Copyright Review Commission Report - ICT Law and Regulation ...

King IIIPrincipleKing IIIRequirementsSAMRO SAMPRA NORMFor the same period,the two executivedirectors were paidR5 million in total(including bonuses),an average ofR2,5 million perdirector. The CRCcould not access thesplit between thebasic and bonuspayments for thesedirectors.The CRC could notassess the fairness ofthe amounts paid tothe executive directorsdue to theunavailability of thesplit between thebasic pay and bonuscomponent.The pay for the CEO isnot disclosedseparately and theentity could not providethe CRC with details ofhis pay.The CRC could notassess the fairness ofthe amount paid to theCEO.There are no executivedirectors.k.S30 ofCompaniesAct of 2008A company mustissue audited annualfinancial statementswithin six months afterend of the financialyear.Full compliance.The audited financialstatements for twoconsecutive financialperiods are not yetissued.The audited financialstatements for the yearended 31 December2010 were not issuedby 20 July 2011.7.3 CONCLUSION7.3.1. The CRC noted that SARRAL’s collapse was preceded by corporate governance failure, the highlights of whichinclude: The breakdown or significant weaknesses in internal controls (the auditors issued qualified audit reports for2003, 2004 and 2005 for failing to verify receipts from the SABC and distribution of royalties to members),the internal rules which were in conflict with the constitutive documents; The fact that the managing director was also the chairperson of the organisation; The outdated constitutive documents, which were also in conflict with the Companies Act of 1973; and The changes in accounting policies, which resulted in breaching of the members’ contracts.It is clear that the internal control and audit functions were not overseen by an effective audit committee.7.3.2. With regard to SAMRO, the following gaps were identified in its corporate governance structure: Constitutive documents are outdated and in conflict with the Companies Act; There are no independent directors; An internal audit function is not in place; Disclosure of the executive directors’ remuneration is limited (contravention of the Companies Act of 2008and the King III);- 52 -