SA's Companies and Intellectual Property Registration Office (Cipro) is fighting against time to upgrade its current - and outdated - IT systems so it can implement the new Companies Act when it comes into force in April.
Cipro's urgency has come about because the implementation of a R153 million complete IT overhaul, in the form of a new electronic content management (ECM) system, which would have ensured the office met the new requirements, is on hold pending ongoing talks with Valor IT.
Elsab'e Conradie, Cipro's head of communication, marketing and stakeholder relations, says although the vital ECM implementation is on hold, the office is pulling out all the stops to upgrade its IT systems to be ready by April as an interim measure.
The ECM system was meant to move Cipro onto a fully electronic platform and improve its current controls. It should have been up and running in time for the new Companies Act, which was initially set to come into force in October, but was then delayed to this April.
Implementation of the R153 million IT system stalled after the contract with Valor IT was canned last May by minister Rob Davies. Davies cancelled the deal after a forensic report uncovered irregularities during the tender award process.
Valor IT took the Department of Trade and Industry (DTI) to court to have the contract upheld, and has apparently reached a confidential settlement with the department, after the Pretoria High Court ordered the parties to negotiate the issue.
However, ITWeb understands that there are several sticking points in regard to the settlement, which means the matter has not been resolved and negotiations are still ongoing. Until the talks are wrapped up, Cipro cannot proceed with the implementation of the ECM system.
New duties
The upgrade to the decades-old company law will require Cipro to perform several new responsibilities. Among these is the need to implement a range of electronic functions, with which its current legacy systems cannot cope.
Cipro is exploring other avenues to make sure it is ready by April, until the court negotiated settlement is wrapped up, explains Conradie. She says its current systems are functioning, but the office now needs to add in new functionality.
Conradie, who is on leave and does not have access to actual figures, says Cipro needs to upgrade various aspects of its IT systems to cope with new requirements detailed in the Act, which will come out of its IT project budget. These include electronic forms and the ability to allow companies to register symbols in their names.
“We will be ready, we have to be,” says Conradie, conceding that it would be catastrophic if the office could not implement new functions by the April deadline. Conradie does not expect large amounts of money to be spent on the stopgap solution.
Better controls
She adds that Cipro expects to move ahead with the ECM system once the legal matter has been wrapped up and the DTI determines the way forward. She explains that, although the office hopes to be ready for the new Act by April, the ECM system will also result in stronger controls at the registrar.
Cipro's database was plagued by abuse last year, as fraudulent tax refunds worth R51 million were paid out by the South African Receiver of Revenue (SARS), because companies' details were illicitly changed on the Cipro database.
The registrar was also lambasted after at least 11 companies were reportedly hijacked, as fraudsters removed legitimate directors and replaced them with others on the agency's database. A recent well-publicised incident saw the directors of mining company Kalahari Resources head to court to have their status corrected, after being “removed” from their positions.
In September, the office said about 10 000 companies filed director change forms each month, and around 10 of these - or 0.001% - are called into question. Conradie explains that after new manual-based controls were put into place in October, no further hijackings have been reported.
Sceptical
Despite the office's promises that it will be ready by April, Jacques Smalle, the Democratic Alliance's shadow deputy minister of trade and industry, argues that there is just too much work to be done.
“Cipro requires a major overhaul of its IT systems to be able to cope with its new responsibilities under the updated Companies Act,” says Smalle. He cites current issues with the office's functionality, such as complaints from company owners sent to the DA indicating the current system is not useable.
Smalle hopes the office is ready in time, because if it misses the deadline, “it could seriously complicate the administrative process companies have to go through to register or change their details”. In addition, says Smalle, the new Companies Act would also not be fully enforceable.
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