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Poor management of an SME could land you in court

Metrosmag,SA

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As the owner or manager of a privately-owned business, you may not think that you need the insurance protection that large, listed companies have for their directors and officers.  However, companies of all sizes, even non-profit organisations and membership associations need comprehensive cover for liabilities that could arise from wrongdoings by directors and officers in conducting their managerial responsibilities.  D&O liability insurance has a vital role to play in any business, regardless of size or nature of ownership.

This is according to Geoffrey de Pinchart, Business Unit Manager for Directors and Officers Liability at Aon South Africa. “Statistics over the last decade show that D&O claims against privately-owned businesses and non-profit organisations are as prevalent as in large listed entities. Yet research by Datamonitor suggests that 70% of SMEs do not have D&O cover despite the increased regulatory scrutiny and the more litigious nature of society, leaving executive management in private firms exposed.”

What is D&O liability insurance?

The main purpose of a D&O policy is to offer financial protection for executives, which provides investigation and defence costs together with awards for a valid claim. The cover that a D&O liability insurance policy provides is an absolute necessity when it comes to the protection of the personal assets of directors, officers and other employees that are charged with supervisory and managerial responsibilities, who can be held liable for wrongful acts which may occur in their day-to-day management activities.

“A D&O claim is typically made by a third party that has some relationship with or interest in the company – such as shareholders, investors, customers, consumer groups, competitors, unions, contractors and even government – who alleges that a director or officer has acted wrongfully, and in most instances, causes a financial loss to the third party.  A loss suffered by a third party will usually be followed by litigation against the individuals who own and manage it, with substantial legal costs to defend such action, and sometimes even civil damages being instituted. A wrongful act is typically defined as an actual or alleged breach of duty, breach of trust, neglect, error, misstatement, misleading statement, omission, breach of warranty or authority or any other act, but excluding intentional and deliberate acts,” explains Geoffrey. 

But does management of SMEs really have exposures to seemingly ‘corporate’ liabilities?

Although the financial quantum may differ between a large listed company versus a private owner-managed business, many of the exposures faced by D&Os in both are the same.  For example they can be held liable for pollution incidents, cyber breaches, for the debts of the company should it go insolvent, for employee injuries at work, unfair dismissals or sexual harassment charges.

In 2014, the managing director of clay-mining company Blue Platinum Ventures became the first company director in South Africa to be held personally liable for a mining-related environmental offence. The cost of rehabilitation in the Blue Platinum Ventures case was estimated by the court at R6.8-million and gave the director a five-year suspended sentence on condition that the damage was rehabilitated in three months. It was the first time that a director has been sentenced to imprisonment without the option of a fine and also the first time that a sentence has been linked to environmental rehabilitation

“There is also a perception that professional indemnity (PI) insurance taken out by the likes of engineers, accountants, attorneys, healthcare professionals and so on would respond in a D&O claim, which is not the case as PI and D&O cover serve very different purposes. The PI policy provides cover specifically relating to the professional services rendered, whilst a D&O policy provides cover for mismanagement and failure to supervise appropriately. Some insurers add a PI exclusion to their D&O policies, while others provide cover for failure to supervise should their staff cause a PI exposure to the company as a direct result,” explains Geoffrey.

The reality is that D&O claims are stressful and long-tailed, with the legal process often taking years to come to conclusion.  For a privately owned business, this can distract the key directors from running the business effectively. It’s also unlikely they will have experience in such matters, nor the access to internal HR and legal departments to counsel them through the process.  Most crucially in private companies, directors often invest their own personal wealth to get the business up and running, which means the cost of defending a claim without D&O cover could impact their family’s financial security and personal assets.

“Where a claim is lodged, the cost of legal defence and investigating an allegation, even if proved unfounded, can run into millions of Rands, draining personal financial resources, as well as the human resources that should be focused on running the business. Many small companies may be dealing with larger corporations who have legal teams and may take legal action against the board should they feel the director caused them a loss and would be prepared to take this to court as they have the funds to do so. Many directors of SMEs would not have the funds to get professional legal assistance without the protection afforded by a D&O policy,” concludes Geoffrey.

Talk to a professional Aon broker with a deep specialisation in the D&O liability environment backed with the right D&O cover to protect your business, reputation, personal assets, colleagues and financial sustainability.  Globally, Aon has driven the progression of Directors’ and Officers’ (D&O) liability insurance for over 20 years and has developed many products that are now accepted industry standards.  Aon places more than $2.6 billion in D&O liability premiums annually.

Metrosmag,sa ( inspired by Mzansi Lifestyle ) Mzansi is rich in Lifestyle, a nation diverse in race and culture. Mzansi Magazine explores the rich heritage , versitile culture and the celebrations of Life in Mzansi. Metros Magazine, SA is South Africa's informative Metropolitan lifestlye magazine with all the fresh and important news in Mzansi.

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Veolia signs landmark B-BBEE deal with Ceracue

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“Veolia was looking for a local development partner with strong project experience in the water treatment markets,” explains Gunter Rencken, Managing Director, Veolia Water Technologies South Africa. “In Ceracure, with whom we’ve had a less formalised working partnership for about four years, Veolia has a hands-on, active B-BBEE partner with a thorough understanding of our core business and the water treatment market.”

This close alignment in corporate vision lays the basis for a synergistic approach to increased business development in both South Africa and Africa. “With this partnership in place, Veolia can confidently amplify business development avenues and enhance our project reach in the municipal and industrial markets,” Rencken continues.

“In addition to demonstrating Veolia’s seriousness to transformation and social development, it also means we’ll be able to supply water treatment solutions encompassing a broader scope of works,” explains Langa Nxumalo, Managing Director, Ceracure. “Together, we can advance our technical and business capabilities, offering a superior and integrated solution for water treatment projects. This ‘one plus one is equal to three’ strategy will allow better project execution in line with clients requirements, all thanks to a good balance sheet and technical experience by Veolia.”

The partnership will also see Veolia South Africa taking an active approach to expanding Ceracure’s business capabilities. “We are assisting Ceracure with achieving a higher CIDB grading, and have planned for a structured transfer of technology and skills of Veolia’s water treatment expertise to Ceracure,” Rencken explains.

Veolia’s shareholding arrangement with Ceracure represents an important pillar of the company’s new vision that is enhancing the water solutions specialist’s delivery of highly efficient, low-footprint water treatment technologies in South Africa and Africa. Alongside the B-BBEE deal are a range of recent organisational and technological innovations that have streamlined the company’s manufacturing, distribution and service networks across the region. Veolia South Africa is now positioned as a key technology and manufacturing hub for Veolia’s new range of standard engineered products and systems as well the company’s range of Hydrex™ speciality chemicals.

“We are excited to welcome Ceracure on board, and look forward to a fruitful synergy with them as we continue to tackle Africa’s water treatment challenges,” Rencken concludes.

Veolia group is the global leader in optimized resource management. With over 163 000 employees worldwide, the Group designs and provides water, waste and energy management solutions that contribute to the sustainable development of communities and industries. Through its three complementary business activities, Veolia helps to develop access to resources, preserve available resources, and to replenish them.In 2016, the Veolia group supplied 100 million people with drinking water and 61 million people with wastewater service, produced 54 million megawatt hours of energy and converted 31 million metric tons of waste into new materials and energy. Veolia Environnement (listed on Paris Euronext: VIE) recorded consolidated revenue of €24.39 billion in 2016.

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Arduino Education Kit for young students aids technology learning

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Johannesburg, South Africa – RS Components (RS), the trading brand of Electrocomponents plc (LSE:ECM), the global distributor for engineers, has announced the availability of the Arduino CTC 101 Education Kit, which is a complete e-learning platform enabling young students to learn the fundamentals of electronics, programming and mechatronics. The CTC 101 kit has been designed for teachers and other instructors working in education and is specially tailored for the 13 to 17 age group at secondary schools. Each kit includes enough electronic components for a class of 24 students and a teacher.

Today, Arduino is one of the most popular open-source electronics platforms. Initiated in 2005, the Arduino project targeted the development of low-cost and easy-to-use hardware and software that could be used by non-engineers or simply anyone new to electronics that was interested in creating digital electronic projects.

Building upon this foundation, the Arduino Education programme was set up to empower educators with the necessary hardware and software tools to create a more hands-on and innovative learning experience. As a major element of the initiative, the CTC, or Creative Technologies in the Classroom, is Arduino’s one-of-a-kind STEAM (Science, Technology, Engineering, Arts and Mathematics) programme for upper secondary education.

The CTC enables the introduction of students to the fundamentals of programming, electronics and mechatronics through a series of well-documented projects and easy-to-assemble experiments. Training for the programme is available online and through a combination of recorded lectures, support materials and Q&A forums, via Arduino.

Specifically, the CTC 101 kit supports programming and mechatronics with five themed modules and offers more than 25 hands-on experiments. All the parts in the kit are completely reusable, thereby enabling experiments to be reconfigured in endless combinations and further developed for more advanced students and projects.

Each CTC 101 kit includes enough electronic components for a class of 24 students and a teacher. It includes: six Genuino 101 programmable microcontroller boards; six Arduino Education Shields; a set of sensors and actuators; component modules; breadboards; a wide selection of electronic components, connectors and wires; plus other elements such as servo motors, USB cable, wheels and bearings, batteries and power modules.

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Vodacom Group appoints Jabu Moleketi as Chairman & Saki Macozoma to Board

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On Thursday, Vodacom Group announced the appointment of Jabu Moleketi (60) as Non-Executive Chairman and Saki Macozoma (60) as a lead Independent Director with effect from 19 July 2017. Jabu Moleketi will succeed Peter Moyo (54), who will have served as Chairman for eight years when he retires and steps down from the Vodacom Board on 18 July 2017. At the same time, Saki Macozoma will fill the role effectively vacated by Jabu Moleketi.

Shameel Joosub, Vodacom Group Chief Executive, says: “I would like to thank Peter for his leadership and dedicated service to the Vodacom Group over the last eight years. I wish him much success in his future endeavours. The appointment of Jabu and Saki is the outcome of an intensive search process coordinated by an external search firm and the Nomination Committee. I look forward to working with Jabu in his new role and welcome Saki to the Vodacom fold. Jabu has deep knowledge of the company and the industry whilst Saki brings with him in-depth financial services experience and corporate governance expertise.”

Jabu Moleketi joined the Vodacom Board in November 2009. Outside of his Vodacom tenure, he has extensive financial services and corporate finance expertise as a director on company boards with interests across multiple industries in the private sector including Remgro, MMI Holdings and Brait. Jabu Moleketi also served as South Africa’s Deputy Minister of Finance between 2004 and 2008. He will assume the role of Chairman of Vodacom’s Nomination Committee while stepping down from the Audit, Risk and Compliance Committee.

Saki Macozoma is a prominent businessman in South Africa and is currently the Chairman of Safika Holdings, Tshipi e Ntle and Ntsimbintle Mining in addition to holding a directorship in Volkswagen South Africa. Saki Macozoma was formerly Chairman of Liberty Holdings, Chairman of Standard Bank and President of Business Leadership South Africa. In 2012 he was recognised for his work in civil society where the University of South Africa (Unisa) bestowed on him one of its highest honours – the Calabash Award – for his fight against oppression during the apartheid regime. He will be appointed to Vodacom’s Audit, Risk and Compliance Committee.

Incoming Vodacom Chairman, Jabu Moleketi, says: “I look forward to taking up the position as Chairman of the Vodacom Group at such an exciting time in the company’s journey. The business is poised to conclude its biggest acquisition in its history, the R35 billion Safaricom transaction, which will make Vodacom a serious financial services player on the continent. It is therefore fitting that Saki Macozoma joins our Board at this time, given the pivotal roles that he played at Liberty Holdings and its parent company Standard Bank. I am confident that we have the right strategy and leadership team in place to deliver on our vision of becoming a leading digital company, empowering a connected society.”

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