KEEP CALM AND SELL YOUR PROPERTY

Selling your property can often cause your hands to get itchy, or ants to start roaming where they have no business being. But more often than not rushing into the sale of the property leads to choices you’ll regret later. Several points need to be remembered once you’ve decided to take the plunge and dive into the property market.

The first step to take is to have your property evaluated. The evaluation is not only to help you find out your property’s market value, but it will also help you identify the areas where your property needs improving. Before you even think about going any further it is advisable to complete any necessary maintenance and make improvements that could lift the value of your property. This phase will not only allow you to lift the property’s selling price, but it will also allow you to improve its attractiveness to buyers. A fresh coat of paint and clean surroundings will contribute as much to attracting possible buyers as the actual features of the property.

Once you’re ready to start with the listing process it’s important to notify the bank where your mortgage is of your intention to sell your property to avoid any delays in the transfer of documents once the sale is complete. Equally important is to procure the services of a conveyancer to ensure a seamless sale.

Even though it may seem daunting, the sale of your property is not a journey you have to go on alone. An estate agent can be more than a middle man during your property sale – their expertise can help you avoid unnecessary pitfalls while helping you direct your attention where it matters from the beginning. An experienced estate agent will be able to help you screen the interested parties early on, ensuring you spend the least time with those who will not continue with a purchase later on. They can also help you through the unforeseen circumstances that you may not have been able to handle on your own. The experience here is of importance, as it will ensure the highest level of knowledge in the technical field.

Although it is sometimes tempting to advertise with as many real estate companies as possible to get maximum marketing exposure, it may not be the best choice. Having one firm handle your listing from beginning to end will ensure the smoothest process when buyers become committed. It will also allow you to create a closer relationship with your real estate agent, having them as a partner in your endeavour and not part of a competition to see who can sell the property first.

Having the assistance of an estate agent doesn’t mean that you have no responsibilities, though. Making sure the property is well-maintained (having made the necessary improvements after the evaluation) and is as presentable as possible is on your shoulders. In reality, homes don’t look the way they do in property magazines or on television shows – it takes effort to make a home look both lived in and picture-perfect. Clear out as much as possible from the property while leaving essential items that create a sense of homeliness. One book on a bedside stand will do – you don’t need to impress potential buyers with all the books you’re planning on reading next. Finally, even though it’s a part of everyday life, no one needs to see your dirty laundry or dishes. Make sure your home is (and looks) clean at all times.

The final touch: ambiance. A bouquet of fragrant flowers (such as lavender, roses or geraniums) will create a welcoming aroma as buyers enter the property as well as being a functioning part of the decoration.

Now, no matter how much effort has been put in, or how perfect your listing is, sometimes properties just don’t sell. At these times it’s important to keep calm and try again. Though, maybe not immediately. Recessions, political angst, a looming tax season – all of these events and many more can cause the property market to grow a little stagnant. Potential buyers may hold back on purchases to see how the dust settles. Our advice: do the same. Remove your listing from the market, avoiding it being around too long and becoming part of the scenery, so to say. Once the market picks up again, re-list your property, allowing it to be seen with new eyes. In the interim time, you may consider renting out your property if you will not be staying there yourself.

Selling a property demands meticulous work, but following these easy steps with the necessary guidance will make it a walk in the park.

This article is a general information sheet and should not be used or relied on as legal or other professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your legal adviser for specific and detailed advice. Errors and omissions excepted (E&OE)

WORKPLACE TRAINING 101

Some companies spend billions on training their employees, however, their investment does not always ensure results. The success of training programmes implemented in businesses depends on whether or not the purpose of the training is clear and whether or not employees are actively engaged in the training. It would also seem that training is not a priority in many businesses, and businesses also don’t always see the value in the development of their employees’ soft skills.

Many managers are often dissatisfied and discouraged when they do invest in training, and the effectiveness of this training is not seen in the workplace. It’s important to remember that a business should take certain steps before implementing training sessions. For example, it’s important to establish whether the problem you are trying to fix within the workplace, is due to a training issue. It is important for managers to determine whether an employee has the correct tools to do the job expected of them, instead of assuming that the employee lacks the skill to do the job.

When it comes to training, it is of utmost importance that the employee being trained understands why he/she needs to acquire this new skill or enhance their existing skills. Furthermore, the training should be relevant to the skill the employee needs to acquire. Finding an external service provider who can customise their training programmes to address the business’s specific needs could be the way to go when it comes to training your employees. The reason being, in-house training is often amateurish and full attention is not given, however, when employing an external service provider, you can rest assured that the training will be done right as this is their primary job.

The failure to see results is still the main issue when it comes to training. The reason for this is that training is not supported enough; it needs to be thoroughly planned out in order to ensure that employees are learning the relevant skills. In companies where training is available, the content and training methods are not always linked to the actual businesses’ or employees’ needs. This wastes money, and it is highly likely that employers will not see a positive impact of these training sessions within the workplace.

When it comes to training, whether it’s in-house or external, it is vitally important to find the perfect fit. Ask the following questions in order to determine what type of training is necessary:

  • What are some of the business problems we are trying to address?
  • Is this business problem a result of a skills gap, or can it be addressed through training?
  • Which employees should attend the training?
  • Is training the right solution?
  • How can we ensure that the training pays off?

Whether your business decides to go with in-house training or external training, it’s very important that management’s attitude towards the training is not only positive but also participatory. This will ensure that the employee will absorb the training and incorporate it into their everyday work tasks and responsibilities. Finally, ensure that your business culture places a focus on continued learning and improvement of your employees.

This article is a general information sheet and should not be used or relied on as legal or other professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your legal adviser for specific and detailed advice. Errors and omissions excepted (E&OE)

HOW TO DEREGISTER OR TERMINATE A TRUST

There is no provision in the Trust Property Control Act, 1988 that requires the deregistration of trusts.

However, this said, it does not mean that a trust can never be terminated, as there are a few events that can occur during the lifetime of the founder, the trustees or the beneficiaries.

When considering the termination of the trust, the first step will always be to turn to the provisions of the trust deed.

Some of the most common provisions are:

  • that the trust assets have been distributed to the beneficiaries;
  • it may terminate after a certain period of time or upon the happening of a specific event;
  • the discretion of the trustees or through a resolution passed by the beneficiaries;
  • once its primary objective has been achieved; and
  • when it becomes impossible to achieve its main objective.

For the termination of a trust, the following documents are required:

  • resolution by the trustees confirming that the trust was active or dormant and that the bank account in the name of the trust has been closed;
  • The original letter of authority;
  • Bank statements reflecting a nil balance or the final statement;
  • Proof that the beneficiaries have received their benefits; and
  • An affidavit by the trustees confirming that the trust has been divested of all its assets.

Upon receipt of the above documents, the Master will deregister the trust. Please note that the above documents must be lodged with the Master with whom the Trust has been registered.

This article is a general information sheet and should not be used or relied on as legal or other professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your legal adviser for specific and detailed advice. Errors and omissions excepted (E&OE)

RESOURCES AND THE IMPORTANCE THEREOF FOR THE SUCCESS OF ANY BUSINESS

Starting a business may sound like a great idea, but it takes hard work to make a success out of any business venture.

A crucial part of a business is the resources available to conduct the business activities in the best way possible to generate the maximum benefit for the company. Therefore, all current and possible new resources need to be managed extremely well. Resource management is focused on optimisation and efficiency.

There are different categories of resources which are crucial for a business to succeed, but the focus of this article will be on employees and Information Technology (IT).

Employees. The most valuable and important resource in any business. With the right employees, your business will strive to new heights and grow continuously. A big attraction for any employee is remuneration. It is also important to know that this is not the only incentive for a good employee to perceive their job as satisfying. New challenges, growth opportunities and acknowledgement are a few of the other aspects needed to keep the good employees and keep them wanting to grow with the business. It is a win-win situation for both parties. A good employee – what is the meaning of this term? This is the employee who has the same vision and drive to achieve success in line with the company strategy. Therefore, it is of utmost importance to source the specific candidates, who fall into this category, provide the support and other tools to develop them and to bring the best out of them to move forward and achieve the goals set by the company.

IT is the key to growing your business in the modern technology-focused business world to help organisations function more efficiently. The right programmes are needed to streamline the business activities and record-keeping of the processes and results. These results are needed in real-time to make future decisions. If these sources of information are not trustworthy, it may have a negative ripple effect on all the aspects of the business. Employees are needed here to operate these systems in the best possible way to ensure success. The data and record-keeping are not the only aspects of the business that IT can improve. Communication with clients and service providers, training of staff members and real-time updates of changes in the industry are also key aspects which can be improved by using and mastering the role IT can play in your business’s road to the top. As we all know, there are risks in using IT systems like Cyber hacking etc. There are ways to ensure the safety of your company’s information by implementing a strict cyber policy, which is of utmost importance.

As mentioned above, this article only focused on two key resources. However, it is not possible to only look at the above mentioned as all resources are inter-connected and work together to achieve the end goal of your business.

This article is a general information sheet and should not be used or relied on as legal or other professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your legal adviser for specific and detailed advice. Errors and omissions excepted (E&OE)

WAT IS GROEP MAATSKAPPYE?

Artikel 1 van die Maatskappywet, 2008, (“die Wet”) omskryf ‘n groep maatskappy as twee of meer maatskappye wat verwant of onderling verwant is. ‘n Maatskappy (maatskappy A) is aan ‘n ander maatskappy (maatskappy B) verwant indien:

  • een van die maatskappye (maatskappy A of B) die ander maatskappy direk of indirek beheer, of die ander se besigheid beheer; of
  • een van die maatskappye (A of B) ‘n filiaal van die ander is.

Artikel 2(2)(a) van die Wet bepaal dat ‘n maatskappy (maatskappy A) ‘n ander maatskappy (maatskappy B) of sy besigheid beheer indien:

  • maatskappy B ‘n filiaal van maatskappy A is, of
  • maatskappy A, tesame met enige verwante of onderling verwante persoon:
    • regstreeks of onregstreeks ‘n meerderheid van die stemregte wat aan aandele van maatskappy B verbonde is, hetsy na aanleiding van ‘n aandeelhouersooreenkoms of andersins, kan uitoefen of the uitoefening daarvan kan beheer; of
    • die reg het om direkteure van die maatskappy B wat ‘n meerderheid van die stemme by ‘n direksievergadering beheer, aan te stel of te verkies, of sodanige aanstelling of verkiesing te beheer.

Artikel 3(1)(a) van die Wet bepaal dat ‘n maatskappy (maatskappy B) ‘n filiaal van ‘n ander maatskappy (maatskappy A) is, indien maatskappy A, of een of meer ander filiale van maatskappy A, of een of meer genomineerdes van maatskappy A of enige van sy filiale, alleen of in kombinasie:

  • ‘n Meerderheid van die algemene stemregte wat aan die uitgereikte aandele van daardie maatskappy verbonde is, regstreeks on onregstreeks kan uitoefen of die uitoefening daarvan kan beheer, hetsy na aanleiding van ‘n aandeelhouersooreeenkoms of andersins; of
  • Die reg het om direkteure van maatskappy B wat die meerderheid van die stemme by ‘n direksievergadering beheer, aan te stel of te verkies, of sodanige aanstelling of verkiesing te beheer.

‘n Maatskappy (maatskappy B) is ‘n volfiliaal van ‘n ander maatskappy (maatskappy A) indien al die algemene stemregte wat aan uitgereikte aandele van die maatskappy verbonde is, alleen of in enige kombinasie gehou of beheer word deur maatskappy A, een of meer van sy filiale, of een of meer van die genomineerdes van maatskappy A, een of meer van sy filiale, of een of meer van die genomineerdes van maatskappy A of enige van sy filiale.

‘n Aantal belangrike gevolge spruit uit die bestaan van ‘n groep maatskappy voort. ‘n Handeling van of ten opsigte van een besondere maatskappy kan nie slegs vir homself nie, maar vir die groep waarvan sodanige maatskappy deel vorm, gevolge meebring. Die gevolge ingevolge die Wet sluit in:

  1. Verkryging van aandele – Ingevolge artikel 48(2) van die Wet kan ‘n filiaal aandele in sy houermaatskappy verkry, mits daardie aandele nie 10% in totaal van die getal uitgereikte aandele van enige klas aandele van ‘n houermaatskappy te bowe gaan nie
  1. Direkteure se gedrag – Artikel 76 van die Wet bepaal dat ‘n direkteur van ‘n maatskappy nie sy of haar posisie as direkteur, of enige inligting verkry terwyl hy of sy in die hoedanigheid van direkteur optree, mag aanwend om hom of haar, of enige iemand anders, buiten die maatskappy of houermaatskappy of ‘n volfiliaal van sodanige maatskappy, te bevoordeel nie. ‘n Direkteur van ‘n maatskappy word verbied om inligting willens en wetens te gebruik ten einde die maatskappy, asook enige filiaal van die maatskappy, te benadeel.
  1. Vervreemding van alle bates of van die grootste gedeelte van bates of onderneming Artikel 115 van die Wet bepaal dat ‘n maatskappy nie die geheel of die grootste deel van sy bates of onderneming mag vervreem, of uitvoering mag gee aan ‘n ooreenkoms of reeks ooreenkomste om dit te vervreem nie, tensy sodanige vervreemding deur middel van ‘n spesiale besluit wat geneem is deur diegene wat daarop geregtig is, goedgekeur word tydens ‘n vergadering wat vir daardie doel belê is en waartydens daar voldoende persone wat op stemregte geregtig is en wat ten minste 25% van alle stemregte wat sodanig uitgeoefen mag word ten opsigte van die beoogde vevreemding uitoefen.
  1. Finansiële bystand – inter-maatskappylenings en bystand – Artikel 45 is nie alleen op direkteure van toepassing nie, maar ook op intra-groep verlening van bystand by wyse van lenings en waarborge. In die algemeen word ‘n spesiale besluit van aandeelhouers vereis voordat ‘n maatskappy finansiële bystand aan ‘n ander maatskappy in die groep kan verskaf.

Hierdie artikel is ‘n algemene inligtingstuk en moet nie gebruik word of op staatgemaak word as regs- of ander professionele advies nie. Geen aanspreeklikheid kan aanvaar word vir enige foute of weglatings of vir enige verlies of skade voortspruitend uit vertroue geplaas op inligting hierin vervat nie. Behoudens foute en weglatings (BFW).

INSURANCE – ALL YOU NEED TO KNOW

Insurance is a contract in terms of which the insurer undertakes, in return for the payment of a price or a premium by the insured, to render the insured a sum of money, or the equivalent to a sum of money, on the happening of a specified and uncertain event in which the insured has some interest. The insurance contract is also referred to as an “insurance policy”. The rationale behind insurance is to protect oneself against the occurrence of undesirable risk.

Types of insurance

In South African law we have two types of insurance, namely indemnity insurance and non-indemnity insurance.

Indemnity insurance is taken out to indemnify oneself against a loss. In other words, insurance is taken out so that one is reimbursed if one suffers a loss. Non-indemnity insurance, on the other hand, is taken out to indemnify oneself against the occurrence of a future uncertain event such as death or disability.

Statutory law

There are two statutes dealing with insurance in South Africa, namely the Short-term Insurance Act 53 of 1998 (hereinafter “SITA”) and the Long-term Insurance Act 52 of 1998 (hereinafter “LITA”).

The abovementioned Acts control the insurance industry and aspects of insurance policies with the view of protecting the interests of those insured. The Acts also provide for the registration and control of insurance companies in South Africa.

The SITA focuses on indemnity insurance. For example, motor vehicle policies and health policies. Whereas, the LITA focuses on non-indemnity insurance. For example, life policies, disability policies and health policies.

The Minister has also enacted Policyholder Protection Rules for the respective Acts.

How is an insurance policy created?

There are two parties to an insurance policy: the insured and the insurer. There may also be instances where a third party is nominated as the beneficiary of a policy.

The Acts refer to the person entitled to be provided with the benefits of a policy as the “policyholder”.

At common law, no formalities are required for the conclusion of an insurance policy. In practice, however, insurance policies are generally reduced to writing.

Essential elements of an insurance policy

  1. The obligation to pay a premium

First, there must be an obligation on the insured to pay a premium.

“Premium” is defined in section 1(1) of LITA and SITA as “the consideration given or to be given in return for an undertaking to provide policy benefits”.

There is no rule that the premium must be paid before the contract becomes binding on the parties. However, there must at least be an undertaking by the insured to pay a premium to render the contract “complete”.

Generally, insurers will adopt a policy of ensuring that the insured pays the premium before they take on the risk.

  1. The happening of a specified uncertain or unplanned event

For risk to exist, the event must be in the future, and it must be uncertain as to whether it will occur, when it will occur and how much harm it will cause.

In the case of Sydmore Engineering Works v Fidelity Guards (Pty) Ltd 1972 1 All SA, it was held that the insurer must have no control over whether the event will occur.

  1. The existence of an insurable interest

The case Lorcom Thirteen (Pty) Ltd v Zurich Insurance Company South Africa Ltd 2013 4 All SA 71, defines an “insurable interest” as the insured’s interest in preventing the risk which he/she is insured against from materialising.

  1. The obligation of the insurer to render compensation

The contract must provide for the payment of a sum of money or render to the insured an equivalent to the payment of money, by the insurer if the risk materialises.

The obligation on the insurer varies depending on whether the insurance is indemnity or non-indemnity insurance.

If it is indemnity insurance, the insurer undertakes to compensate the insured for the actual loss which he/she has suffered as a result of the happening of the event.

If it is non-indemnity insurance, the insurer undertakes to pay a specified sum of money (or to make periodic payments of specified amounts of money) to the insured on the happening of an event, regardless of the extent of the actual monetary loss which was incurred.

Reference List:

  • Lakeand others NNO v Reinsurance Corporation Ltd and others 1967 (3) 124 (W) 127H
  • Short-term Insurance Act 53 of 1998
  • Long-term Insurance Act 52 of 1998
  • Sydmore Engineering Works(Pty) Ltd v Fidelity Guards (Pty) Ltd 1972 1 All SA
  • Lorcom Thirteen(Pty) Ltd v Zurich Insurance Company South Africa Ltd 2013 4 All SA 71

This article is a general information sheet and should not be used or relied on as legal or other professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your legal adviser for specific and detailed advice. Errors and omissions excepted (E&OE)

DO YOU HAVE A WORK-LIFE BALANCE?

Having a job and a steady income plays a significant role in any person’s life, as it keeps us afloat and drives us to reach our full professional potential. However, when we have an unhealthy work-life balance, this can all come tumbling down. An employee’s ability to establish and maintain a healthy balance between their work and personal commitments and responsibilities is referred to as a work-life balance. Companies have begun to recognise the importance of helping their employees to achieve this balance. Work responsibilities have also seen an increase recently and this leads to increased stress among employees as they struggle to find a balance between work and personal commitments.

Over the years, there have been dramatic changes in employees’ work patterns, as well as how and where they work. More and more companies have begun to embrace the digital and technological age, which means that work is no longer restricted to the workplace only. Technology enables employees to work anytime, anywhere, and from any internet-enabled device. This means that employees can be reached by employers and even clients 24/7, which makes achieving a healthy balance between work and your personal life even more difficult.

Having an unhealthy work-life balance has a negative effect on both employees and the companies they are employed by. Having an unhealthy work-life balance leads to high levels of stress which results in decreased productivity. Increased stress can also lead to health problems and absenteeism, which costs the company money. Finally, personal relationships and co-worker relationships amongst the employees can suffer, and lead to reduced job satisfaction.

Companies can implement various policies that will aid their employees in establishing and maintaining a healthy work-life balance. Many companies have started to provide their employees with flexible working hours, which helps employees shape and mould their work pattern to fit into their personal schedules. This reduces the conflict between professional and personal responsibilities significantly. Managers can also encourage their staff to use their annual leave, and set clear boundaries which state that staff should not respond to work-related emails and calls during non-working hours.

Finally, it’s not all about job satisfaction, personal satisfaction is equally as important. An employee’s ability to meet personal commitments has an enormous impact on their professional success. When employees have the opportunity to meet these personal commitments, it benefits the company, as the employee is not experiencing conflict between their professional and personal lives.

Helping employees establish and maintain a healthy work-life balance leads to increased job satisfaction as well as increased loyalty to their employer.

Once a company recognises the benefits of healthy work-life balance and implements policies to promote this balance, they will experience an enormous increase in productivity and increased retention of staff, which ensures that the company continues to thrive and succeed.

This article is a general information sheet and should not be used or relied on as legal or other professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your legal adviser for specific and detailed advice. Errors and omissions excepted (E&OE)

EVERYTHING YOU NEED TO KNOW ABOUT THE NATIONAL HEALTH INSURANCE BILL

The National Health Insurance Bill was approved by Cabinet in 2017. The date for implementation of the NHI is 2025.

The government formulated the National Health Insurance (NHI) in order to coordinate access to quality and affordable health care for all.

The National Health Insurance will pay for health care for all South Africans and will be run as a non-profit public entity.

If you are a registered refugee, you will also be entitled to the National Health Insurance.

How will the National Health Insurance be funded?

  • The National Health Insurance Fund will get a large amount from general taxes and every person in South Africa will contribute to the fund.

Employers will assist the NHI Fund and will make sure that their workers’ NHI contributions are collected and submitted.

What about Private Medical Aid?

  • Private Medical schemes will continue to exist, but their role will change.
  • Individuals will be free to continue their medical scheme membership, but they will also need to make contributions to the NHI Fund.

The government will no longer provide tax subsidies for medical scheme contributions.

The National Health Insurance will be introduced in three phases:

  • The first phase will prepare central hospitals to provide specialised services to all citizens, under the control of the government.
  • In phase two, all those who qualify for NHI will be registered.
  • In the third phase, working people will start to make mandatory payments and the private sector providers will be contracted to provide services.

The Bill has not yet been referred to the committee, although it was tabled in Parliament.

The Health Department expects the final NHI Act to come into effect before March 2020, according to its latest annual plan.

A healthy nation is a safe, productive and economically stable nation to live in.

To read more about the National Health Insurance, go to www.health.gov.za or pick up a booklet on NHI at your nearest health facility.

This article is a general information sheet and should not be used or relied on as legal or other professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your legal adviser for specific and detailed advice. Errors and omissions excepted (E&OE)

HOMEOWNER’S INSURANCE FOR LANDLORDS

Apart from paying off a bond on a rental property, property investors/landlords are usually also paying for homeowner’s insurance. What is homeowner’s insurance? Homeowner’s insurance covers the property owner against damages to the structure of the property. This damage could be caused by flooding, fire, wind, hail or other natural causes.

However, the above is not the case with all homeowner’s insurance policies. If you have a standard homeowner’s insurance policy, you might not be protected against any damages that occur while the property is occupied by a tenant or empty. Additionally, this policy might also not cover you for loss of rental income when the property cannot be occupied due to damages.

It’s important to take note of the terms of your policy. Most banks won’t approve a bond unless you have homeowner’s insurance, however, if you are a landlord, it would be wise to check the specific terms of your policy, as you need to ensure that your insurer is aware of the fact that your property is occupied by tenants and not by you, the owner. It’s also important to check if there are any provisions in your policy which prevent you from renting to a certain category, for example, students.

It’s also very important to check if the sum insured stated on your policy is the full replacement cost of the property, and not just its market value, as this could be higher or lower.

The correct coverage might be more expensive, however, paying a little more on your premium is better than finding out that your cover is not valid in the event of a disaster hitting your property. It’s important for new homeowners to know that they do not need to accept the homeowner’s insurance offered by their bank; they are entitled to shop around for the perfect insurance for their needs and requirements.

Keep in mind, you might not have as much flexibility if your property is situated in sectional title schemes because there will be only one homeowner’s insurance policy for the whole building or complex. The premium will have to be paid either annually or monthly by all the members of the body corporate.

Additionally, there are several other insurance matters for landlords to be aware of, which include household contents that belong to tenants that must be insured by them; the landlord is not responsible for any damage or theft of tenants’ possessions. However, if you are renting your property furnished, you will need to take out a separate household contents policy to cover the furniture and equipment that belong to you.

In conclusion, if you are renting your property, always make sure that you check your policy, to save yourself both time and money in the event of damage to your property.

This article is a general information sheet and should not be used or relied on as legal or other professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your legal adviser for specific and detailed advice. Errors and omissions excepted (E&OE)

ELECTRONIC SIGNING OF DOCUMENTATION

The commercial world is currently moving to greater levels of digitisation. Organisations are implementing automated and electronic solutions in an effort to improve efficiency and better the environmental footprint at the same time. The move to digitisation and electronic signatures prompted questions surrounding the legality of these documents. This article aims to highlight certain legal aspects of electronic signatures in both a general business environment and an audit industry environment.

Different types of electronic signatures

The Electronic Communications and Transactions Act, 25 of 2002 (ECTA) differentiates between standard electronic signatures and advanced electronic signatures. Standard electronic signatures include digital or scanned signatures. An example would be using an iPad to sign a document or merely printing, signing and scanning the document. Advanced electronic signatures are defined as electronic signatures which results from a process which has been accredited by the Authority as stipulated in Section 37 in the ECTA, for example, Quicklysign.

Standard electronic signatures are sufficient in most instances if and when the method of signing had not been agreed upon by the parties beforehand. Advanced electronic signatures are required for a suretyship agreement as well as signing as a Commissioner of Oaths (Section 18 of ECTA). Some documents are specifically excluded from being signed electronically (as per Schedule 2 of ECTA) for example:

  • an agreement for alienation of immovable property;
  • an agreement for the long-term lease of immovable property in excess of 20 years
  • the execution, retention and presentation of a will; and
  • the execution of a bill of exchange as defined in the Bills of Exchange Act, 34 of 1964.

Electronic signature of financial statements

Stakeholders in the audit industry will be all too familiar with the challenges being posed by printing various sets of financial statements, only to be scanned again after signature. The industry seems to be one of those that will benefit from the efficiencies provided by electronic signatures but are these electronic signatures on a director’s and auditor’s report acceptable?

The Independent Regulatory Board of Auditors (IRBA) identified the increase in usage of electronic signatures on financial statements and audit reports and reported on the matter through the 2017 public inspections report. IRBA communicated that the following challenges are experienced by the practice of electronic signatures:

  • uncertainty as to the identification of the final version of the auditor’s report and annual financial statements;
  • uncertainty as to the approval by the company’s board of the exact final version of the annual financial statements; and
  • the risk that the incorrect annual financial statements are published.

We are of the opinion that an advanced electronic signature service provider, as approved by the ECTA, will sufficiently mitigate the above-mentioned challenges identified by IRBA. Contact us in order to obtain more information as to how we can assist in finalising documentation efficiently.

This article is a general information sheet and should not be used or relied on as legal or other professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your legal adviser for specific and detailed advice. Errors and omissions excepted (E&OE)