There appears to be a yawning gap between good governance and the role of intellectual property disclosure and value creation. The global and local trend is toward better and increased governance, reporting, transparency and disclosure. There’s increasing spend on governance, but there is very little attention paid by boards to the intangibles on and off the balance sheet, and to the relationship between intangibles and intellectual property.

Power FM’s Iman Rapetti spoke to Darren Olivier and Adv. Annemarie van de Merwe about the recent examples of IP mismanagement, ignorance and under-reporting. How should boards dela with the opportunities, risks and governance of intellectual property?

The challenge for board members is multi-faceted. The role of the auditor and accountant in valuing and recording intangible assets on the balance sheet is far from clear. This is both an international and national debate and concern that internally generated intellectual property is not disclosed in annual accounts, leading to sometimes significant under and over valuations of business entities. This presents both risks and opportunities for businesses. With the increasing rise of the value of intangibles over tangibles in corporate value over time, the dearth of information relating to a businesses intellectual property is a real concern.

There is a desperate need for the education, accurate disclosure and scrutiny of intellectual property at a board level. So where should the education process begin? There needs to be a step-by-step approach to IP, education, identification, disclosure and governance, with a focus on self-audits, the need for IP advisors, a management plan, and an IP narrative. The message is clear: Boards have a duty to recognise the role of IP in governance and value creation.

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