1

SUMMARY

The Society of authors, composers and publishers

of New Caledonia

2019 - 2024

Reviewed by the Territorial Audit Office, 27

th

of February, 2025

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Warning

This summary is intended to facilitate the reading and use of the full report from the territorial

audit office. Only the full report engages the territorial audit office.

The answers, if expressed, of the administrations, organizations and local bodies concerned

are included after the full report.

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TABLE OF CONTENTS

1

A

COMPANY

CREATED

TO

SUPPORT

ARTISTIC

CREATION

THAT

HAS

DELEGATED THE MISSION OF

DISTRIBUTING

RIGHTS TO A THIRD PARTY

..........

4

2

MANAGEMENT AND GOVERNANCE PRESENT SOMME IRREGULARITIES

............

6

3

AN OPERATING CYCLE THAT CAN BE OPTIMISED FOR THE BENEFIT OF

MEMBERS

.....................................................................................................................................

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The only organization managing copyrights in New Caledonia, the Société des Auteurs,

Compositeurs et Éditeurs de Nouvelle-Calédonie (SACENC), or society of authors, composers

and publishers of New Caledonia, fulfils an essential mission of collecting and distributing

copyright royalties, as well as supporting cultural activities in the musical domain in New

Caledonia. Following reports of governance difficulties, the territorial audit office wished to

audit the SACENC to ensure the effectiveness of the collection and redistribution of copyright

royalties to artists, to review the management of the society, and to analyse its financial

situation.

The territorial audit office's audit covers the fiscal years 2019 and onwards. The severe public

disturbances that occurred on the territory since May 13, 2024, are likely to impact cultural

activities and, consequently, the collection and redistribution of copyright royalties. This is not

analysed in this report.

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A COMPANY CREATED TO SUPPORT ARTISTIC CREATION

THAT HAS DELEGATED THE MISSION OF DISTRIBUTING

RIGHTS TO A THIRD PARTY

The Société des Auteurs, Compositeurs et Éditeurs de Nouvelle-Calédonie (SACENC) was

established in July 2004 to collect and redistribute the copyrights of its members and protect

their interests, according to its bylaws. It also has the mission to support artistic creation in

New Caledonia. The territorial audit office notes that the society, which has been approved

by the government since June 2024 to collect private copying remuneration, does not have

the approval required by the intellectual property code for the collection and distribution of

copyrights. This approval ensures that it meets obligations of transparency, democratic

governance, and fair redistribution of rights. The territorial audit office invites the society to

approach the government to regularize this situation.

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Diagram 1: Operating diagram of a collection and distribution body

Source : territorial audit office

The collection of copyrights, based solely on a declarative process from broadcasters, has

decreased by 13 % between 2019 and 2023 (232 million CFP francs in copyrights collected

in 2023). To ensure the completeness of the recovery of its members' rights, the territorial

audit office recommends that the society implement an action plan to inform broadcasters

about their obligations and to monitor compliance with these obligations. It also recommends

presenting an annual follow-up of ongoing disputes to the board of directors. The territorial

audit office also invites the company to formalize its information and communication policy

towards broadcasters and to renew the approval of the agents in charge of detecting

infringements of the intellectual property code.

The society is connected to a network of authors' societies to enhance the value of its

repertoire beyond the borders of New Caledonia through reciprocal agreements with the

Société des Auteurs, Compositeurs et Éditeurs de Musique (SACEM) and the Société pour

l'Administration du Droit de Reproduction Mécanique des Auteurs, Compositeurs et Éditeurs

de Musique (SDRM), as well as with the Société des Auteurs Compositeurs Dramatiques

(SACD), the Société Civile des Auteurs Multimédia (SCAM), and the Société des Auteurs

dans les Arts Graphiques et Plastiques (ADAGP). Within the framework of this agreement,

the SACENC has entrusted the SACEM with the mission of distributing the collected rights

based on the exchange of information regarding authors, their works, associated rights, and

the broadcasting programs of broadcasters. The territorial audit office recommends that these

agreements be updated to ensure transparency of the distribution fees collected by the

SACEM and to improve the exchange of information between the societies.

The SACENC serves as an information source for musical creators and other artistic

disciplines and undertakes actions to promote culture. It provides support to authors,

composers, publishers, and broadcasters who program and promote these artists. To achieve

this, it has a social and cultural works fund, partially funded by a subsidy from New Caledonia

until 2020 and then exclusively by statutory deductions from gross rights. This fund has

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enabled the support of between 50 and 100 projects per year (albums, audio visual works,

music videos, concerts, and festivals, promotional actions, and tours) for a total amount of

45.3 million CFP francs between 2019 and 2023.

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MANAGEMENT

AND

GOVERNANCE

PRESENT

SOMME

IRREGULARITIES

The territorial audit office has identified several areas for improvement in the governance of

the company. The company must fully implement the provisions set by its bylaws or modify

them, otherwise risking rendering decisions made by the general assembly and the board of

directors irregular, particularly concerning the distinction between regular members and

definitive members with regard to their voting rights and their ability to administer the

company. In addition, the company's bylaws provide that the duties of directors are performed

free of charge. However, a monthly remuneration is paid to the president of the board of

directors, and attendance fees are paid to the administrators. The company must cease these

payments as they are contrary to the bylaws.

The management fees deducted by the company, not only for its own operations but also to

fund the social and cultural works fund and to remunerate SACEM for the distribution mission

entrusted to it, have a negative impact on the royalties ultimately paid out to beneficiaries.

The territorial audit office estimates that the net royalties paid out represent nearly 55 % of

the public performance royalties collected as a result of the fees levied, whereas, according

to the company, the management fees of the members of the International Confederation of

Societies of Authors and Composers, of which SACENC is a member, average 30 %.

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Graph 1 :

Amounts paid to beneficiaries

Source : territorial audit office from information provided by SACENC

The company is facing an increase in the number of members and beneficiaries, a drop in

the collection of public performance rights, and a near-complete disappearance of mechanical

reproduction rights. To increase the royalties paid to beneficiaries or the support given to

cultural creation, the company must review the ways in which it carries out its missions,

including the delegation of the distribution mission to SACEM, with regard to the management

fees levied. It must also formalize its management processes, identify key control points, and

implement a data protection and information system security policy to mitigate risks and

enhance the efficiency of royalty collection and payment.

Funding of the Social and

Cultural Works Fund

Amounts remaining to be

distributed:

58,045 F CFP from the DEP

83,790 F CFP from the DRM

Application of distribution

fees by SACEM: SACEM

deducts 5% from the DEP

and DRM to cover the costs

of processing the

distribution

Amounts remaining after

deduction of distribution

fees:

61,750 F CFP from the DEP

85,500 F CFP from the DRM

Application of management fees

by SACENC (per 100,000 F CFP

collected, SACENC deducts 35%

from public performance rights

(PPR) and 10% from mechanical

reproduction rights (MRR).

Amounts

remaining

after

deduction

of

management

fees:

65,000 F CFP from the DEP

90,000 F CFP from the DRM

Collection of royalties by SACENC

(per 100,000 F CFP collected)

Collection

Public performance

rights

- 35 %

Public performance

rights

- 5 %

Public performance

rights

- 6 %

Mechanical

reproduction rights

- 10 %

Mechanical

reproduction rights

- 5 %

Mechanical

reproduction rights

- 2 %

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3

AN OPERATING CYCLE THAT CAN BE OPTIMISED FOR THE

BENEFIT OF MEMBERS

Despite the impact of the health crisis, the company managed to reduce its staff costs and

external charges. Its operating performance improved between 2019 and 2023, resulting in a

32.3 % increase in gross operating surplus over this period. The company generates a surplus

from its operating cycle, contributing to its net cash position.

However, its operations are characterised by an increase in average payment times to

broadcasters, which remain higher in 2023 than in 2019. The territorial audit office invites the

company to improve its receivables monitoring process and identify those at risk of non-

recovery. The operating cycle is also characterised by a high level of copyright-related debt.

The territorial audit office invites the company to speed up the exchange of information with

SACEM and make it more reliable, with a view to increase distribution and ultimately payment

of individual rights to members.

As in 2019, the year-end cash position in 2023 was high in relation to royalties collected

(133 % and 134 %, respectively).

Graph n°1:

SACENC's cash position in relation to royalties collected

Source: territorial audit office from the financial statements of the company

This high level of cash compared to royalties collected indicates room for improvement in

reducing management costs and speeding up the distribution and payment of royalties to

beneficiaries, in conjunction with SACEM.

358

282

270

290

309

267

240

211

228

232

134%

118%

128%

127%

133%

105%

110%

115%

120%

125%

130%

135%

140%

0

50

100

150

200

250

300

350

400

2019

2020

2021

2022

2023

Axis title

Cash position (a)

Royalties collected (b)

Ratio (a)/(b)

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In this context, to improve the management of the company, the chamber issues three legal

reminders and five performance recommendations.

Legal Reminder No. 1: (SACENC) Obtain the approval provided for in article Lp.321-1-1 of

the intellectual property code applicable in New Caledonia for the collection and distribution

of copyright royalties. (Deadline: 2025)

Legal Reminder No. 2: (SACENC) Comply with the provisions of article 26 of the company's

bylaws regarding the voting rights of members of the general assembly, whether they are

definitive members or not. (Deadline: 2025)

Legal Reminder No. 3: (SACENC) Cease the payment of a monthly remuneration to the

president of the board of directors and attendance fees to the administrators in accordance

with article 16 of the company's bylaws. (Deadline: 2025)

Recommendation No. 1: (SACENC) Implement an action plan to inform broadcasters about

their obligations and to monitor compliance with these obligations. (Deadline: 2025)

Recommendation No. 2: (SACENC) Work with SACEM, SACD, SCAM, and ADAGP to

update the reciprocal agreements by refreshing the data, particularly the management fees

applied by the parties, and by simplifying and ensuring the reliability of information exchanges.

(Deadline: end of 2025)

Recommendation No. 3: (SACENC) Review the company's business model to reduce

management fees and increase the rights reversed to beneficiaries or actions supporting

cultural creation. (Deadline: 2025)

Recommendation No. 4: (SACENC) Formalize processes, identify key control points, and

implement a data protection and information system security policy. (Deadline: 2025)

Recommendation No. 5: (SACENC) Implement an action plan to accelerate and ensure the

reliability of the collection, distribution, and reversal of rights to beneficiaries. (Deadline: 2025)