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September 7, 2015
Comments Off on The SA Social Media Landscape in 2015

The SA Social Media Landscape in 2015

The annual Social Media Landscape Report, compiled by Fuseware and World Wide Worx, is being released in under two weeks and contains some highly impactful findings on social media usage in South Africa. This report is a must for brands, agencies and marketers across the board to fully understand what is happening in social media.

The social media landscape in SA has shifted subtly but dramatically this year, especially in light of the large Instagram growth. Visually rich imagery dominates newsfeeds, and the new streaming content players are certainly going to see increased uptake in the next 12 months. Social media is evolving towards its pinnacle – on-demand content creation, consumption and engagement in any format, at any time and any place. There has been decreased brand content engagement the board, indicating that newsfeeds have become too saturated and brands need to start paying up to get to the reach and engagement they desire.

Although business impact in terms of revenues is difficult to quantify, engagement and reach of branded content has substantially shifted in 2015. Twitter has become far too crowded to become consistently useful for brands, resulting in large drops in engagement on brand content. Facebook engagement has risen slightly, but this boost is also coupled with an increase in paid media spend on the platform. Instagram is the social network star of the year, with triple digit user growth in the last year as well as engagement on brand content that is an order of magnitude higher than that of the other networks. Social media has also become a large traffic source for publishers and consumer-centric brands alike, and social media optimization (SMO) has become as critical as search engine optimization (SEO).

The use of social media as a CRM tool for businesses has increased dramatically, especially with smaller businesses beginning to use Twitter and Linked In to communicate with their customers. Social media sentiment can be used to drive business strategy and product innovation, serving as a far more fundamental piece of the business puzzle than just a communications function. Social media analytics are also used to accurately gauge what makes consumers tick about a brand, with this data serving as an input instead of just an output to successful marketing campaigns.

Social media growth is still solid, but has slowed across the board with the exception of Instagram, with most networks having grown at a modest 15-25% over the last year. We’ve seen new entrants that focus on live streaming of video content, Periscope and Meerkat, but they have not seen significant uptake in the local market as yet. Content has become much richer across the board, with a large emphasis on videos and high resolution pictures being shared. This trend reflects even on Twitter, where a single picture can tell a story far more than 140 characters of text can, and brands are capitalizing on this by publishing a large amount of visual content on the network. Companies have also gotten serious about spending on media, with a significant increase in paid media spend on Facebook, Twitter and Youtube respectively – however Facebook still remains the network that delivers the highest ROI to companies, according to our corporate survey.

Instagram is the fastest growing social network in the country, with triple digit growth in the last 12 months. The growth is also leap-frogging the normal early adopter crowd and reaching mass market earlier than usual, with local television celebrities and presenters leading the charts in terms of followers. Photo filter usage on the network has dropped to record lows, and the most engaged with images tend to have no filter at all, indicating that people have grown tired of the special effects that sparked initial interest to use the platform.

Facebook has experienced solid consistent growth across all segments, with one very interesting difference. Feature phone usage is plummeting in the platform and is associated with an equivalent rise in smartphone usage. As predicted, the low cost of entry level smartphones are proliferating the market and have shifted device usage significantly in only 12 months. Although the Nokia Asha still leads the way as the top phone used to access Facebook, usage of this phone on Facebook has dropped by over 400,000 people in the last 12 months.

Twitter has increased in usage over the last year, but growth has significantly slowed. With the recent Periscope acquisition, there is an increased emphasis towards integrating the platform with real-time streaming video content. Twitter engagement on brand content has dropped significantly compared to last year. Brands are posting more content than ever before on the social network, but even paid-for campaigns are often not seen as relevant by Twitter users. For the first time ever, more than 50% of all surveyed brands post content once per day or more – but this is translating to a sea of noise that doesn’t necessarily result in business value.

Linked In usage has grown significantly in the last 12 months, with a large number of smaller businesses joining the platform in 2015. Entry level workers represent the largest increase in numbers in terms of seniority level, growing by 21% in the last year. Operations, healthcare and education personnel are joining the network the fastest across all industries.

MXit has experienced a further decline in users compared to the year before, but the platform is also restructuring its business model to focus on empowering Africans and accelerating economic and social growth in the region, by placing a stronger emphasis on social services and associated programmes. A fundamental shift away from just the typical instant messenger model employed by WeChat or Whatsapp, it will also allow businesses to help make a difference in education and healthcare through CSI initiatives in the platform.

In a surprise finding, corporate blogging has seen a strong resurgence as the importance and relevance of long form content surpasses 140 character updates. Corporate blogs are seen as more effective marketing channels than any social network, as surveyed by SA corporates.

The headline results will be presented and discussed by the top industry influencers at the Social Media Landscape Briefing, held in Johannesburg on 16 September 2015, and in Cape Town on the 17 September 2015. To book a ticket to these events, click on the links below:

Book for the Johannesburg event

Book for the Cape Town event

Enquire about the report

nelson-mandela1
December 17, 2013

Twitter Pays Tribute to Madiba

Twitter pays Tribute to Mandela

proudlybroughtbyanc
October 9, 2013

#ProudlyBroughtByANC PR Spins Out of Control

With over 25,000 mentions from South Africa, #ProudlyBroughtByANC is possibly the hottest hashtag that has hit South Africa in recent political history, bringing satire to everyone involved. On the back of the DA’s eTolls billboard campaign, the ANC tried to use the hashtag to create a positive publicity spin on Twitter.

This Wednesday, Mike Wronski, MD of Fuseware, will be talking to Jenny Cwrys Williams, on 702 at 3pm, about the trend that has taken South Africa by storm.

The hashtag, which has been trending in South Africa since Monday, was first mentioned by Khusela Sangoni, whose Twitter profile states that she is the ANC’s National Media Liaison, and former ANC Youth League Spokesperson. Since then, 6.7% of all people who have spoken about the hashtag have indicated they are affiliated with the ANC in their Twitter bios. The rest of South Africa’s mentions paint a different picture.

@KhuselaK (ANC National Media Liaison) was the first person that tweeted the hashtag with a tweet reading “2 new universities #ProudlyBroughtByANC” at 12:50 PM on 7 Oct.

@shakasisulu, with almost 35,000 followers, joined the conversation soon after, tweeting “@gautrain #ProudlyBroughtByANC”.

@_KushCarter tweeted over 80 times, starting at 1:39pm on 7 Oct, spurring on the voice of the masses, many of his tweets receiving over 15 retweets, despite having only 439 followers. Most of the responses to his tweets were already highly negative.

Starting at 1:46PM, @theafricanchild tweeted over 125 times – very much pro ANC, again the replies to his tweets were highly negative.

Initial thought-leader, Jackson Mthembu got on the proverbial Twitter train at 2:04pm on 7 Oct with tweets like “#ProudlyBroughtByANC Freedom for all South Africans”.

@MyANC_, with 74k followers only tweeted once by retweeting Jackson and receiving 44 retweets. Followers are extremely pro-ANC and had positive response.

After this, the avalanche started gaining momentum as key influencers had joined the conversation and several highly active connected tweeters had started tweeting.

Sentletse (33k followers) and PearlThusi (123k followers) also started tweeted the hashtag after 2pm, and the rest is history. Within 24 hours, many SA celebrities and opposition parties had caught on and joined the fray. It had become the most viral hashtag in recent SA political history.

Twice as many tweets were made from Johannesburg versus Cape Town, of which 75% were from male contributors. Most tweets were made after 5pm when the rest of South Africa could join the conversation on Twitter, including celebrities and influencers such as Gareth Cliff, Helen Zille, Khaya Dlanga, Roger Goode and F1 Sasha.

August 22, 2013

Heavy Chef with Michael Jordaan – Twitter Insights

Last night I had the privilege of hearing Michael Jordaan speak for the first time – and what a speaker he is. He spoke about business innovation using metaphor and stories which everybody could relate to, and everybody walked away inspired afterwards. Fuseware monitored Twitter mentions of the event, and found 798 mentions from 207 different people. Here are some of the stats, if you’re interested:

Most Influential People

Person Followers Description Relevant Mention
Trendsmap-logo-_dark___1__normal TrendsSthAfrica 56,102 Real-time South Africa Twitter trends #heavychef is now trending in South Africa http://t.co/2CuazzNYPS
(link)
E02ffc09892f89f5801c2fe6def838d5_normal MichaelJordaan 32,679 Banker, economist and wine enthusiast That’s me “@RichMulholland: I took a quick snap at tonight’s #HeavyChef http://t.co/Bxt7RIEMbZ
(link)
Trendsmap-logo-_dark___1__normal TrendsJoBurg 25,704 Real-time Johannesburg Twitter trends #heavychef is now trending in #Johannesburg http://t.co/WyftiKOh3l
(link)
Tweet-avatar_normal AntonRSA 10,425 Your local digital marketing guy into lead generation, online credibility, and customer communication. Likes blogging, golf, photography, and music. At the #heavychef event http://t.co/lb3Cj8jSOX
(link)
E61de9bd1bf23bcb7b147cfe16575ee8_normal mikestopforth 8,924 The law of averages says I have about 14 000 days left on this planet. I’m bent on making the most of all of them. Proudly South African. CEO at @cerebra. kudos to the @mikesharman mini-bomb… PRT @mylifescape: A picture of me and Michael Jordaan CEO of FNB #heavychef http://t.co/R1NDwh9oi7
(link)
E5c8116885af9050570dff4c061b99bf_normal SiliconCape 8,902 Silicon Cape Initiative : supporting innovative Cape Town technology startups. RT @MichAtagana: No one smarter than everyone. @MichaelJordaan #HeavyChef
(link)
Walter_pike_02_-_version_2_normal walterpike 6,910 Marketing in the social era, Founder of PiKE & The Digital Academy, TEDx Organiser #slutwalkjhb organiser, Pro Speaker, Opionisista, Photog & Polo player. Rushing to #HeavyChef at a rate of knots hope traffic plays the game.
(link)
196be672e3ee3170422dc7ede2c470ff_normal DeloitteSA 6,560 Follow Deloitte South Africa here. RT @AvSchalkwykZA: Great crowd for the #heavychef session hosted at Deloitte’s offices in JHB. http://t.co/X52eioPlyw
(link)
47894f45f8c088338796ab12beaba11a_normal RichMulholland 5,981 An Inked-ellectual Gentleman I took a quick snap at tonight’s #HeavyChef / #nokiaRSA http://t.co/G7GPNAJ30q
(link)
Bc79bff5be2a92008e35a20afd5e5f00_normal pauljacobson 4,850 Web.Tech.Lawyer, photographer and thinker of deep thoughts. I run @JAttorneys and @WebTechLaw. Allergic to stupid. The legal stuff: http://t.co/pKnZZ6D2Ly RT @AvSchalkwykZA: Great crowd for the #heavychef session hosted at Deloitte’s offices in JHB. http://t.co/X52eioPlyw
(link)
26d9341a642df8cf2226f1d4113e4ba0_normal mylifescape 4,002 Head of Digital+Strat | Global Mouse. Founder of #DigitalCrunch. Budding Artist. Speaker. Motivating people towards greatness. Creating opportunities. Looking forward to #HeavyChef – Michael Jordaan on How Digital Innovation is Transforming the Banking Sector @heavychef
(link)
4f9f14d6d51f43c17e745f5d8d0d6b79_normal ianollis 3,484 South African Member of Parliament, innovative leader, Liberal Democrat and Shadow Transport Minister. Daily Maverick Opinionista @mikewronski @MichaelJordaan #heavychef Yes. We don’t like change. Especially when it’s got teething problems!
(link)
E552c403a2fccf0a8cb0a63af57f9f39_normal GerardZA 2,871 Cruising the digital frontier *audere est facere* \(⊙▂⊙)/ RT @SPiVs: Sounds like FNB delivers more tablets than Dischem. #HeavyChef #NokiaRSA #FNB
(link)
Bcb85066a84fef0b55c7bd2dcdd1280a_normal followme_Africa 2,816 I verified my own account twitter took too long!! #teamfollowback RT @Tweetpohtato: ideas are welcomed … but never create an expectation and then crush someone’s dream. #heavychef #nokiaRSA
(link)
Fred_normal Fred_Roed 2,799 CEO of World Wide Creative. Co-founder of the Heavy Chef project. A marketing, evangelising, brand building, feeling-lucky-punk kind of guy. All calm before tonight’s #heavychef session @DeloitteSA Woodmead. http://t.co/x3V5SNB1r7
(link)
Ea7b83e78926f54efb42afddf3693f7f_normal mikewronski 2,762 MD @Fuseware, product dev @Primedia. Technologist, data analyst, consultant, speaker, wannabe guitar player. Want to self-actualize society, 1 step at a time Largest audience ever at tonight’s #heavychef session. @MichaelJordaan speaking about innovation http://t.co/Ci1jjrdYLH
(link)
Image_normal CathrynR 2,760 Product Manager at http://t.co/KfU5tghJ RT @Ceej_Robs: Innovation can only happen in an empowering culture #heavychef #nokiaRSA
(link)
Ca75b4e1bfa8f861e306c87e2037fa02_normal shawnjooste 2,638 My hair defies gravity, heavy right foot, have camera in hand, writes about cars … sometimes That explains it. RT @Fred_Roed: So, turns out that @elonmusk was at nursery school with @MichaelJordaan. #heavychef #nokiaRSA
(link)

Top Retweets

Tweet Retweets
RT @TheLukism: Innovation heros are the guys who navigate corporate beuracracy to take ideas to reality – @MichaelJordaan #HeavyChef #Noki… 9
RT @Fred_Roed: The crowd tonight @heavychef / #NokiaRSA http://t.co/rShreKZ0A2 8
RT @JonHoehler: Have FUN, COFFEE & ALCOHOL, we don’t need to take ourselves seriously. True story from @michaeljordaan at #heavychef http:/… 6
RT @AvSchalkwykZA: Great crowd for the #heavychef session hosted at Deloitte’s offices in JHB. http://t.co/X52eioPlyw 5
RT @malizab: #HeavyChef We respect our competitors. What keeps us up at night are not our competitiors but technology. @MichaelJordaan 5
RT @Tweetpohtato: The Innovator’s dilemma: ideas are worthless, unless you can *implement* them #heavychef #nokiaRSA 5
RT @RichMulholland: I took a quick snap at tonight’s #HeavyChef / #nokiaRSA http://t.co/G7GPNAJ30q 5
RT @Tweetpohtato: ideas are welcomed … but never create an expectation and then crush someone’s dream. #heavychef #nokiaRSA 5
RT @TheTijn: Ernest Shackleton, set an impossible challenge. People flocked to follow. – @MichaelJordaan #HeavyChef #nokiaRSA 4
RT @Fred_Roed: Mnr @MichaelJordaan is sharing some extraordinary stories how the innovations at FNB came about. #heavychef #nokiarsa 4
RT @MichAtagana: Ideas are important but mean nothing unless implemented #HeavyChef #nokiarsa 4
RT @SPiVs: Sounds like FNB delivers more tablets than Dischem. #HeavyChef #NokiaRSA #FNB 4
RT @heavychef: Lots of excitement for tonight’s #HeavyChef event with @MichaelJordaan.If you’re joining us,please be aware that the talk wi… 4
RT @AntonRSA: Ideas are nothing if you cannot implement them #heavychef 3
RT @SaliEsmail: "Not taking risks is a riskier strategy than taking risks" @MichaelJordaan #heavychef 3
RT @Fred_Roed: So, turns out that @elonmusk was at nursery school with @MichaelJordaan. #heavychef #nokiaRSA #arbitaryfunfact 3
RT @Ceej_Robs: Innovation can only happen in an empowering culture #heavychef #nokiaRSA 3
RT @mikewronski: Implementing daylight savings time in SA would immediately reduce energy consumption by 4% @MichaelJordaan #heavychef #inn… 3
RT @ClassicMoose: ‘Surround yourself with great people and let them get on with it’ #HeavyChef 3
RT @ClassicMoose: ‘Take risks, make mistakes’ #heavychef 3
RT @MichAtagana: When FNB starts it own green grocer I am swapping banks #HeavyChef #nokiarsa 3
RT @mikewronski: Technology is moving so fast that the thing now holding it back is human behaviour – @MichaelJordaan #heavychef 3
RT @farhaadS: Harness the wisdom of the employees to generate better ideas. Collectively Awesome ! #heavychef #NokiaRSA 3
RT @CraygH: Big ideas are great but if you can’t implement them they mean nothing | #nokiaRSA #HeavyChef #whywedodigital 3
RT @chp365: "If you only have a hammer, everything looks like a nail" – @MichaelJordaan on innovation at #HeavyChef, cc #NokiaRSA. 3

Top Hashtags

Hashtag Mentions
#heavychef 503
#HeavyChef 223
#NokiaRSA 189
#nokiaRSA 100
#nokiarsa 96
#FNB 39
#MJ 30
#Heavychef 14
#Noki 9
#innovation 8
#HeavyChefs 6
#nokiasa 5
#arbitaryfunfact 4
#whywedodigital 4
#wisdomofeveryone 3
#inn 3
#MichaelJordaan 3
#whoknew 3
#Johannesburg 3
#RewardInnovation 2

Top Words

Word Mentions
heavychef 823
nokiarsa 410
michaeljordaan 320
innovation 155
fnb 112
ideas 83
tonight 70
risks 65
take 63
don 49
people 47
great 46
michael 43
nothing 42
jordaan 40
one 39
make 38
taking 37
implement 34
never 34

Top Domains Shared in Conversations

Chart?chco=fff804,336699,339933,ff0000,cc99cc,cf5910&chf=bg,s,ffffff&chd=s:9iieee&chdl=trendsmap.com|withloveretro.wordpress.com|instagram.com|dlvr.it|www.heavychef.com|app.box

Gender Profile

Chart?chco=fff804,336699,339933,ff0000,cc99cc,cf5910&chf=bg,s,ffffff&chd=s:9d&chdl=male|female&chtt=gender+distribution&cht=p3&chs=400x300&chxr=0,40,19

twitter_accounts-e8dc8dd8f019c54d3eaf87d12051f3ad
August 12, 2013

SA Social Media Landscape 2014 – New Insights

The date draws closer to the 2014 SA Social Media Landscape release, as well as the Social Briefing event. Some preliminary insights were posted earlier on this blog, here are some more that have been uncovered:

Brand response time of top brands is lacklustre. A social media analysis of the top 25 SA brands discovered that their average response time to comments on Facebook stands at an uninspiring 645 minutes, while the Twitter response time of the same set of brands is 271 minutes.

Competitions, although seemingly outdated, are still highly effective. The top retweets and Facebook posts across 25 top SA brands have a large proportion of competitions and giveaways in exchange for tweets, likes and similar engagement.

39.2% of all the mentions of South Africa’s top brands on Twitter are retweets. This indicates that consumers are seeing the value in brand related posted content, either by the brand itself or by brand ambassadors and relevant influencers.

Consumers close the gap between offline and online mediums. As South Africans have become used to social media, it has become the go-to source to discuss topics being discussed in radio, TV and print, in real-time. South Africa’s most popular TV shows all become top trending topics in the country for the broadcast duration.

Facebook is the most effective social media channel for big brands. Of 57 SA brands surveyed, 52% said that Facebook is either completely effective (5/5), or highly effective (4/5), the highest percentage of any social network.

Brands are investing in content rich mobile apps. Of the 57 brands surveyed, 67% are planning on creating mobile apps in 2014.  A reasonable 47% of brands are also planning on creating rich multimedia content, such as videos or podcasts.

The report will feature some fantastic content and insights into the local social media landscape, including:

  1. Insight from SA’s top 10 agencies on social business
  2. Survey results from 60 SA brands on social media usage
  3. Analysis of SA’s top 25 brands, and their social media content
  4. Demographics and analysis of 8 of the major social networks in SA

To be one of the first to know when the report is published, please subscribe to the Fuseware Insights newsletter today.

Subscribe to the Fuseware Insights newsletter
grapes
July 17, 2013

The Deloitte Postdigital Grapevine – Social Media and the Role of the Internal Audit

This article’s full contents are available on the Deloitte blog.

Organisations today are embracing new digital technologies to leapfrog or keep pace with growing competition in the marketplace. Powerful platforms (such as mobile, analytics, social media, cloud, and cyber intelligence) can potentially impact every facet of the organisation and create new opportunities. However these emerging technologies and platforms can also introduce significant disruptive forces into the business. The convergence of these macro forces reflects a new basis for competition, is changing the environment in which we both live and work, and has become the core of the “Postdigital Enterprise”.

No longer confined to areas of entertainment and life management, social media and social software have become an integral part of the postdigital business landscape. According to the South African Social Media Landscape 2012 study, 95% of major brands surveyed have some form of social media strategy aimed at
consumers. With more and more users linking, liking, friending, and following, the “postdigital grapevine” is an important medium for communicating with customers, increasing brand awareness, and promoting innovation and collaboration among employees.

According to The South African Social Media Landscape 2012 study 15% of companies using social media believe their skills are optimal, which may explain why most companies surveyed intend to make investments in training existing staff in social media best practices. Social business is typically viewed as a tool for external-facing activities, and is considered particularly useful for managing customer relationships. Increasingly, its relevance to innovation and competitive differentiation is also being recognised.

For many companies, the barrier to adopting social business is risk. According to a 2012 survey of 192 executives conducted by Deloitte & Touche and Forbes Insights, social media was identified as the fourth largest risk over the next three years, through 2015, placing it on par with financial risk. These are the risks that companies should be aware of:

Brand and reputation damage
Numerous corporate social media debacles over the last few years have brought attention to the phenomenon of brand sabotage. They have also demonstrated why brand stewards should be concerned about attacks – whether intentional or unintentional – on their brands.

Regulatory compliance
Compliance and legal risks arise from potential violations of or nonconformance with laws, rules, regulations, prescribed practices, internal policies and procedures, or
ethical standards. These risks also emerge when an organisation’s social media policies and procedures may not have kept pace with regulatory changes. Failure to adequately address these risks can expose an organisation to enforcement actions and/or civil lawsuits

Information leakage
Information leakage prevention is an effort by companies to keep sensitive information from leaving the virtual walls of the organisation. Because social media allows employees to speak to broad audiences, insufficient controls could lead to the disclosure of sensitive information, such as personal accounts, health information, intellectual property, customer data, personally identifiable
information, etc. Information leakage may result in loss of competitive advantage and brand damage.

Third-party risk
Outsourcing social media activities can expose companies to substantial risks, particularly copyright and trademark infringement. For example, business impersonation (in which social sites or social identities that are similar to your company’s name or brand are used for unauthorised business activities) can facilitate abuse of business trademarks and copyrights. In addition, organisations that have relationships with third-party affiliate marketers run the risk of non-compliance with applicable state and federal laws that govern advertising and marketing activities. Any advertising or marketing activities that take place through social media are subject to the same rules and regulations that similar practices would be in traditional media.

Governance risk
A lack of governance can result in many uncoordinated and inefficient activities, which can also lead to missed opportunities for gaining competitive advantage or sustaining market leadership. The urgency to meet the needs and expectations of departments across the organisation, exacerbated by enterprise-grade solutions that are often procured without IT oversight, can result in even greater chaos.

Value-adding role for Internal Audit
Leading practices for social media are still in their nascent stages and have, to a large degree, evolved reactively. What’s more, many organisations have only fragmented views of their social media infrastructure, which hinders effective risk management.

April 23, 2013

The new Companies Act – Responsibility of directors vs the role of the Regulator

This article was originally published by Deloitte on the Deloitte Blog.

CIPC no longer required to approve company actions and documentation

The new Companies Act, 2008 (the Act) has now been effective for almost two years, and despite much anxiety and uneasiness about the quality of the legislation prior to its implementation, the transition from the old to the new Act can be described as (almost) smooth.

Responsibility of directors

A key feature of the new Act is that it clearly emphasises the responsibility and accountability of directors. By accepting their appointment to the position, the directors indicate that they will perform their duties to a certain standard, and it is a reasonable assumption of the shareholders that every individual director will apply his or her particular skills, experience and intelligence to the advantage of the company.

The Act codifies the standard of directors’ conduct in section 76. The standard sets the bar very high for directors, with personal liability where the company suffers loss or damage as a result of the director’s conduct not meeting the prescribed standard. The intention of the legislature seems to be to encourage directors to act honestly and to bear responsibility for their actions – directors should be accountable to shareholders and other stakeholders for their decisions and their actions. With the standard set so high, the unintended consequence may be that directors would not be prepared to take difficult decisions or expose the company to risk. Since calculated risk taking and risk exposure form an integral part of any business, the Act includes a number of provisions to ensure that directors are allowed to act without constant fear of personal exposure to liability claims. In this regard, the Act has codified the business judgement rule1, and provides for the indemnification of directors under certain circumstances, as well as the possibility to insure the company and its directors against liability claims in certain circumstances.

In addition to the codified standard of directors’ conduct, the Act also provides for personal liability in instances where anybody suffered loss or damage as a direct result of non-compliance with the provisions of the Act (see section 218(2)). The intention of the legislature here seems to be the decriminalisation of corporate law, and to move the onus for ensuring compliance to the directors individually, and to the company. The regulator and the State will only be required to ensure compliance in very specific instances (i.e. where the Act provides for the Companies and Intellectual property Commission (CIPC) to issue a compliance notice, or where non-compliance is specifically classified as an offence). In every other instance the provisions of the Act may be ‘enforced’ by means of civil action by the stakeholders of the company (shareholders, employees, creditors, members of the community, etc.).

Revised role of the CIPC

The Act specifically reduces the company’s reliance on the regulator, the CIPC. Although companies still have to comply with an administrative process to inform the CIPC of its decisions (for example the appointment of directors, changing of auditors, change of year end, amendment of the Memorandum of Incorporation), none of these decisions are dependent on the approval of the CIPC. In most instances, the company’s decision is effective immediately and it merely needs to inform the CIPC of decisions or actions. However, in a few instances the effect of the decision is delayed until the necessary notices have been ‘filed’ with the CIPC.

Companies are often required to “file” a notice with the CIPC. Section 1 provides that “file”, when used as a verb, means to deliver a document to the Commission in the manner and form, if any, prescribed for that document. If one looks at the Regulations, (Regulation 7 and Annexure 3), it clearly indicates that when a document is “delivered” to the CIPC, the date and time of delivery is determined as follows:

methods

It should be clear from the table above that “file” and “deliver” is defined so as to simply mean that a document must be submitted to the CIPC. There is no subsequent requirement for the CIPC to check or approve the particular action. Of course, the company needs to ensure that the particular filing complies with the provisions of the Act (relevant form completed correctly, required supporting documents attached, and the prescribed fee paid). Where the company fails to comply with the provisions of the Act, the company and its directors may be liable.

In order to illustrate the above conclusion, the provisions of the Act with respect to a few company actions will be investigated. To date, the CIPC still adheres to the approach followed by the old CIPRO, in that they regard it as a core function to check and approve all documents filed with them, and then inform the company as to whether or not the particular company action is approved or rejected. This approach is outdated, and not provided for in the new Act. On the contrary, section 6(8) and (9) clearly provides for a ‘substance over form’ approach, and indicates that even if there is a deviation from the design or content of a prescribed form, or in the manner of delivery, it does not invalidate the action taken.

Appointment of directors

In terms of section 66(7):

  1. A person becomes entitled to serve as a director of a company when that person
  2. has been appointed or elected in accordance with this Part, or holds an office, title, designation or similar status entitling that person to be an ex officio director of the company; and
  3. has delivered to the company a written consent to serve as its director.”

In turn, section 70(6) requires every company to file a notice (CoR39) within 10 business days after a person becomes or ceases to be a director of the company.

Thus, in terms of the Act the appointment of a director is effective as soon as he/she is appointed or elected, and has confirmed in writing that they are prepared to accept the appointment to the board. The CIPC has no role to play in the appointment of directors. The filing of the relevant notice does not affect the validity or the time of the appointment.

The question arises as to what would be the consequence if the CIPC fails to update its register of directors, delays the updating of the register, or includes incorrect information in the register?

Despite the requirement to file a notice of the appointment or removal of a director to the CIPC, the company is obliged to keep a record of its directors (section 24(3)(b) and 24(5)). This record may be accessed by any person who holds or has a beneficial interest in any securities issued by a profit company, or who is a member of a non-profit company. Any other person has a right to inspect or copy the register of directors of a company, upon payment of a prescribed amount. As such one may conclude that the register held by the company should be regarded as the ‘official’ register of its directors, and it is this register that should be consulted where there is a discrepancy between the company’s register and CIPC’s register, or where there is confusion or uncertainty as to the identity of the company’s directors.

Change of the financial year end

In order to determine the exact date and time on which the financial yearend is changed, one needs to look at the provisions of the Act. Section 27(4) of the Companies Act determines that:

  1. “The board of a company may change its financial year end at any time, by filing a notice of that change, but—
  2. it may not do so more than once during any financial year;
  3. the newly established financial year end must be later than the date on which the notice is filed; and
  4. the date as changed may not result in a financial year ending more than 15 months after the end of the preceding financial year.”

As pointed out above, ‘filing’ in terms of the new Act simply means that the notice had been received by the CIPC (recorded in the CIPC’s computer system, or the date on which registered or other mail is received by the CIPC). The CIPC is not required to approve or vet any decisions or actions of the company. The changing of the company’s financial year end will be complete once the relevant notice (CoR25) was received by the CIPC.

Change of auditor

The Act requires certain companies to appoint an auditor (public companies, state owned companies, and any other category of company that meets the requirements set out in the Regulations). The Act provides for the appointment of the auditor by shareholders at the annual general meeting, and where a vacancy exists for the directors to fill the vacancy within 40 business days. Section 85(3) requires the company to file a notice (CoR44) within 10 business days after making the appointment. In addition, the company has to maintain a record of its auditors (section 85(1)). Again, the Act does not link the filing of the relevant notice to the effectiveness of the appointment. However, where an auditor resigns, the Act expressly states that the resignation of the auditor is effective when the notice is filed (section 91(1)). This implies that a resignation letter submitted to the company by the auditor is not sufficient to terminate the appointment of the auditor. In order to complete the action, the company has to file the CoR44. The resignation will only be effective on the date and time when the notice was received (and recorded) by the CIPC.

Amendment of the Memorandum of Incorporation (MOI)

Where a company amends its MOI, it has to file a Notice of Amendment (CoR15.2) within 10 days after such amendment (section 16(7) read with Regulation 15(3)). Where a company amends its MOI by means of a special resolution of shareholders (as provided for in section 16(1)(c)), the amendment will not be effective immediately. This constitutes the one instance where the Act delays the effectiveness of a special resolution of shareholders. Under other circumstances, a special resolution will take effect as soon as the required number of votes is obtained. However, where a special resolution is obtained to amend the MOI, the amendment to a company’s Memorandum of Incorporation takes effect on the later of the date on, and time at, which the Notice of Amendment is filed, or the date, if any, set out in the Notice of Amendment (section 16(9)).

Conclusion

The new approach to enforcement of the Act, as illustrated by the examples above is in line with the Government’s objectives for reform of our corporate law. The high-level objectives of the new Companies Act (as per a DTI presentation to Cabinet, dated 31 January 2007) were to:

  • Reduce regulatory burden for small and medium-sized firms (mostly owner-managed, privately owned)
  • Enhance protection of investors through enhanced governance and accountability (esp. public interest companies), minority protection and shareholder recourse
  • Create a more flexible environment, without comprising regulatory standards and objectives, to enhance investment.

The effect of the corporate law reform is clearly that the regulator now regulates with a much lighter touch, and that companies and directors need to bear responsibility for their actions. As a consequence, this new regulatory regime allows companies to take and implement is own decisions much easier and quicker, without having to wait for approval or a go-ahead by the CIPC. In most instances, mere ‘filing’ and ‘delivery’ will suffice to ensure compliance with the Act. Where documents are rejected by the CIPC, it does not invalidate the particular company action – it merely implies that the company needs to improve its administrative game. Of course the new approach also points to the need for directors to carefully consider their decisions and actions, and to take into account the wider context and impact of such decisions. The Act clearly made it easier for companies to conduct business and has upped the ante for directors.

Queries: Dr Johan Erasmus – jerasmus@deloitte.co.za
The Woodlands, 20 Woodlands Drive, Woodmead Johannesburg South Africa

April 17, 2013

The Internet is Crowdsourcing the Identity of the Boston Bomber via Online Photo Analysis

boston-bomber

My heart goes out to all the people affected by the bombing that took place in Boston earlier this week, what a terrible tragedy.

There is one very interesting trend that has come out of this situation – the Internet has united together to sift through massive volumes of photos and videos taken at the event to disseminate information that may lead to the capture of the people behind the bombing.

This is a historic first, and shows just how profoundly the Internet has affected people and access to information.  A “findbostonbombers” subreddit forum was set up to bring thousands of Internet detectives together to sift through the volumes of data on social networking site Reddit. Several hours since its inception, several suspects have already been identified from photos. There is also an entire Imgur gallery showing suspects as well as photos linking evidence. The speed and efficiency of such work is unprecedented, but it also comes with some dangers.

Mob justice has been known to quickly overtake the Internet and threaten the lives of innocent people. If one of the suspects is wrongly accused and the “crowd” decides that they are the perpetrator, there is no doubt that their safety would be threatened. What the Internet giveth in the collective wisdom of crowds, the Internet also taketh in the form of their collective stupidity. I’m almost certain this crowdsourcing of evidence will lead to a fast crack down of those responsible, but it will only be smooth sailing  if no judgement calls are made before authorities confirm the evidence.

What does this mean for the future? It seems that we are already living in a weird dystopian future where we are linked up to this real-time information machine known as the ‘net. Citizens of the net, we have a collective responsibility to ensure that information is used correctly, spread fairly and not allow emotions get the better of our judgement. We have all become content creators, disseminators, aggregators and connectors through the enabler of social media, and it is now more important than ever to realize the collective power this premise holds for humanity.