Innovation in business registration

For some years, the system for business registration in South Africa has been in crisis and in recent years there has been a process of reform designed to improve this problem.

I have been involved in various business environment reform programmes in a number of countries that focus on business registration and licensing, much of which has focused on how to reduce the steps and time required to register a business, while improving transparency. However, in South Africa the challenge has largely been an institutional one.

Ivor Chipkin and Barbara Lipietz, writing in 2012, provide an interesting review of the Companies and Intellectual Property Registration Office, CIPRO, from a new public management perspective (NPM) here. They argue that while company registration is an administrative task that is a basic condition of a market economy, if it is not performed successfully then economic life is placed in jeopardy. “Yet under the auspices of NPM company registration was placed at the mercy of CIPRO’s performance as a business”.

In May 2011 CIPRO was transformed into the Companies and Intellectual Property Commission (CIPC) with a mandate for the registration of companies, co-operatives and Intellectual Property Rights as well the enforcement of the Companies Act. CIPC administers fifteen pieces of legislation related to Corporate and Intellectual Property registration, maintenance and regulation.

This week the trade and industry minister announced a new initiative between CIPC and First National Bank (FNB).

In what they claim is a “world first” the agreement allows businesspeople to register a company while opening a bank account. FNB present the business registration process in its website in the following manner:

CIPC Registration: If you want to register a new Private Company and you apply for an FNB Business Account, we will help you register your business with CIPC at no additional cost.

Benefits

  • We help register your company with CIPC on your behalf when you apply for a Business Account for your newly founded Private Company!
  • No waiting in long queues at the offices of CIPC.
  • You will pay the CIPC registration fee of R125 only. We don’t charge you for the CIPC registration.
  • You will receive electronic copies of your CIPC Registration correspondence.

Company name arrangements: As a new business owner, the following options w.r.t. naming reservations are available to you, for your new Private Company

  1. No company name, using a Trading or Business Name, WHICH IS NOT REGISTEREDCompanies have the option of selecting its own business name or trading name, which is not registered with CIPC. There is provision for trading names in our Application Process. There is no fee or specific process attached to this arrangement. The only risk is if another company who owns that name as a Registered Company Name or Trade Mark, legally opposes the use of such a name, you might be asked to stop using it.

  2. No company name, using an enterprise number: This is what we currently accommodate through our Business Account application process. Nothing prevents the entity from trading with only a Company Registration Number.

  3. Attaching a name (by registering one) after company registration: Companies that wish to attach a name to a company after registration through our Application, need to reserve a name through the CIPC website. This costs R50.To add this name to the company, a special resolution has to be lodged with CIPC as it is considered an amendment to the company. This costs R250.

FNB will not charge a fee for this service, which is likely to affect the numerous firms who currently act as intermediaries for businesses wishing to register. The minister claims that these firms will now have to add more to their services if they are to survive.

This is an interesting initiative that should be watched. It applies an agency model that could be replicated in other countries. While authorising FNB to provide these services will not remove the broader challenges faced by CIPC, it appears likely that is will simplify and speed-up these processes for many new companies.

One comment

  1. One of the major problems new businesses face is that they have no idea what else they need to get started and what else they need to guarantee their success. I’ve put together a little guide on my website, hopefully it’ll help someone that is looking for a comprehensive guide. If you have any other links you think I should include I would really appreciate feedback. –

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