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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with the constitutive documents; The fact that the managing director was also the chairperson of the organisation; The outdated constitutive documents, which were also in conflict with the Companies Act of 1973; and The changes in accounting policies, which resulted in breaching of the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regard to SAMRO, the following gaps were identified in its corporate governance structure: Constitutive documents are outdated and in conflict with the Companies Act; There are no independent directors; An internal audit function is not in place; Disclosure of the executive directors’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 -
The members’ rights are disempowered by these outdated constitutive documents; andThere is limited transparency with regard to the categorisation of membership.7.3.3. SAMPRA’s situation is as follows: The audited financial statements for the last two completed financial years have not been issued; There are no independent directors; No disclosure for executive directors’ remunerations; The annual reports are not published; and No reports are provided to the members with regard to the status of the internal control environment.7.3.4. With the exception of the issuance of the audited financial statements, the situation for NORM is not differentfrom SAMPRA.7.4 RECOMMENDATIONS7.4.1. With regard to the collapse of SARRAL, there are two recommendations for the liquidators:7.4.1.1. They should consider initiating a civil claim against SARRAL’s former auditors for failing to issue a qualifiedreport regarding SARRAL’s breach of members’ contracts by retaining more than the 7,5% of the totalcollections (SARRAL deducted between 30% and 40% to settle the liabilities of the company between2003 and 2008) as opposed to 7,5%, which was stipulated in the members’ contracts.7.4.1.2. They should consider initiating a civil claim against SARRAL’s former directors for allowing the company tobreach the members’ contracts.7.4.2. In order to improve the level of compliance to good corporate governance principles, the followingrecommendations are made:7.4.2.1. The law should be amended to allow for all music-rights collecting societies (SAMRO, NORM andSAMPRA) to fall within the ambit of the regulations issued under the Act.7.4.2.2. The Registrar should be empowered to take over the administration of any collecting society should he orshe be satisfied that such society is being run in a manner that is detrimental to the respective rightsholders;7.4.2.3. Adherence to the good principles of corporate governance should be compulsory for collecting societies;7.4.2.4. SAMRO should amend its constitutive documents in order to be aligned with the latest Companies Act andacceptable standards of corporate governance; and7.4.2.5. The existence of independent qualified directors (at least one-third of the Board membership) withincollecting societies is encouraged and recommended.- 53 -
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TABLE OF CONTENTSLIST OF ABBREVIATI
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11.8 RECOMMENDATIONS ..............
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LIST OF TABLESTable 1: Cases of Non
Page 8 and 9: NORMOSPsPOSAPPLPPL (India)ProLitter
Page 10 and 11: These problems are addressed in the
Page 12 and 13: xxi.The report considers developmen
Page 14 and 15: 1.3.8. Determine whether all money
Page 16 and 17: 1.4.9. The CRC derived considerable
Page 18 and 19: 2.3 SUBMISSION BY THE DEPARTMENT OF
Page 20 and 21: Aspects of Intellectual Property Ri
Page 22 and 23: (1) Subject to the provisions of th
Page 24 and 25: Copyright Tribunal or an arbitrator
Page 26 and 27: society, the South African Recordin
Page 28 and 29: 3.2.14. With the liquidation of SAR
Page 30 and 31: the final rate or rates to be appli
Page 32 and 33: (a)that payment is to be made to th
Page 34 and 35: information as to their use to enab
Page 36 and 37: The WCT and WPPT oblige members to
Page 38 and 39: Once the handset technology changed
Page 40 and 41: 4.3.16. In 2009, in what was coined
Page 42 and 43: 4.4.6. In exchange for the above li
Page 44 and 45: operators are licensed by NORM to p
Page 46 and 47: 5.2 FUNCTIONING OF COLLECTING SOCIE
Page 48 and 49: the grant of licences. Article 17 o
Page 50 and 51: 6.1.3. The CRC’s assessment of th
Page 52 and 53: 6.3.3. SAMPRA should be given one y
Page 54 and 55: Corporate Governance GapsKing II Re
Page 56 and 57: King IIIPrincipleKing IIIRequiremen
Page 60 and 61: 8 COLLECTION OF MUSIC ROYALTIES8.1
Page 62 and 63: 8.1.4.2. Needletime royalties are n
Page 64 and 65: 8.1.7.4. For the past five years, V
Page 66 and 67: PRS (UK)SPRE (FRANCE)SUISA(SWITZERL
Page 68 and 69: DetailsPerformance RightsSound Reco
Page 70 and 71: 8.2.7 Comparative Study Performed b
Page 72 and 73: y a collecting society. A rights ho
Page 74 and 75: agency, its rights being derived fr
Page 76 and 77: Mr Robinson said DALRO assumed the
Page 78 and 79: 10.1.6. The distribution to publish
Page 80 and 81: 10.4.4. Most of the other collectin
Page 82 and 83: 10.6.3.4. South African English-lis
Page 84 and 85: 10.10 CONTRACTUAL RELATIONSHIPS BET
Page 86 and 87: 10.12.2. The Regulations should rec
Page 88 and 89: licence that the licensee comply wi
Page 90 and 91: 11.4.6. The details of ICASA’s ta
Page 92 and 93: RecommendationsTimelines for Recomm
Page 94 and 95: enterprises. There was a suggestion
Page 96 and 97: Copyright as it relates to copyrigh
Page 98 and 99: 13.4 DEPARTMENT OF ARTS AND CULTURE
Page 100 and 101: Table 28: Comparative Study’s Key
Page 102 and 103: KEY ITEMS BRAZIL FRANCE INDIA NORWA
Page 104 and 105: KEY ITEMS BRAZIL FRANCE INDIA NORWA
Page 106 and 107: about 30%, which is the highest amo
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15.1.3. The Copyright Tribunal’s
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15.1.20. Local music content requir
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for the selected artists. The outco
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King III Report by Institute of Dir
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Paranagua Pedro, “Strategies to I
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Copyright Amendment Act of 1984Copy
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APPENDIX 1(B): SUMMARY OF ORAL REPR
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Due to the fact that the existing c
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Mr BrottelProtection of copyright m
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1.1.3. LIST OF ENTITIES VISITED AND
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In the 2009 Annual Report of ABRAMU
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The implementation of this law led
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ecordings. In respect of audio-visu
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In 1995, ECAD distributed 72% of it
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niches in the market to ensure fair
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Proprietary rights allow authors to
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International royalty distribution
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3.2. Relevant LegislationsThe prese
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IPRS uses the standard tariffs in r
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Ad-hoc workshops on copyright are c
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meaningful living out of their crea
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4.1.3. LICENSING AND LEGAL REGIMESI
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Ballet teachers; Teachers in the fi
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It was founded in 1928 by the Norwe
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6.2. STRUCTURE OF COLLECTING SOCIET
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6.5. COLLECTION OF MUSIC ROYALTIEST
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1957, when the Managing Director of
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16.4.14 SWISSPERFORM: CHF4 millionI
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Cross-border licensing of digital r
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algorithm could be used to determin
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Collecting societies in the UK all
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APPENDIX 3: RECOMMENDATIONS BY MITT
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1.PREAMBLEThe Music Industry Task T
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The environment in which the music
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3.1.3 IMPLEMENTATION AND ACCESSION
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In this regard, the Minister should
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3.5.6 OMBUDSMANThe music industry s
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RECOMMENDATION 23:The MITT recommen
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The MITT further recommends that DA
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APPENDIX 4A: EXTRACTS FROM COPYRIGH
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(f)(g)doing, in relation to an adap
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(i)requiring notice of any intended
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(b)any organization claiming to be
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PERFORMERS’ PROTECTION ACTNO. 11
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the parties may agree to refer the
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ANNEXURE 5: COPY OF SARRAL’S CONT
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ANNEXURE 6: SARRAL’S AUDIT REPORT
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TERMS OF REFERENCESNO’SREQUIREMEN
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