The Case for Software Assisted Compliance
Posted on 07 October 2025 22:15
Compliance Statistics and Key Non-Compliance Areas
Non-compliance is widespread in several fundamental areas of corporate governance and regulation.
- Corporate Governance (CIPC): A striking statistic highlights the challenge: 72% of the 3.1 million companies in South Africa reportedly fail to submit annual returns to the Companies and Intellectual Property Commission (CIPC) (Source: CIPC Annual Report, as cited by InfoDocs). This failure can lead to severe penalties, including de-registration, as seen when the CIPC recently de-registered over 640,000 companies.
- Data Protection (POPIA): Compliance with the Protection of Personal Information Act (POPIA) remains a major challenge. Common non-compliance pitfalls include an over-reliance on technology without adequate organisational measures and employee training, leading to employee error as a key cause of data breaches (Source: Bowmans Law). Another misconception is that consent is the only or primary legal basis for processing data.
- Financial and Anti-Money Laundering (AML): The Financial Sector Conduct Authority (FSCA) is aggressively increasing enforcement. In the 2023/24 financial year, the FSCA imposed nearly R943 million in administrative penalties for non-compliance, a dramatic increase from approximately R100 million the previous year (Source: Duja Consulting). The Financial Intelligence Centre (FIC) also imposes substantial fines, up to R50 million for legal persons, for non-compliance with the Financial Intelligence Centre Act (FICA) (Source: FIC).
- Health and Safety, Labour, and Tax: Compliance with the Occupational Health and Safety Act (OHSA) and strict labour laws are continuous requirements, especially in high-risk sectors like mining and construction (Source: Duja Consulting). For smaller businesses, tax compliance costs are often found to be regressive, meaning the burden is disproportionately heavier for them (Source: University of Pretoria).
The state of compliance among South African companies is complex, characterized by a challenging regulatory landscape and a high incidence of non-compliance, particularly among small to medium-sized enterprises (SMEs). Regulatory bodies are increasing enforcement, making the cost of non-compliance a significantly greater risk than the cost of maintaining compliance.
The High Cost of Non-Compliance
The financial and non-financial consequences of non-compliance far exceed the initial costs of being compliant. Globally, the cost of non-compliance is, on average, 2.7 times higher than the cost of maintaining compliance (Source: Ponemon Institute, as cited by Duja Consulting).
| Type of Cost | Examples and Consequences |
|---|---|
| Direct Financial Penalties | POPIA: Administrative fines can reach up to R10 million (Section 109). The Information Regulator recently imposed a R5 million fine for non-compliance with an enforcement notice (Source: Legalese, PH Attorneys). FSCA/FIC: Fines can reach R50 million for legal persons (Source: FIC). SARS: imposes various fixed and percentage-based tax penalties. |
| Indirect & Operational Costs | Reputational Damage (leading to lost customer trust and business), Protracted Negotiations with regulators, Legal Fees and costs for corrective action plans, Operational Disruption, and Loss of business lines (Source: Duja Consulting). |
| Personal & Criminal Liability | Directors can face personal liability and criminal charges for serious breaches, such as certain POPIA offences that carry a penalty of up to 10 years imprisonment (Source: Legalese). Failure to file CIPC returns can lead to de-registration and the withdrawal of the company's legal personality. |
Role of Software in Assisting Compliance
Software tools, often referred to as Governance, Risk, and Compliance (GRC) solutions, such as Exponuity, offer crucial assistance, especially to SMEs burdened by resource constraints and regulatory complexity.
- Automation and Alerts: Software can automate the tracking of deadlines and regulatory changes (e.g., CIPC annual returns, tax submissions), sending proactive alerts to management.
- Centralised Documentation: It provides a central, auditable repository for all compliance documents (e.g., POPIA compliance frameworks, Health and Safety plans), making audits faster and easier.
- Simplified Filings: Tools specifically designed for South African regulations can simplify complex processes, such as CIPC filings, making compliance more accessible and affordable for smaller entities (Source: InfoDocs).
- Mitigating Human Error: By standardising processes and providing templates, software helps reduce the risk of non-compliance stemming from employee oversight or error, a major factor in data breaches.
Sources
- Startup removes complexity to counter non-compliance by 72% of SA's small businesses (InfoDocs Blog)
- Startup removes complexity to counter non-compliance by 72% of SA's small businesses (CBN)
- CIPC: List of Companies and CCs not compliant with BO filing (SA Accounting Academy)
- Compliance checklist report - CIPC
- CIPC Compliance Checklist (SAIPA PDF Slides)
- A decade of corporate regulatory compliance monitoring and enforcement actions by the companies and intellectual property commission - CIPC (Report PDF)
- The Ultimate Compliance Checklist for South African Businesses (SSLR Inc.)
- The Rising Cost of Non-Compliance: Why SMEs Need to Pay Attention (Struct Capital)
- Press release: Tech startup InfoDocs automates statutory compliance (CFO South Africa)