Policy for South Africa; and

Integrated Strategy for the Development and Promotion of Co-operatives. CIPC and its predecessors, CIPRO and OCIPE, are explicitly mentioned and considered in two of the dti policy documents, namely the Co-operative Development Policy of South Africa and the Corporate Law Reform Policy. As there are synergies between the legislative mandate of the CIPC and other policies and strategies of the dti, an opportunity presents itself for CIPC to define its role in enterprise development and industrial policy. CIPC identified key issues in the policies and strategies of the dti that are relevant to its mandate:

The need for employment creation and economic growth in a manner that is sustainable and encourages broad-based economic participation;

The emphasis on co-operatives as a vehicle for employment creation in marginalised areas and communities;

The need for commercialising South African research and development, with a particular emphasis on certain sectors identified in the IPAP2;

The importance of public and preferential procurement for enterprise and industry development;

The need to develop SA’s competitiveness by improving the ease of doing business, stimulation of entrepreneurship, sustainable corporate entities, transparency, integrity and high standards of corporate governance; and

The potential of indigenous knowledge and the need for its protection and commercialisation. CIPC further considered the broader policy environment created by the National Planning Commission and the Department of Economic Development as well as specific departments, whose work directly impacts on CIPC, namely the Department of Science and Technology (DST), the Department of Arts and Culture (DAC) and the Department of Agriculture (DoA). CIPC considered the following policies and strategies to inform its broader policy mandate: -

The New Growth Path;

The National Development Plan - 2030

The Ten Year Plan on Innovation;

Mzansi Golden Heritage: Contribution of the Arts, Culture and Heritage Sector to the New Growth Path; and

The Government MTSF 2009 - 2014. These policies and strategies create a broader policy environment for CIPC. Key issues have been identified that impact on our work:

The New Growth Path places emphasis on the ease of doing business, the sustainability of enterprises



and the development of a knowledge economy. It envisages that employment growth will result from the development of labour intensive sectors. These points are all directly relevant for CIPC.

The National Development Plan – 2030 promotes a plan of action across a broad front with three key priorities: o Raising employment through faster economic growth o Improving the quality of education, skills, development and innovation o Building the capability of the state to play a developmental, transformative role

CIPC contributes to all three of these priority areas. By improving the ease of doing business in South Africa through fast, efficient, integrated registrations and other value-adding services, the CIPC can directly impact the speed of economic growth. Through promoting and protecting Intellectual Property, CIPC contributes to a culture of innovation. Through effective, well-balanced regulation and the promotion of good governance, CIPC contributes to strengthening the state’s transformative role in achieving an inclusive, equitable society

The Ten Year Innovation Plan highlights the need for the development and exploitation of South African innovations - ‘converting ideas into economic growth’ – and the potential of certain sectors in promoting a knowledge economy, such as green technologies, agriculture, pharmaceuticals and business processing. The Plan further mentions the potential of indigenous knowledge and its exploitation as a way to benefit communities, especially in respect of medicines and indigenous cultural expressions.

The Mzansi Golden Heritage policy document by the Department of Arts and Culture (DAC) considers the contribution that the Arts, Culture and Heritage Sectors could make to the New Growth Path, in particular with respect to employment creation. IPAP3 explicitly refers to the employment potential of cultural industries connected with the tourism industry. This is reinforced in the National Development Plan which stresses that ‘South Africa can offer unique stories, voices and products to the world. In addition, artistic endeavour and expression can foster values, facilitate healing and restore national pride.’ The DAC policy document, read in conjunction with the NDP, sets out a vision for the creative sector, including the development of the music industry. Given its roles and responsibilities in promoting and protecting IP, CIPC could make a major contribution in this area.

The Government Medium Term Strategic Framework, developed by the Minister in the Presidency responsible for Planning, emphasizes the need for Batho Pele and reliable, empathetic, respectful and efficient service delivery to the people of South Africa. Enhanced service delivery is particularly important to CIPC, given its legacy from CIPRO.

The broader policy context implies that CIPC should have a more explicit enterprise development focus on the one hand, and an industry development focus on the other, with particular attention to sectors such as the creative industries, green industries, pharmaceuticals and indigenous knowledge. The NDP stresses that ‘South Africa needs to sharpen its innovative edge and continue contributing to global scientific and technological advancement. This requires greater investment in research and development, better use of existing resources and more nimble institutions that facilitate innovation and enhanced co-operation between public science and technology institutions and the private sector.’ The role of CIPC would be to encourage registration of intellectual property relating to innovation and



creativity in South Africa from throughout Africa and from within SADC in particular. It would also be to facilitate the development and exploitation of those rights by making rights holders aware of the opportunities, and by establishing strategic partnerships with relevant institutions in the public and private sector. In this way, government’s investment in public sector research can be strengthened and safeguarded.



4. SITUATIONAL ANALYSIS

While the legislative and policy mandate of CIPC establishes the foundation for its strategy, other factors that impact on its environment also need to be considered. These include the impact of the economic environment on the demand and need for its services, customer needs and expectations, opportunities that exist, as well as local and international trends that influence the manner in which its mandate is executed. CIPC’s strategy and plans have to be understood within the broader global context impacting on investors and businesses. The strategic environment within which CIPC finds itself is defined by a number of issues, including:

The deepening global financial crisis – our major trading partners’ economies are in recession, the future of the Eurozone remains uncertain, a climate of austerity is prevalent. This all has resulted in a slowdown in investment and trade. Scandals such as the fixing of the LIBOR rate have also resulted in an increased scrutiny of corporate governance practices;

The economic slowdown in South Africa – this has increased the number of companies that have filed for bankruptcy and de-registration. The CIPC’s role in Business Rescue will need to continue to develop and the impact of the de-registration process on other government agencies such as SARS will need to be mitigated

Importance of effective regulation reinforced – CIPC is both a service provider and a regulator. There is a need to strengthen CIPC’s regulatory role with the acquisition of the appropriate intelligence, risk analysis and mitigation and enforcement competencies. The CIPC has developed a culture of responsiveness to the needs of its Customers. This focus must not allow it to become subservient to the entities it regulates and must ensure that it avoids regulatory ‘capture’;

Emergence of knowledge and innovation as key strategic assets / differentiators for private and public sector organizations. Recent global court cases between Apple and Samsung have stressed the importance of IP as a significant business asset and have highlighted the high stakes involved in IP protection;

Intellectual property (IP) is viewed as key strategic asset at both business and national level. It is important to grow South Africa’s (SA) stock of IP and protect indigenous knowledge from exploitation. The CIPC works closely with WIPO to ensure that global IP standards are implemented in South Africa and that global best practice is reflected in the changing IP legislative and policy environment. An imperative for the CIPC is to attract the registration of IP from African countries, and in particular from countries within SADC;

An increased focus on enabling Co-operatives as a result of 2102 being ‘The Year of the Co-operative’, globally and in South Africa will result in the CIPC deepening its capacity to support Co-operatives in their establishment and governance

Ease of doing business is an important attractor for global capital – it is important for CIPC to envision ways of reducing regulatory burden and costs whilst increasing Customer value add. This has



influenced the CIPC to explore alternative access channels and partners that should result in improved turn around times on registrations and a ‘one stop’ registration process across different government agencies;

Rising Customer expectations, the power of technology and social media are all amplifying pace of change and presenting new challenges and opportunities. Customers are increasingly expecting 24/7 real time access to their information and to transactions. This presents both challenges and opportunities for CIPC. The rapid adoption of smart phones has increased the viability of increasing access through the development of mobile applications. It has also enabled more effective communication to Customers of the progress of registration applications. Developing new access channels through smart phones and the utilisation of social media are immediate areas of focus for CIPC,

Globalization requires that SA businesses be viewed as credible, well regulated entities with world class governance standards. The CIPC will continue to expand its governance capability and its regulatory functions in this regard;

SA requires economic growth to deliver on its social obligations. Better understanding the needs and challenges of business, including the vital small business and Co-operatives sector will inform the future role of the CIPC in this regard. Initiatives are planned for the coming year to research underlying needs and best practice in this regard

CIPC has been brought into being within the context of a world in economic recession. At a global level, governance and regulatory failures, fiscal crises, global imbalances and shifts in economic power have all created a challenging environment of uncertainty and high risk. At a national level, the challenges of creating decent jobs, maintaining economic growth and dealing effectively with crime and corruption have all contributed additional impetus to the accelerated development of CIPC. CIPC will continue its external focus on better understanding its role and in institutionalising its mandate. It will continue to do this mindful of its obligations as an important member of a community of government departments and agencies with which it shares a purpose to contribute to the economic and social well being of all South Africans.

4.1 PERFORMANCE ENVIRONMENT

4.1.1 The economic context

The economic forecast has not changed since the drafting of the previous CIPC APP. If anything, the world has slipped into a deeper recession and the global outlook for economic recovery remains bleak. The global recession has led to an environment of heightened economic uncertainty, with projections for growth in world GDP for 2013 and 2014 being revised down significantly. Growth in world trade volumes has slowed sharply and the direct impact is starting to be felt in the South African economy, which traditionally lags such trends. African economic growth continues to outperform traditional economies and this remains a positive factor for the South African economy.



Policies in regions and major economies have moved to stabilize financial and economic activity in some major economic regions and policies are expected to remain supportive of a global recovery. A stronger recovery in much of the world economy should be expected from 2014 as employment levels recover, productivity and household incomes rise, and debt levels of firms and households in key economies fall. It is expected that slow growth will continue in South Africa over the foreseeable future, as the world economy recovers. Historically, the growth in the number of applications for company and intellectual property registration has been closely linked to domestic and global growth. In the context of the current economic outlook, it is expected that growth in registration of companies and intellectual property will be limited and will closely track the changes in the local and global economy, unless there is a particular policy focus and concerted effort in particular areas to stimulate local demand for registration. This may be the case with Co-operatives, where there is a concerted government drive for new registrations. Whilst growth in registrations is desirable as a short-term indicator of increasing economic activity as well as an acknowledgement by the marketplace of the value of registrations, the sustainability of registrations is probably a more accurate reflection of success in the medium to long term. Registrations that lapse or are cancelled are an indication that organisations do not have the competitive or managerial capacity to survive or to fully benefit from the potential of registration. It may also be an indication of a premature shift from the informal to the formal economy and as such, registration may be of limited benefit to these organisations. Unsustainable registrations are also of limited benefit to CIPC. The high administrative burden of de-registration and lapsed registrations is not in CIPC’s interests. Ultimately it is important that those who register have their discretion well informed so that they can make the best possible decision at the time of registration. This should be based upon a sound understanding of both the advantages and potential disadvantages of registration. In the coming period, CIPC will conduct research into a better understanding of the potential benefits and challenges associated with formal registration. This research will be used to innovate CIPC’s products and services and will potentially serve as an input to a developing well informed Customers who are able to make better decisions regarding whether or not to register their entities and intellectual property .

4.1.2 The small business landscape Most large and medium sized businesses, if not all, can be expected to have registered their corporate entities. Furthermore, large businesses can safely be assumed to have trade marked their brands. The small business sector therefore represents the largely “unserved” or “underserved” registration market for corporate registration and for intellectual property rights, where such registration is applicable and appropriate. According to a recent survey of Small Businesses in South Africa1 (FinScope Small Business Survey 2010), an estimated 5.9 million small businesses operated in South Africa in 2010, owned by roughly 5.5 million small business owners. Small business owners were defined as being 16 years and older,

1 Finmark Trust is embarking on a follow-up survey in 2013.



perceiving themselves to be business owners or generating an income through small business activities and employing less than 200 employees. According to the survey, the biggest concentration of small business owners is in Gauteng (23%), Eastern Cape (15%), and KwaZulu-Natal (14%), followed by the North West (13%) and Limpopo (10%). The survey also measured levels of business registration. 17.3% of small business owners claimed that their businesses were registered, but only 8.3% claimed to be registered with CIPRO. Business owners who claimed to have registered their business did not appear to see much value in registering their businesses:

54% claimed that registering their businesses meant “compliance with the law”;

14% claimed that they registered their businesses to “avoid harassment from the authorities”;

7% claimed that they registered their businesses to “avoid fines”;

6.5% claimed that registration held “no benefits” for their businesses.

The most frequently mentioned reasons for not registering businesses included:

“the business is too small to register”(49% of owners of unregistered businesses);

“don’t know how to register” (18% of unregistered businesses);

“don’t have money to register” (18% of owners of unregistered businesses);

“it is too complicated” to register the business (9% of owners of unregistered businesses).

It is clear that rigorous, in depth and more regular research into understanding the challenges and opportunities facing small business is essential. The CIPC will continue to encourage and fund, where appropriate, such research. In particular, a better understanding of the interplay between registration and long-term business success needs to be developed. The CIPC will participate in one such research project in conjunction with the Monitor Group during the 2013 / 2014 year. The formalisation of businesses does appear to have benefits to the fiscus and contributes to a more effective regulatory environment. From the data presented, there appears to be substantial opportunity for the registration and formalisation of small businesses. CIPC recognises that for many small businesses there may be limited incentives for formalisation, which must in turn outweigh the compliance obligations. The challenges and unintended consequences of de-registration also need to be better understood. A positive value proposition for small businesses to encourage their formalisation is required. Education and awareness in this segment is therefore a priority. There is clearly a need for information on how to register, as well as easy access to registration services. Most of the potential for formalisation would come from service providing businesses, especially where public procurement is involved. Targeted interventions will need to be pursued to develop a range of value-added services for small businesses. These services will need to enhance the registration process, provide additional benefits to mitigate some of the disadvantages of registration and contribute to the potential for long-term viability and sustainability. Such services may well include partnerships with large corporates who may in turn provide additional value-added services to small business. There is also a clear need to encourage the registration of Intellectual Property that has been developed as a result of public funding. Initiatives will be explored with the Technology Innovation



Agency, NIPMO and other relevant stakeholders to ensure that there is a coherent, aligned response to this challenge.

4.1.3 Regulatory trends 4.1.3.1 Ease of doing business

‘Enabling private sector growth – and ensuring that poor people can participate in its benefits – requires a regulatory environment where new entrants with drive and good ideas, regardless of their gender or ethnic origin, can get started in business and where firms can invest and grow, generating

more jobs.’ Janamitra Devan

The World Bank Group

Internationally, the ease of doing business is an important differentiator of countries and attractor for global capital. The World Bank and the International Finance Corporation (IFC) conduct an annual survey, which ranks economies on their ease of doing business from 1 to 183. The ease of doing business index averages country’s percentile ranking across 10 topics, which are outlined below.

South Africa was ranked 35th of out 183 countries in the 2012 ‘Doing business in a more transparent world’ survey. South Africa compares favourably overall and in most categories when compared to economies of similar size and composition. Sub Saharan Africa has also progressed significantly. The report notes that ‘a record number of governments in Sub-Saharan Africa changed their economy’s regulatory environment to make it easier for domestic firms to start up and operate in a region where relatively little attention was paid to the regulatory environment only eight years ago.’ South Africa should aim to maintain and improve its ranking. CIPC is committed to increasing the ease of doing business in South Africa by reducing the compliance burden, in particular the burden of excessive administration, which has a significant impact on small business. CIPC has an impact on the ease of starting a business, the protection of investors and resolving insolvency (through business rescue). There is also potential to impact positively on the ranking of paying taxes through the strengthening of CIPC’s relationship with SARS. The CIPC is the lead organisation, with the dti, to host a regional ‘Ease of Doing Business’ conference in 2013 / 2014. This will contribute to a greater awareness of the challenge and to the generation of innovative ideas and solutions that may well be applicable to the workings of the CIPC.

4.1.3.2 Corporate governance and disclosure regulation

The global financial crisis and failures of large corporates, such as Enron and Arthur Andersen, has created a renewed focus on credible regulation and good governance. The LIBOR fixing scandal in the United Kingdom again emphasised the need for such a focus. The South African corporate regulatory environment needs to be respected as a credible, safe and secure environment that promotes good corporate governance and protects corporate and intellectual property rights. The CIPC, as custodian of the Companies Act and as an enforcer of Intellectual property rights has an important role to play in this regard.



Financial reporting standards have received much attention internationally. South Africa has also revised its legislative regime in this regard and established a statutory scheme. The challenge, however, relates to its implementation and the pro-active compliance monitoring that it requires. Internationally, corporate regulators have adopted an XBRL system, which allows financial statements to be lodged in a particular format, thus making compliance monitoring simpler for the regulators and given the companies that have submitted credibility. XBRL is still in its infancy in South Africa, but in some other jurisdictions, is very well established. The new Companies Act, 2008 creates a regime that facilitates enhanced enforcement and compliance monitoring. The World Bank survey rated South Africa 10 out of 183 in respect of protecting investors. It is important that a culture of corporate compliance is fostered and that smaller businesses in particular are made aware of their compliance and governance obligations. In the coming year, CIPC will strengthen its capability to deliver an effective compliance monitoring function. This will commence with a focus on communication and education and then expand into visible monitoring and enforcement, in line with a comprehensive Risk Based Approach. This should over time translate into innovations in relevant policy, legislation and governance best practice. As the custodian of the Companies Act, the CIPC takes its role as a regulator equally serious and it developed an external governance framework which will ensure the establishment of a number of governance committees to act in an advisory capacity to the accounting authority, the Commissioner.

4.1.3.3 Identity theft and fraud

Identity theft is a well-known fraud that has received a lot of attention. Corporate identity theft is a less known variation of identity theft, practised in much the same way. According to Reuters, “corporate identity theft (CIT) is the fraudulent and deliberate misrepresentation of a company’s identity”. It occurs when a person or a group take on a company’s identity for the purposes of extracting money, data or any other kind of information from the organisation in order to profit through illegal means. The internet has made corporations, banks and regulators more susceptible to identity theft by making information more accessible. This includes statutory documents, patents, trademarks, web domains as well as information that the company volunteers about itself. Company logos and websites can be easily downloaded and replicated if steps are not taken to protect content. Another way in which corporate identity theft is perpetrated is by changing the names of directors or the registered business address of a company by submitting the required forms to regulators and it can be hard to detect and difficult to reverse once completed. Identity theft has been prevalent in South Africa for several years. It has affected individuals financially through illicit access to their bank accounts, credit obtained by someone else in their name and many other ways. Corporate identity theft is also on the increase and is manifesting in many different ways. Public registries are used to obtain and falsify information. In 2010, a number of instances were identified and publicised where directors had been illegally changed at CIPRO, first electronically



and then with the assistance of internal staff. These acts have been motivated by both criminality and internal disputes within corporations. Often internal disputes amongst directors result in allegations of corporate identity fraud. This, together with the restoration of deregistered entities, often results in the public being misled about the credibility of an institution. In this regard, the CIPC has put in place mechanisms to discourage the reinstatement of deregistered entities. Only when creditors can demonstrate how they’ve been adversely affected by the deregistration of an entity will consideration be given to the reinstatement of such entities. Many instances of corporate identity theft were also criminally committed to redirect tax refunds from the South African Revenue Services (SARS). South Africa is not the only jurisdiction that has experienced corporate identity theft. The UK Companies House maintains on its website that between 50-100 cases of identity fraud occur every month. The institution encourages electronic filing to prevent corporate identity theft. The UK Companies House offers protected online filing, which enables companies to protect themselves from unauthorized changes to their company’s records, including documents for the appointment, termination, or change of particulars of company officers and the change of the registered office. The dangers of identity theft have a major impact on institutions such as corporate and intellectual property registries and it affects the manner in which identity is verified, information security is maintained, the security of the channels used to access the registries, the way in which information is disclosed by the registry and how paper-based documentation is disposed of. As the CIPC migrates to more electronic channels to register and change information, more direct safeguards can be built into the process including sms confirmations of access or changes to information. The CIPC will continue to be vigilant in this regard and strengthen all internal processes to reduce the potential for illegal acts. Besides the issue of protecting entities from being defrauded through potential corporate identity theft, the issue of protecting personal information from potential misuse is becoming more and more important. To this end, the CIPC is reviewing its data disclosure policies, particularly its’ methodology for disclosing information in cases where CIPC acts in partnership with external parties. This is becoming particularly important as the re-sale of raw data poses a significant potential risk to the organization.

4.1.3.4 Redefining the role of intellectual property rights and regulation

Intellectual Property is increasing recognised as a valuable strategic asset - at a national as well as at a corporate and individual level. As Bloomberg reports, ‘Suddenly companies are acknowledging that patents are a strategic asset worth billions.’ This acknowledges the reality that innovation is crucial to competitive advantage and that the ability to compete globally is essential to wealth, job creation and fiscal health.

Investment in intangible assets today outstrips investment in tangible assets. The global trade in IP licenses alone is estimated at more than R7 trillion per annum. This equates to over 5% of world trade. The Hargreaves Report in the United Kingdom has highlighted the need for countries to modernise both their IP legislative frameworks and regulatory regimes. Globalisation, technological changes, as well as the emergence of low-cost manufacturers in developing countries such as China have fundamentally changed the Intellectual property landscape and are challenging the value of conventional IP rights protection and its enforcement.



According to a 2005 report by PricewaterhouseCoopers, entitled Redefining Intellectual Property Value: The Case of China”, “Technological changes, such as digitization, have made IP more portable and are diminishing the effectiveness of current intellectual property enforcement mechanisms. As more countries are entering and profiting in international markets, the level of intellectual property rights infringement is rising and the distinction between innovation and copying is blurring. Emerging economies are unlikely to implement IP rights and protection practices as those established in North America and Western Europe.” (p.9)

At the same time, however, the value of corporations has shifted more and more to intangible assets, namely their intellectual property. According to the PricewaterhouseCoopers study, in 1998, 85% of the value of US corporations was in intangibles, up from 38% in 1982. The study argues that Multinational Companies must therefore find new ways in which to protect their intellectual property that is distinct from the conventional methods. These ways include acquisitions, having a presence in big emerging economies, such as China, with the potential for infringements. The implications for South Africa of these global changes is that there it is unlikely to see a substantial increase in the registration of intellectual property rights from international sources. Any more substantial growth in IP registration will come from local or from African sources. Therefore, while South Africa must continue to support the international Intellectual Property system, and in particular participate in WIPO, it is important that CIPC clearly establishes what role intellectual property rights and their protection can play in South Africa and how it should be better integrated economically. South Africa also has a clear role to play in the development of Intellectual property rights on the African continent and more particularly, in SADEC and SACU countries. Developing a coherent strategy in this regard is an imperative for CIPC in the coming year. The aim should be to encourage the lodging of African applications in South Africa. The substantive examination of patents remains central to the lodging of applications in South Africa and to the stimulation of local innovation and investment. Through continued engagement in stakeholder roundtables, CIPC will seek to make a contribution to develop an appropriate approach to this crucial matter. Given the large scale on which counterfeit goods are manufactured, it is important that South Africa prevents these goods from entering our local markets through pro-active enforcement at our national and regional bordersCollaboration with local law enforcers will also be required to minimize the local production of counterfeits, especially given its impact on our local creative industry. In order to improve the protection for local patents and designs, serious consideration would also have to be given to developing substantive examination capacity in CIPC.

Accession to the Madrid Protocol remains a strategic opportunity for South Africa, which could contribute to economic growth and investment. Such opportunitities entail foreign investors being able to file through internationally their applications for the protection of intellectual property rights. Similarly, local rights holders would be in a position to file internationally easier through a more cost effective process. Should the decision be taken by dti and Cabinet to accede to this Protocol, CIPC will be prepared to support its implementation. CIPC will be well prepared to do so as it has made input into the proposed legislative changes, internal systems will have bee offices



internationally whn enhanced and practices and procedures will have been updated. Regular interaction with WIPO in this regard will continue

The Copyright Review Commission concluded its work in 2011 and has made recommendations regarding the changes it believes are necessary. These recommendations are likely to influence the IP policy review and to make a positive contribution to the overall IP industry in South Africa. Similarly the adoption of the Beijing Treaty on Audiovisual Performance is an important milestone in protecting the rights of performers. Preparatory work is being done by CIPC to ensure that South Africa is able to implement rapidly and effectively should a decision to adopt the treaty be taken by government. CIPC will continue to work collaboratively with the DOC, dti, DoC and other key stakeholders in this regard Preparations for the implementation of the IP Amendment Bill are underway, most notably the aspects relating to the protection of indigenous knowledge and specifically preparations for the recordal of indigenous cultural expressions.

4.1.3.5. Business Rescue

The introduction of Business Rescue in 2011 was met with a great deal of scepticism and resistance. It appears that these early fears were not justified and confidence in the process continues to grow with a number of well known companies applying to participate. CIPC continues to support Business Rescue with programmes of education and awareness and through round table meetings and engagement with industry stakeholders. As the process starts to mature, the CIPC will derive implementation lessons and will seek to inform improvements to the overall policy and legislative environment. It will also seek to take a more active role in the regulation of Business Rescue Practitioners. Support to Business Rescue is an important area of focus for CIPC in 2013 / 2014.

4.2 ORGANISATIONAL ENVIRONMENT

CIPC is starting to emerge and develop as an institution. It has been established in May 2011 through the amalgamation of the former CIPRO and OCIPE, In addition to the challenge of executing its functions as envisaged by the Companies Act, it also has had to meet the challenges of the amalgamation of two organisations, strategically, structurally and culturally. In so doing, it also has to deal with a legacy that has contributed to organisational stagnation, low employee morale and poor service delivery. CIPC is ‘making a fresh start’ in building a capable organisation that has a Customer-centric culture and a workforce that is energised, proud, committed and competent. In its first phase of institution building, CIPC ‘Prepared for Take-off’. It has had to go back to basics in understanding who its Customers are, what they value, require and expect and in crafting a strategy that is understood and supported by its people. This has been advanced through the design of effective and efficient business processes, the definition of a customer segmentation model, a strategically-aligned structure, IT enabled systems, appropriate facilities and a ‘fit for purpose’ common organisational culture. CIPC is now in its second phase of institution building - ‘In flight Adjustment’. Learning has been distilled from the first year of operation and adjustments have been made to some of the



underlying strategic assumptions and approaches. Much success has been achieved in strengthening service levels and responsiveness to Customers, backlogs have been eradicated and the competence and commitment of its people continues to grow. The immediate challenges are to ‘match and place’ people into the new organisational structure, to deepen core employee competencies (in particular in the regulatory aspects of CIPC’s work) and to innovate a number of important aspects of CIPC’s business model.

Much attention is also being paid to embracing technology to enable quicker, easier, secure access to CIPC and to delivering new and unique value through partnerships with channel partners in financial services. These new and unique service offerings focused around a single point of registration should contribute greatly to the reputation and credibility of CIPC in years to come. In the coming year, attention will be paid to developing an effective Reputation Model so that stakeholder perceptions of CIPC may be more accurately captured and benchmarks for improvements established. In essence, the strategic challenge facing CIPC has two components:

a transactional challenge to deliver faster, more accurately, reliably and in a more secure manner on the registration of companies and intellectual property rights, to safeguard the integrity of data and to enable responsive access to requests for information. This will require the re-engineering and integration of business processes, the IT enablement of workflows and information management, the training and development of competent people and the development of Customer-centric access, communication and service delivery channels

a transformational challenge – to add greater value to entrepreneurs through enhanced products and services, a range of easily accessible channels as well as ongoing communication and engagement with segmented Customer communities. To positively impact good governance in South Africa, create a culture of voluntary compliance with legislation and to build the required capabilities to be able to deliver on the ‘new’ components of CIPC mandate.

This includes delivering on CIPC’s innovated regulatory functions, the need to promote voluntary compliance, initiate and investigate contraventions of the Act, monitor compliance with financial reporting standards and promote the reliability of financial standards. This transformational process to build the required internal capabilities (knowledge, expertise, systems, culture / mind-set) to deliver on these aspirations will require a strategically focused transformation journey that will last for many years to come. The current CIPC focus is around accelerating the pace of change. This encompasses innovating the way CIPC works in order to be able to deliver core registration and maintenance services timeously and in accordance with both acceptable standards of quality and the needs of CIPC’s Customers. At the same time it is focused on establishing the foundation of competent people and systems required to implement new services. . In a sense this challenge to both ‘catch up’ and ‘get ahead’ at the same time is analogous to ‘changing the engines on an aeroplane in mid flight!’ In the coming strategic period CIPC will continue to invest in the development of its people and in providing the tools and the enabling environment required to deliver high performance. Today’s data intensive, round the clock, globalised business environment also requires the appropriate technology investments that allow for intelligent work, informed decision making and seamless,



engaging, satisfying and consistent Customer experiences. Renewed emphasis will be placed on issues of data integrity, alternative access points and channels will be explored and adopted and innovative ways to provide value-added services will be developed to ensure the organisation’s continued relevance. CIPC is carefully evaluating the investments that will be required, as well as the strategic partnerships that will assist it in delivering on its strategic objectives. CIPC recognizes that it will achieve its goal of organisational excellence over time and that the journey will be based on consistent and continuous improvement in its service delivery and product offering.



5. CUSTOMER NEEDS AND EXPECTATIONS

In understanding CIPC’s dominant value proposition, it is important to confirm that that CIPC has two important core functions. It has to deliver services to its Customers in a responsive, efficient and Customer-centric manner. This has to be done in such a way that ensures that the integrity of Customer information is not compromised in the interests or expediency of service. It is also an important regulator of market conduct. As such, ensuring compliance to legislation is an essential core component of its regulatory function. This dual role has the potential for tensions and conflict. CIPC provides a revenue-generating service to its Customers. It also supervises and enforces its Customers compliance to the legislation entrusted to CIPC by its mandate. By so doing, it runs the potential risk of regulatory capture by being dependent upon those it regulates as the source of its revenue. Regulatory capture occurs when a state regulatory agency, created to act in the public interest, instead acts in favour of the commercial or special interests that dominate the industry or sector that it is charged with regulating. The potential for regulatory capture presents a number of specific regulatory dilemmas or tensions that need to be managed on an on-going basis. The first tension is between having a Customer-centric orientation and retaining the independence, impartiality and the confidence to enforce where required. The second key tension is between Customer satisfaction and Customer respect. Through the supervisory and enforcement activity CIPC exercises, it may well take action that does not directly generate Customer satisfaction as it may have an adverse affect on the interests of Customers. It should nevertheless engender a feeling of respect in that its actions are seen to be impartial and fair. All of CIPC’s Customers ascribe significant value to the reliability and integrity of CIPC and the data that it gathers and maintains. They also require acceptable turnaround times for the registration of companies and intellectual property and prompt, secure access to relevant information held by CIPC. This needs to be done in such a way as to ensure that data integrity and privacy of individuals are not compromised. To deliver on operational excellence, CIPC should understand its Customers and adapt its structure, systems and processes to deliver on their legitimate needs and expectations. Not all customers have the same needs and expectations, so it is important to adopt a business model with a model of Customer segmentation that informs the way in which organisational structures, systems and processes are best structured to enable effective service delivery and to deliver on CIPC’s promise. CIPC’s Customers may (at a very high level) be segmented as follows: - 1) Customers with registration needs (both company and intellectual property); 2) Customers with information and data needs; 3) Customers with compliance needs; and 4) Customers with redress needs.

Different Customer groupings may also have different needs around access to CIPC. For example, Customers in rural areas do not have the same level of direct access to CIPC’s offices or the same levels of business sophistication. They may therefore require innovated communication and/or access channels to



ensure that they receive the appropriate service from CIPC. The following table details the perceived needs and expectations of these Customer segments:



Table 6: Summary of customer needs based on customer segmentation Needs Based Segmentation

Types of Customers Product and Service Needs

Customers with registration needs

Customers who access our services directly Customers who access us indirectly through intermediaries or through their company secretaries Includes actual and potential customers

Efficient, predictable and reliable registration and amendment of registrations of entities and intellectual property rights

Accuracy, security and protection of registry information

Choice, efficiency and cost-effectiveness of access channels

Information about the benefits and obligations of registration and other rights, responsibilities and recourse

Information about opportunities for growth

More personalized, decentralized service, advice and support – face to face, agency or contact centre

Greater ease of doing business, e.g. integrated registration for tax, workman’s compensation, bank account, etc.

Customers with information and data needs

Government agencies, institutions, banks, international business entities, international bodies (WIPO), other regulators and the general public

Access to accurate, reliable information and data – either through face-to-face contact or direct access to CIPC systems and/or database, usually for verification and fraud prevention purposes, could also be for search purposes (e.g. IP or name reservations) and for legal clarity;

Access to policy information about business activity, conduct and impact of regulation on enterprise formation and sustainability, innovation and creativity in specific sectors

Customers with compliance needs

Registered entities or holders of renewable IP rights

Easily accessible information about the compliance obligations and requirements

Advice on complicated matters

Easy lodgment of compliance obligations, inclusive of ease of payment and feedback on levels of compliance

Minimal interaction with CIPC

Customers with redress needs

Individual or corporate investors, directors, IP rights holders, acting alone or through intermediaries

Timeous investigation of complaints, empathy;

Professional investigation, remedial action and report back by trained, knowledgeable professionals

Credible, reliable findings

Reversal of illegal actions and possible damages



In terms of its Vision, CIPC aspires to be ‘the gateway to sustainable formal economic participation and investment for all in South Africa’. This implies that individuals and corporate entities should enjoy many of the benefits of the formal economy once intellectual property or business entities are registered.

CIPC realises that for a number of individuals and single owner businesses, registration may not deliver any real benefits and may simply add unnecessary costs and create an unnecessary bureaucratic burden. For CIPC, registration without any real benefits accruing to the Customer, may simply lead to future de-registration and unnecessary administration. It is important therefore that CIPC develops a value proposition around registration that delivers real, perceived value to Customers. It is also important that CIPC informs the discretion of individuals and corporate entities regarding the potential benefits of registration whilst ensuring that particularly small businesses derive real benefits from registration. In this regard, the organisation needs to be at a certain level of maturity to partner with particularly large corporates that can ‘handhold’ small businesses to reach a point of sustainability. The sustainability of registrations is very important to CIPC in its future planning. To enable good quality registrations, CIPC will need to increase awareness of the potential benefits of registration in its ‘un-served’ market. The ‘un-served market’ may best be defined as ‘those individuals or corporate / collective entities that do not currently enjoy formal registration with CIPC and are unaware of the potential benefits of registration.’ This increased awareness should be realistic and balanced providing a sound basis for Customer decision-making.

CIPC’s proposition is that economic growth coupled with a growth in creativity and innovation will create a natural ‘pull through’ need for registrations. CIPC’s role should therefore be to ensure that all who may potentially benefit from registration are aware of the potential benefits of registration and are able to access registration quickly, easily and at a cost that does not discourage registration. Some of the potential criteria that could indicate that a need for registration exists include: -

Where a single owner business has an aspiration for services provided by others within the formal economy, such as financial services and credit, and where registration is the pre-requisite for the supply of such services;

Where a single owner business has an aspiration for growth and requires formal registration to access capital (either through the registration of the business itself or through the registration of intellectual property that has an assumed value and against which finance may be raised);

Where the owner of a business may wish to avoid actual or potential personal liability through the transfer of such liability into a limited liability legal entity’

Where the owner of a business may want to bring in equity partners or may want to sell a business and its assets;

Where the owner/s of intellectual property may wish to protect its trade marks, copyrights, patents or designs from infringement, theft or abuse by others.



6. THE CUSTOMER VALUE PROPOSITION

CIPC Customer Value Proposition is aspirational as it includes both benefits that Customers currently enjoy as well as future Customer benefits that will be developed and delivered by CIPC, in association with its channel and strategic partners, over time.

It must be emphasised that living up to these aspirations will require that CIPC build the required capabilities over time and in collaboration with its strategic partners. The achievement of these aspirations is therefore partly within its scope of control and partly under the control of CIPC’s strategic partners.

The value proposition of CIPC is that ‘dealing with CIPC means that you have access to opportunities for growth; are compliant with good corporate governance principles; have security of lodged information; and ease of registration.’ 1. Access to opportunities for growth ‘As a registered entity, you are more likely to be able to attract investment in your businesses, through credit or equity. In the same way, registered intellectual property rights can be safely commercialised or licensed to third parties, whether through franchising or other distribution or manufacturing arrangements. CIPC will provide information to you about the possibilities to grow your business or your investment in intellectual property rights.’

2. Good governance and credibility of information and conduct ‘Registering with CIPC means that investors can rely on the credibility of your corporate entity’s information and conduct. You will be receiving a ‘Certificate of Compliance’ from CIPC which means that you will be perceived as a credible corporate citizen who has paid their taxes, complied with good governance and statutory requirements and that the information you provide, such as your financial statements and BEE status, will be respected in accordance with global standards.

As a Customer, you can rely on the integrity and professionalism of registered business rescue practitioners, collecting societies and alternative dispute resolution practitioners in times of crisis.’

3. Security of lodged information ‘Being registered with CIPC means important assets such as intellectual property, shares/equity, products, brands and identity are protected from being stolen or misappropriated. As a Customer, you can rely on CIPC to act against counterfeiters and other people who do not respect your trade mark rights.’

4. Ease of registration (reduced bureaucracy) ‘As a Customer, you can register your business and intellectual property directly through our ‘one stop shop’ on-line portal and comply with all other statutory registrations at the same time such as Income Tax, Value Added Tax (VAT), Unemployment Insurance Fund (UIF) registrations, etc. You can register your business at the same time as you open your business bank account. You can register through our other channel partners and receive sound business advice at the same time. You can receive your registration number and certificate on the same day you register, dependant on whether CIPC can verify your details’. You can call our Contact Centre or relevant Issue Champion to query any aspect of your registration or receive any information you may require. You can renew all of your registrations easily, on line or through banks, ATMs or other Self Help Terminals as well as through our other channel partners.’



7. CIPC’S BUSINESS MODEL

A business model describes ‘the rationale of how an organisation creates, delivers and captures value.’ (Osterwalder) Whilst CIPC spent time defining its business model in 2011, enhancements to it became necessary in the 2012 year due to the organisation gaining a better understanding of its Customers, their needs, the challenges facing the organisation and the internal as well as external environment. Its evolving business model is based on the priorities that it identified for the organisation, namely:

Improving the reliability and integrity of the information in CIPC’s registries;

Improving the relevance and value of CIPC’s services to its Customers and stakeholders

Improving compliance with the laws that CIPC administers.

Demonstrate CIPC’s economic impact

Partnerships with the right stakeholders are key in meeting these priorities and therefore a considerable amount of time is spent exploring, developing and enhancing such collaboration efforts with both private and public partnerships. The organisation, through its innovation efforts, continues to seek opportunities to be innovative and to offer value added services whether through its products and services - registration and regulatory services or its access channels. Of great importance is the issue of compliance with legislation and the business model takes into account the attempts to be made to ensure greater compliance. Its education and awareness function therefore has a great role to play in this respect. All the efforts of the organisation will be in vain if no real economic impact can be seen over time. The business model therefore makes provision for working towards demonstrable change in the economic environment. In addition to the strategic issues related to the business model, CIPC remains a public sector regulatory agency rather than a business, and therefore its goal is not to be profitable but is rather focussed on a self-sustaining funding model that delivers sufficient revenue to cover the capital and operating costs of the services it delivers. The CIPC business model is equally on the quality of the services it provides, the acceptable speed with which it delivers them and the value that its products, services and solutions generate for customers. CIPC’s business model focuses on the manner in which it will deliver services, the quality of those services, the fees it will charge to be sustainable and the potential for value addition. In order to deliver on its strategic mandate, CIPC has identified three key resources that it will need to build, develop and / or acquire:

An informed, competent and engaged workforce;

Intelligent Information Technology systems and infrastructure;

Strategic partners that assist CIPC to deliver on its broader mandate in a mutually beneficial manner.



An estimated 80% of CIPC’s services are currently delivered through intermediaries- intellectual property legal practitioners, company secretarial services, provincial small business development partners and other associated intermediaries. Customers choose to deal through intermediaries for the sake of convenience, but also because CIPC is difficult to access and navigate. CIPC is exploring and piloting a new business model which is based on a direct channel and partnership approach which is aimed at meeting customer needs through: Telephone services – where greater emphasis will be placed on answering calls and resolving customer queries (which might require a call-back service). Customer faxing documentation Customers e-mailing documentation CIPC will be establishing a framework for registering intermediaries that charge customers for their services. Whilst much of the fraudulent activity experienced by CIPC has come through intermediaries, we recognise that many intermediaries are professionals that adhere to professional standards. This will be taken into consideration when developing the registration and regulatory criteria. CIPC will monitor the services provided through such intermediaries and take the necessary action against intermediaries who engage in fraudulent or unethical activities. CIPC will increase access to its products, services and solutions through the development of indirect channels. These channels will be managed in collaboration with identified service delivery partners. CIPC will continue to participate in a project to simplify and co-ordinate the requirements to start a business. In particular, it will work closely with the South African Revenue Services (SARS), (the Department of Labour?) and Statistics South Africa to create a seamless, single registration process for government related compliance obligations. The possibility of adding private sector partners, such as banks, to such an engagement will also be explored. In order to deliver the enhanced services required by its Customers and stakeholders, CIPC will require competent, engaged employees who will deliver high quality work at an acceptable speed of delivery. Operational efficiencies will be enhanced by intelligent, high performance Information Technology systems, which will serve CIPC employees, CIPC customers and their partners and registered intermediaries. CIPC envisages that expenditure on its IT systems will be a consistent feature in its budget over the period of the strategic plan and into the future. Often, expenditure on IT systems is accompanied by a reduction in expenditure on human resources. CIPC does not anticipate that this will be the case over the next five years and expects that its expenditure on human resources will need to increase in order to improve service delivery. Efforts will be made to achieve cost-savings in non-core areas to enhance the efficiency of the organisation. Efficiency will however, need to be balanced with effectiveness. CIPC will prioritise improvements in service delivery as it recognises that the cost of non-delivery to the economy overall is very high. The implication of this is that CIPC’s overall income will need to increase in the short to medium term to fund the improvement in services, the development of new, enhanced value



to customers and the growth in its regulatory mandate. To meet these needs, a new revenue model will be developed, based on both a simplification and rationalisation of CIPC’s fee structure. Given the importance and sensitivity of the information held by CIPC and the impact of service delivery on the business sector, CIPC will prioritise information integrity and security, disaster recovery and change management in all its efforts. It will place significant emphasis on pro-actively managing the strategic risks that have been identified, while providing innovative and value-adding services. The business model and strategic mandate of CIPC requires an enhanced set of key capabilities, which will need to be developed. These include capacity for:

Programme and project management. There is a need in the organisation to enhance project management skills to ensure the enhanced implementation of projects that will yield tangible results. The shortcoming currently is the inability to problem solve challenges that threat the delivery of projects.

A Quality Management ethos with supporting quality control processes and competencies. There is a need to develop a set of quality indicators at a granular level to ensure minimum rework and increased Customer satisfaction.

Policy, research and Advocacy. CIPC will need to develop the capacity and ability to provide input into policy and legislative changes to the dti and other government institutions such as DST, DHET, DAC, based on its implementation experience, its institutional wisdom as well as learning derived from international trends and developments. In addition, CIPC will need to support the efforts of the DIRCO to put forward policy positions and to advocate for international change in international fora, such as the World Intellectual Property Organisation (WIPO) and the World Trade Organisation (WTO).

Product and Channel Development and innovation. CIPC will need to develop a specialised capacity to continuously monitor the value it delivers to existing and underserved markets to identify new opportunities for value addition, improvements and solutions creation. This will require an organisational culture and an operating model that encourages and rewards innovation at all levels in the organisation. It will also require a focused approach to the development of new, innovative Customer channels that provide for more efficient and effective Customer engagement and information processing

Market surveillance and enforcement. In order to become a credible regulator CIPC will need to enhance its capacity for monitoring compliance, its ability to proactively enforce compliance with legislation as well as to encourage and promote voluntary compliance.

Good governance and risk management. As the custodian of corporate governance and conduct, CIPC will need to aspire to the highest standards of corporate governance itself. The effective management of risk to ensure that any potentially negative impacts on customers and/ or stakeholders are minimised will also need to become an integral feature in all its operations. Good governance and effective risk management and mitigation are specific competencies that will need to be entrenched in the culture, processes and governance arrangements of CIPC.

Stakeholder and reputation management. In order to be a credible, well-respected and effective regulator, CIPC will need to proactively manage its public image and intentionally shape the



perceptions and the behaviour of those it regulates. CIPC will need to establish a reputation for integrity, for reliable service delivery, a value-enhancing partner and credible, impartial regulator. This will require that all people within CIPC be clearly aligned with its strategy. It will also require a capacity for channel management, strategic communication and stakeholder management, as well as personalised relationship management with intermediaries and partners.

Standard setting, monitoring and evaluation. CIPC will need to be able to set standards for security and service delivery for itself, its strategic partners and the capacity and skills to monitor, evaluate and enforce adherence to these standards.



8. STRATEGIC PLANNING PROCESS

CIPC engaged in an extensive strategic review for the 2012 planning period, which entailed understanding who its customers are and what their views of CIPC are, the expectations and requirements of key stakeholders in the public sector, as well as the inputs of internal stakeholders, including the senior management and organised labour. During the 2013 planning period, the strategy and annual performance plans were reviewed and updated in accordance with the progress made in strategy implementation as well as the changes experienced and foreseen in the internal and external environment.

9. STRATEGIC GOALS

CIPC has identified three outcome oriented strategic goals that aim to give effect and substance to its strategy. These are: - 1) To improve the competitiveness of the South African economy by enhancing the reputation of South

African businesses and the South African business environment; 2) To contribute to a knowledge-based economy and competitive local industries by promoting

innovation, creativity and indigenous cultural expression and knowledge; 3) To promote broader formal economic participation by enhancing service delivery and extending the

reach of CIPC.

Strategic Outcome Oriented Goal 1 Improve the competitiveness of the South African business environment

Goal Statement To improve the competitiveness of the South African economy by enhancing the reputation of South African businesses and the South African business environment

Strategic Outcome Oriented Goal 2 To promote innovation, creativity and indigenous cultural expression

Goal Statement To contribute to a knowledge-based economy and competitive local industries by promoting innovation, creativity and indigenous cultural expression and knowledge

Strategic Outcome Oriented Goal 3 To promote broader formal economic participation

Goal Statement To promote broader formal economic participation by enhancing service delivery and extending the reach of CIPC



PA R T B : S T R AT E G I C O B J E C T I V E S

10. STRATEGIC OBJECTIVES

10.1 PROGRAMME 1: BUSINESS REGULATION AND REPUTATION

Goal 1: To improve the competitiveness of the South African economy by enhancing the reputation of South African businesses and the South African business environment

The purpose of the programme is to enhance the reputation of South African businesses and the South African business environment by ensuring that the registers of corporate entities, their managers and their identity have integrity and that a culture of corporate compliance and high standards of governance, disclosure and corporate reputation is established. The programme is also responsible to provide policy and legal insight and advice on the co-ordination, implementation and impact of the respective laws. The strategic objectives of this programme are to: 1. To encourage the formalisation of South African businesses and their identity

Strategic Objective 1.1 To encourage the formalisation of South African businesses and their identity

Objective Statement To increase the formalisation of small businesses and the registration of local trade marks by South African corporate entities

Baseline 95% of companies registered manually within the published service standard 95% of companies registered manually within the published service standard 23% of co-operatives registered within the published service standard 90% of trade marks applications processed within the published service standard

KPIs % of companies registered manually within the published service standard % of companies registered manually within the published service standard % of co-operatives registered within the published service standard % of trade marks applications processed within the published service standard

Strategic Objective 1.2 Encourage the maintenance of high standards of corporate governance, transparency and brand protection

Objective Statement To improve the levels of compliance with corporate regulation and improve brand protection through the consistent application of corporate identity across trade marks, corporate and business names.

Baseline 70% compliance with annual returns 33% of investigations completed within the published service standard

KPI % compliance with annual returns % of investigations completed within the published service standard



10.2 PROGRAMME 2: INNOVATION AND CREATIVITY PROMOTION

Goal 2: To contribute to a knowledge-based economy and competitive local industry by promoting innovation, creativity and indigenous cultural expression and knowledge. The purpose of the programme is to support the international IP system and to promote local innovation and creativity by maintaining accurate and secure registries of patents, designs, film productions and recordals of indigenous cultural expressions and creative works, as well as by supervising and regulating the distribution of benefits of copyright and IK rights and protecting existing rights. The programme is also responsible to provide policy and legal insight and advice on the co-ordination, implementation and impact of the respective laws. The strategic objectives of this programme are to:

1. To promote the protection and commercial exploitation of innovations in key sectors; 2. To protect our cultural heritage and support a strong competitive South African creative industry

that provides benefit to local artists.

Strategic Objective 2.1 To promote the protection and commercial exploitation of innovations in key sectors

Objective Statement To increase the proportion of local filings of patents and designs and patents with recorded licence agreements

Baseline 87% of patent applications processed within the published service standard 98% of design applications processed within the published service standard

KPI % of patent applications processed within the published service standard % of design applications processed within the published service standard

Strategic Objective 2.2 To protect our cultural heritage and support a strong competitive South African creative industry that provides benefit to local artists

Objective Statement To increase the number of local filings of cinematography and to increase number of performing artists with agreements in place

Baseline 64% of copyright in film applications processed within 2 working days

KPI % of copyright in film applications processed within the published service standard

10.3 PROGRAMME 3: SERVICE DELIVERY AND ACCESS

The purpose of the programme is to promote better access to and service delivery by CIPC by ensuring that our access channels are secure and easily accessible to all, that the institution has sufficient and appropriate organisational resources to deliver the best possible service and that operational excellence is established in all areas of the organisation.



Goal 3: To promote broader formal economic participation by enhancing service delivery and extending the reach of the CIPC The strategic objectives of this programme are to:

1. Provide easy access to credible, reliable and relevant information and advice and secure, value-added services;

2. Build an enabling and intelligent work environment anchored in a governed and sustainable organisation;

3. Improve the reputation and organisational performance of CIPC.

Strategic Objective 3.1 To provide easy access to credible, reliable and relevant information and advice and secure, value-added services

Objective Statement To implement 100% ICT stabilisation programme by 2018. To implement 100% of the Swedish model as a new telephone service approach by 2018

Baseline IT website availability not accurately measured in 2012 28% call answer rate

KPI % website availability for on-line filings 24/7 % Call answer rate

Strategic Objective 3.2 Build an enabling and intelligent work environment anchored in a governed and sustainable organisation

Objective Statement To improve the organisational capacity of CIPC by ensuring that:

95% of vacancies are filled by 2018,

CIPC can support itself 100% through its operating revenue

Baseline 124% of expenditure covered by operating revenue and reserves

KPI % of total expenses covered by operating revenue

Strategic Objective 3.3 To improve the reputation and organisational performance of CIPC

Objective Statement To position CIPC as an effective regulator and a reliable service provider and to improve operational performance

90% neutral media coverage

Baseline 90% neutral media coverage

KPI % neutral media coverage in mainstream and social media



10.4 Risk Management Risk Name Risk Description Controls and Mitigating Action

Accuracy, integrity and reliability of registry information

Lack of accuracy and completeness of data resulting in limited reliability of data for internal and external purposes Inadequate quality controls Lack of adequate verification of information submitted Lack of integrity in the corporate names register due to criteria adopted for approval Lack of integrity in patent and design registers as filings are not examined substantively

Implementation of better quality control measures to ensure accuracy, linked to performance measurement and reward Introduction of electronic filing and electronic workflows Cleansing of historical data records Procedure for effecting data changes and corrections Improved upfront identity verification Consistent approach and guidelines on the evaluation of business names, corporate names and trade marks Cost benefit analysis of introduction of substantive examination of patents and designs

ICT systems and governance

Lack of alignment between IT strategy and business needs

Slow legacy ICT systems with limited ability to change and to meet the needs of the business unit Inadequate user access control Excessive reliance on ICT service providers Lack of proper change management and control over ICT environment Lack of implementation of business continuity and disaster recovery plans

Stabilise legacy systems Upgrade and replace current applications Introduce an adequate testing environment Build and retain internal ICT capacity with product knowledge ICT governance framework developed and implemented Implementation of Change Control Board BCM Policy, plans and procedures in place Recovery strategy plan in place Training to recovery teams Incident site team trained Backup process, procedures and tapes. Tapes stored externally Digitization of records, especially historical records

Change management

Lack of internal management of the implementation of changes to processes, systems and ways of working

Internal training programmes and seminars; Coaching capacity; Change management initiatives



Risk Name Risk Description Controls and Mitigating Action

Theft, fraud and corruption

Lack of documented controls Lack of accountability for implementation of controls Unauthorized access to, use and manipulation of information with the intent to commit fraud.

Documented delegations and responsibilities Documented procedures Segregation of duties Inclusion in performance management system Enhanced controls and audit trails related to user access Enhanced systems security Revised procedures for accessing information Conduct information security audits

Organizational capacity and management

Organisational transition Lack of sufficiently skilled human resources, equipment and consumables. Loss of skilled staff Lack of appropriate skills and knowledge amongst staff Ineffective management of human resources Lack of employee commitment and strategic alignment Resistance to change Potential for labour unrest

Approved and implemented organisational structure Clear job descriptions and norms and standards Sufficient positions in the organisational structure Staff training interventions Internal administrative capacity Succession planning and staff retention policies Staff training exchanges with international offices and other regulators Management and team management training Appropriate remuneration framework Organisational culture engagements Involvement of Organised Labour Good relationship with organised labour

Reputation and Stakeholder Management

The risk that changes in relationship with intermediaries and other stakeholders or changes in CIPC processes results in negative media coverage Inadequate management of public expectations regarding service delivery

Stakeholder management strategy Pro-active communication about changes and new developments Brand building initiatives Pro-active media strategy



Risk Name Risk Description Controls and Mitigating Action

Financial sustainability

Lack of debtors management Outdated fee structure Ineffective billing system

Develop and implement debtors management system Implement financial viability framework. Review annual returns revenue model. Review fee structure

11. RESOURCE CONSIDERATIONS

11.1 ASSUMPTIONS

The following assumptions inform the financial projections:

1) CIPC has developed a new structure, which will ensure that adequate resources are employed in order for the institution to deliver on its mandate and improve its service delivery. The staff complement over the next five years will increase from 500 posts in year 1 to 630 posts over a period of five years.

Table 5: Projected staff numbers from 2013 - 2018

Projected no of employees

2013/14 2014/15 2015/16 2016/17 2017/18

Number of permanent employees

500 620 630 630 630

Number of interns 56 70 70 70 70

Total staff complement 556 690 700 700 700

In order to improve service delivery, CIPC envisages that it will need to make a substantial investment into the capacity of its staff over the next five years to ensure better service delivery and to build capacity for new functions in the institution. The organisation is in the process of reviewing its current remuneration framework and performance management and reward system. The overall salary structures will remain aligned with the public service, but more flexibility will be introduced into the pay scales. Provision has been made for annual performance bonuses. In combination with increased staff numbers, the result will be increases in the overall salary budget of CIPC over the next five years. The increased expenditure will be funded from reserves that the organisation has, but a revision of the fee structures, especially for intellectual property transactions, will be necessary to ensure that sustainability is retained after year five (5).

2) CIPC has experienced major space constraints and is unable to add all the required staff due to the limitations. Attempts to procure a new building for CIPC were not successful in 2012; options will be further explored going forward. An estimated amount of R41m has been provided for the lease of the premises, escalating by 10% per annum. The current space requirements have been plannee maximum no of staff as per the proposed structure and National Treasury’s recommendations.



3) Another major expenditure area for CIPC over the strategic period will be its investment in information technology and in the assets required to ensure that filings are not only electronic, but that the institution also has electronic workflows. CIPC expects to move to a majority of electronic filing over the next three years particularly in relation to IP filings and also to digitize its existing historical records over the same period. The investment will include installing dual screens for all staff involved in registration and investigations, increases in network infrastructure and the necessary applications to support the electronic filing process.

Table 6: Projected annual growth in electronic filings

Nature of Filing 2012/13 2013/14 2014/15 2015/16 2016/17 2017/18

Co-operative registration 20,000 31,500 40,950 49,140 54,054 59,459

% electronic filings - -- 30% 50% 60% 70%

No of electronic filings 12,285 24,70 32,432 41,621

Company registration 200,000 207,000 214,245 221,744 229,505 236,390

% electronic filings 66% 70% 90% 90% 90%

No of electronic filings 132,000 144,900 192,821 199,569 206,554

Trademark registration 33,452 37,536 42,412 48,236 55,198 62,373

% electronic filings -- 30% 50% 70% 90%

No of electronic filings 0 11,261 38,171 43,412 49,678

Patent filings (excl. provisional applications)

7,000 7102 7,191 7,289 7,389

% electronic filings - 30% 50% 70% 90%

No of electronic filings 0 2131 3596 5102 6650

Design registration 2000 2,005 2,119 2,243 2,379 2,528


No of electronic filings 0 601 1059 1570 2,142

Film registration 59 61 63 66 69 71


No of electronic filings 35 18 32 46 62

4) Other areas of programme expenditure for CIPC will include commissioning of research and

analysis, possible litigation and specialised investigations, as well as education and awareness campaigns and publications. These are key areas of strategic focus for the institution, as it establishes its new mandate and presence.

5) The Commission will reduce its reliance on consulting services over the strategic period, as it is able to appoint more staff and conduct the work itself. It is expected that there will still be a high dependence on consulting services in the 2012/13, especially in the area if ICT. This reliance will, however, be significantly reduced over the following years. In addition, certain services will also be outsourced, such as printing services. These outsourced services will be provided for under the goods and services budget.



6) Revenue projections will largely be based on the baseline number of registered entities, as well as the estimated annual increases in new registrations. The revenue model will be revised to focus on renewals, rather than on the initial registration. In addition, a revision of the fee structure is anticipated.

Table 7 below outlines the projected corporate and intellectual property registrations over the next five years. It is expected that co-operative registration will increase at a declining rate over the five-year period, beginning with a projected 50% increase in the first year, which declines to a 10% increase by year 5. In company registration, it is expected that the level of registration in 2013/14 will continue to reflect the registration trajectory established in 2011/12 and will increase at a steady rate of 3.5% per annum thereafter. The trend in intellectual property filings over the past 10 years has been an annual growth of between 1% and 2%. This trend is expected to continue for international filings (estimated at 1% for all intellectual property filings), while specific efforts will be made to increase the number of local filings. For this reason, the overall number of intellectual property filings will increase more substantially per annum, with the exception of patents, where the projection is that local filings will increase at a rate of 2% per annum. Provision has been made for an increase in local filings for designs and film productions of 10% per annum and in trade marks for 20%.

Table 7: Projected registration of corporate entities and intellectual property rights

Type of registration

2012/13 2013/14 2014/15 2015/16 2016/17 2017/18

Co-operative registration 22,500 31,500 40,950 49,140 54,054 59,459

Company registration 200,000 207,000 214,245 221,744 229,505 236,390

Total Trademark registration 33,452 37,536 42,412 48,236 55,198 62,373

Estimated local filings 19,737 23,684 28,421 34,105 40,926 47,883

Estimated international filings 13,715 13,852 13,991 14,131 14,272 14,414

Total Patent registration (excl. provisional applications)

7,000 7102 7,191 7,289 7,389 7,462

Estimated local filings 650 663 776 792 808 824

Estimated international filings 6350 6439 6415 6497 6581 7,239

Total Design registration 2000 2,005 2,119 2,243 2,379 2,528

Estimated local filings 950 1,045 1,150 1,264 1,391 1,530

Estimated international filings 1050 960 969 979 989 998

Total Film registration 59 61 63 66 69 71

Estimated local filings 17 19 21 23 25 27

Estimated international filings 42 42 43 43 44 44

Total registrations 264,911 285,197 306,980 328,718 348,594 347,932



11.2 PROJECTED EXPENDITURE BY PROGRAMME

The projected expenditure is based on the expenditure related to the increase in staff costs. Expenditure on compensation of employees is expected to grow from R214.6 million in 2013/14 to R325.2 million in 2017/18, at an average annual rate of 9 per cent, due to the implementation of CIPC’s new structure and functions, as a result of its legislative mandate. All other operating expenditure has been reviewed and reprioritised based on the strategic objectives over the MTEF period. Total expenditure is expected to increase from R435.9 million in 2013/14 to R569.0 million in 2017/18, at an average annual rate of 6.4 per cent due to increase in employee costs as well as the implementation of special projects aimed at stabilisation of ICT systems and improvement of service delivery. Expenditure on goods and services is expected to decrease from R241.2 million in 2012/13 to R214.9 million in 2015/16, at an average annual rate of 4.5 per cent. The reduction of capital costs relating to the special initiatives incurred in 2013/14 to 2015/16 also contribute to the decreased spending over the medium term due to reprioritisation. CIPC has adopted a phased approach for implementation of special projects due to the limited capacity to implement major projects. An amount of R 150 million has been allocated for special initiatives over a period of five years, which will be funded through the approved retained earnings.

Rm Rm Rm Rm Rm

178.3 188.8 200.0 213.0 226.9

78.2 82.9 87.8 93.5 99.6

149.4 196.9 188.2 202.4 212.6

405.9 468.6 476.0 508.9 539.0

30.0 30.0 30.0 30.0 30.0

435.9 498.6 506.0 538.9 569.0Total Expenditure

Innovation and Creativity Promotion

Service Delivery and Access

Total operational expenditure

Special initiatives*

2015/16 2017/182016/17

Business Regulation and Reputation

Programme 2013/14 2014/15

*Special initiatives: Special initiatives relate to stabilisation of ICT systems and service delivery improvement programmes as identified in the strategy.



11.3 PROJECTED REVENUE

The Commission generates revenue from registration fees and annual returns. Revenue projections are based on the expected business activities and are expected to increase from R336.9 million in 2012/2013 to R371.2 m in 2017/18 at an annual average rate of 2 per cent. However, there will be a shortfall in revenue for the medium term. This shortfall will be funded through the total approved remaining retained earnings of R1.1 billion. In order to ensure financial viability a review of the fee structure will be initiated during the 2013/2014 financial year in order to develop a fee structure that will be aligned to the cost of rendering CIPC services.

61.4 67.5 73.8 77.5 81.4

1.6 1.6 1.7 1.8 1.9

45.0 49.5 50.0 52.5 55.1

18.8 19.7 20.7 20.9 21.1

197.4 197.9 198.0 202.0 206.0

15.0 10.0 5.0 5.3 5.7

339.2 346.2 349.2 359.9 371.2

96.7 152.4 156.8 169.0 157.8

10.0 40.0

435.9 498.6 506.0 538.9 569.0Total funds available

Total

Retained surplus*

2015/16

Intellectual Property

Corporate Information

Annual Returns

Interest on investment

Increase revenue - revised fee

2017/182016/17

Companies

Cooperatives

Revenue Stream 2013/14 2014/15

*Retained surplus Retained surplus approved by National Treasury for funding of special initiatives and improvement of service delivery.



PA R T C : L I N K S TO O T H E R P L A N S

12. LINKS TO THE LONG-TERM INFRASTRUCTURE AND OTHER CAPITAL PLANS

Asset Plan

Description 2013/2014 2014/2015 2015/2016

Rm Rm Rm

Furniture 10,000 6,000 6,500

Servers - ICT 4,000 2,000 2,000

Server room equipment 23,000 6,000 3,000

Shelving for new building 1,000 1,000 1,000

Desktop PC’s 2,000 2,000 2,000

Printers 6,000 3,000 3,000

Laptops 2,000 1,000 1,000

Scanners 4,000 2,000 2,000

Security Equipment 3,000 1,000 1,000

Office equipment 5,000 1,000 1,000

ICT software / programs 20,000 15,000 17,500

(CIPC) Strategy 2013 - 2018

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Transcript of (CIPC) Strategy 2013 - 2018