TEN THINGS TO LOOK FOR WHEN BUYING A HOUSE

Buying a house is a bit like planning for your wedding day — there are months packed with excitement, stress, planning, and then, finally, the big payoff.

1. Recognise a roof in need of repair

Before you ever set foot inside, check out what’s happening on top. Does the roof look relatively new or is it caving in? If the roof is eye-catching (as in, “My, look at that gaping hole”), chances are it could end up costing you.
A newer roof, on the other hand, could mean a lower homeowners insurance rate. Likewise, a roof made of an especially sturdy material is better equipped to defend against wind and hail (and can save you from a potential claim).

2. Don’t judge a room by its paint job

When you step inside your prospective abode, focus on the structural stuff — aging appliances, loose wires — and tune out any freshly painted walls or upscale decor. The foundation will be there long after the paint has started chipping and you want that to be what lasts.

3. Look at the municipal plans

Get a copy of the approved building plans from the municipality or the owner and check that all structures on the property are on plan. This could save lots of money in the future if you decide to do renovations and find that there are structures which are not approved and may possibly never be approved.

4. Decide on your dealbreakers

Aside from the basics, like quality windows and countertops, think about the purpose of your home and the requirements for your lifestyle, like storage for a large book collection or a big entertainment area.
It can also be smart to spring for a home with an extra bedroom if you’re planning on kids or guests. And if your significant other is a night owl while you’re a connoisseur of cat naps, it might be a good idea to look for a house with an entertainment area set far away from the master bedroom.

5. Plumbing: what lies beneath

When you’re poking around a new kitchen, don’t stop at eye level — get underneath the sink and examine those pipes. Check for leaks, water damage, and mold.
Not only is mold unsightly and foul-smelling, but it can also cause health problems. If you live with a baby, an elderly person, or someone with asthma, you’ll want to be especially careful before moving in with mold.

6. Check out the land beforehand

Don’t just look at the building — examine the area around it. Is the house in an area prone to flooding or wildfires? Is the driveway shared with another property? If there are fences, have they been built and positioned properly? It’s a lot to take in, but when you buy a house, you can’t ignore its surroundings.

7. Smell the roses (and more)

Do you smell sewage, gas, or anything equally unpleasant? Sewage systems in older homes can sometimes get clogged or damaged by tree roots. Luckily, some sewer or plumbing companies can send a camera through the pipes to detect any breaks or blockages.
Also worth noting: pet odors, cigarettes, and mildew.

8. Invest in a well-insulated house

Above all else, your home should be comfortable. Check the ceiling, water pipes, and heating ducts to make sure they’re properly insulated. This can reduce heating and cooling costs and keep you comfortable in summer and winter. Double-paned windows can also save you money down the road. Plus, they can help soundproof your place from outside noise.

9. Get your hands on everything

I mean that literally. Turn on every tap and light switch, open every window and door, flush the toilets, even taste the water. Buying a house is a big step — maybe one of the biggest — and you need to know how everything works firsthand. That way, you can address problem areas and see if there’s a cost-effective solution.

10. Have a home inspection done

There’s only so much you can do with your own 5 senses. You’ll also want to enlist a professional to ensure the foundation is solid. If there is a lot of wood in the building/s, make sure that you request a borer beetle certificate and ensure that the relevant clause is incorporated in your offer to purchase.

For professional legal advice, contact Goldberg & de Villiers Inc on 041 501 9800.

 

TRAVELLING ABROAD? KNOW LOCAL LAWS OR RISK JAIL

“Ignorance of the law is no excuse” (old Roman law principle applied in many legal systems worldwide)

Whether you travel abroad on business or on holiday, ignorance of local laws can easily land you in a situation where your protestations of “But I had no idea that that is illegal here, it’s totally legal in South Africa” are met with stony faces and a complete lack of sympathy from your destination’s law enforcement authorities. And whilst the nearest South African embassy or consulate can offer you some basic support, it’s the local laws – and penalties for contravening them – that could put you in jail (or worse).

Recently government has specifically warned travellers to acquaint themselves with the laws and customs of their destination countries. This follows the death sentence imposed on a South African drug smuggler in Vietnam, and reports that some 800 South Africans are currently doing time in foreign jails, not only on drug-related charges (see “Know your foreign laws before travelling” on the South African Government News Agency’s website).

In regard to drug laws the problem is that, with many countries in the process of either legalising or easing their stance on marijuana and other “soft” drugs, it can be difficult to keep up with what’s legal where.

And remember that even prescription drugs can put you behind bars – in some countries medicines which are legal in South Africa could land you in prison (in the case of Dubai for example, for 6 months to 2 years unless you are carrying the required “medical certificate” ).

Moreover the warning goes far beyond illegal drugs, and applies to you even if you have never had anything to do with them. In Thailand for example, you can be imprisoned for disrespecting the Thai Royal Family in any way.

There are many other such examples from around the world, and whilst some general articles are interesting for an overview of some unexpected laws in popular destinations, rather Google specifically for the laws of the particular country or countries you are visiting. Just make sure that whatever webpage you land on is (a) authoritative and (b) up to date. A good place to start is perhaps the UK Government’s “Foreign travel advice” page.

DIRCO (the Department of International Relations and Cooperation) has plenty of guidance on its “Advice for South African Citizens Travelling Abroad” .

If you’re unsure of anything don’t take any chances, rather ask the team at Goldberg & de Villiers Inc for advice. Tel.  041 5019800

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EDCON CLUB FEE RULED LAWFUL

The Edcon Group (“Edcon”) has successfully appealed the finding of the National Consumer Tribunal (“the Tribunal”) that Edcon unlawfully charged its customers Club fees and was in contravention of the National Credit Act 34 of 2005 (“the NCA”).

Following a complaint initiated by the National Credit Regulator (“the Regulator”), the Tribunal made a ruling that Edcon had engaged in repeated prohibited conduct by adding a Club fee to the credit agreement as this was contrary to Section 101 of the NCA. Edcon offers a ‘Club’ membership to its credit customers which membership gives access to various services and benefits.

Section 101 of the NCA sets out the costs, fees and charges allowed in terms of the NCA and does not allow for a “club fee” or anything similar. Accordingly, the Tribunal directed that a hearing should proceed on the appropriate sanctions to be imposed on Edcon.

Edcon appealed the ruling of the Tribunal in the North Gauteng High Court in Pretoria where Judge Johan Louw upheld the appeal and found that the Tribunal erred in its decision [Edcon Holdings Ltd v National Consumer Tribunal and Another 2018 (5) SA 609 (GP)].

In his ruling, Judge Louw held that Edcon’s credit agreements do not place any obligation on a consumer to pay a Club fee and the consumer has a choice whether or not to apply for Club membership. Furthermore, the consumer can cancel the Club membership at any time. Thus the Club fee charged is clearly not a cost of the credit which is extended to the consumer in terms of the credit agreement and is therefore not in violation of the provisions of the NCA.

As a result, the Edcon Group, which includes stores such as Edgars and Jet, may yet again charge Club fees for its willing customers.

For quality legal assistance contact Goldberg & de Villiers Inc. on 041 – 5019800.

 

 

 

WHEN IS A DEBTOR “INSOLVENT”? A CASE OF ARREAR MAINTENANCE ILLUSTRATES

 

“To my mind the best proof of solvency is that a man should pay his debts” (quoted in the judgment below)

If you are owed maintenance you have a variety of enforcement options open to you and should ask your lawyer for advice on which is the best for your particular claim and circumstances.

A recent High Court judgment confirms that one of the weapons in your legal armoury is the sequestration application. And as the defaulter’s desperate attempt to avoid sequestration in this particular case illustrates, even just the threat of sequestration can be a powerful motivator to settle up, regardless of whether your claim is based on maintenance arrears or on any other form of debt.

The reason is that an insolvent has to surrender control of his/her estate to a Trustee, who collects and sells all the insolvent’s assets and divides the proceeds between the creditors. The insolvent can also be ordered to pay over any excess earnings – such as for example monthly salary less reasonable expenses – to the Insolvent Estate. That’s a lot of control to lose over one’s own affairs.

Maintenance arrears and a “no goods” return

In this particular case –

  • As part of a divorce settlement, a father was ordered to pay child maintenance, but fell behind and ran up substantial arrears.
  • His ex-wife obtained judgment against him in the maintenance court for R45k and the sheriff, with a warrant of execution against property in hand, attached a motor vehicle belonging to the father.
  • Unfortunately the sheriff did not actually remove and sell the vehicle at the time and three months later it was gone. The sheriff then rendered a nulla bona (“no goods”) return when the husband claimed to have no money or attachable assets.
  • The mother then applied for the sequestration of the father’s estate, and the father raised two main defences –

“I’m not actually insolvent”

To sequestrate someone’s estate you have to prove either actual insolvency (not always easy to do) or an “act of insolvency”. And although the sheriff’s nulla bona return in this matter qualified as an act of insolvency, the husband still insisted that he was actually solvent. He didn’t deny owing the R45k (plus by that stage another R183k) but said that he would make payment once he received tax refunds from SARS in the future.

The Court dismissed this argument, quoting from a 1907 judgment: “Speaking for myself, I always look with great suspicion upon, and examine very narrowly, the position of a debtor who says, ‘I am sorry that I cannot pay my creditor, but my assets far exceed my liabilities’. To my mind the best proof of solvency is that a man should pay his debts; and therefore I always examine in a critical spirit the case of a man who does not pay what he owes” (our emphasis).

It was just not good enough, said the Court, for the father to say that he would eventually pay.

“Sequestration won’t be to the advantage of my creditors”

To get a sequestration order you must also prove that “there is reason to believe that it will be to the advantage of creditors of the debtor if his estate is sequestrated”.

The husband’s contention here was that he was under debt review in terms of the National Credit Act, and was making payments to his creditors. The flaw in this argument, said the Court, was that only listed creditors were being paid under the debt review arrangement. Nothing at all had been paid towards maintenance for almost four years, and the arrears were increasing at a rate of some R7k every month.

In those circumstances the Court was satisfied that sequestration would indeed be to the advantage of the husband’s creditors.

The Court’s discretion

Even after you have proved that you have a “liquidated” (agreed or easily-established amount) claim of at least R100, plus insolvency and advantage to creditors as above, the court can still refuse to order sequestration. In this regard it has a wide discretion “to be exercised judicially taking into account all the facts as well as the general history and circumstances of the case”.

Finding there to be “no reasons or circumstances to disentitle her of this order”, the Court held for the mother and sequestrated the defaulting husband’s estate.

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For professional legal advice, contact Goldberg & de Villiers Inc on 041 501 9800.

CAN I TERMINATE MY LEASE EARLIER?

Life is unpredictable and sometimes it becomes necessary to terminate a lease agreement entered into for a fixed term earlier. Can a tenant give notice to the landlord to cancel the lease before the agreed fixed term of the lease has run its course?

The first point of departure is to read the lease agreement. Sometimes leases have clauses providing for an early termination notice period. If there is no such clause the lease may only be cancelled in situations where the parties agree to the termination or in the situations where the Consumer Protection Act applies.

The Consumer Protection Act (“the Act”) applies to the supply of goods and services within South Africa. Residential leases fall within the definition of services where the landlord leases the property in the ordinary course of business.

Unfortunately it is not yet clear how our courts will interpret this definition in respect of residential leases.

If your landlord is a property developer with a letting business with a whole selection of apartments or houses, the lease will definitely fall under the Act. It is not so clear whether a private homeowner who rents property on a temporary basis will fall within the definition.

When the Act applies

The application of the Act is further excluded where the lease is concluded between to juristic entities and where the tenant has an annual turnover or asset value of more than R2 million Rand.

If the Act applies to the lease, the tenant may cancel a fixed term lease for any reason by giving the landlord 20 business days written notice of the cancellation.

“Business days” means weekends and public holidays are not counted. If the tenant cancels the lease before the lease would have ended in the ordinary course then the landlord is entitled to a reasonable cancellation penalty.

In order to determine a reasonable penalty the following factors must be considered:

  • the rental amount which the tenant stills owes the landlord up to the date of cancellation;
  • the value of the lease transaction up to the date of cancellation;
  • the duration of the lease agreement as initially agreed upon by the parties;
  • losses suffered or benefits accrued by tenant because of the tenant entering into the lease agreement;
  • the length of the notice period given by the tenant
  • the length of the period within the land lord would be able to find a new tenant
  • the industry practice

Between one and two months rental would probably be considered reasonable.

In cases where the Act applies to a lease, a landlord can only cancel a tenant’s lease if the tenant has breached the lease and if after having given 20 business days written notice to the tenant to remedy the breach, the tenant has failed to do so.

Consult an experienced property attorney before sending breach and/or cancellation and/or early termination notices. Contact  Goldberg & de Villiers Inc on 041 501 9800 for advice.

IT’S “13TH CHEQUE” TIME AGAIN: MUST YOU PAY ANNUAL BONUSES?

 

 

Once again November is upon us, and no doubt employees around the country are starting to dream of all the good things they can do with that “Christmas” bonus coming their way.

If you are one of them perhaps you plan to pay off debt or to re-charge the family’s batteries with a special holiday. Or perhaps you just want to reward yourself and your loved ones with a bit of free-spending on a luxury or two to celebrate a special time of year.

That’s all well and good, but the hard reality is that every year a percentage of employers decide that they can’t afford a sudden doubling of their staff costs and will call everyone together to say something like “Sorry guys, times are really tough so no bonuses this year. You’re lucky to still have jobs”.

Disappointment and anger will no doubt lead to thoughts of CCMA referral and legal action, but none of that is necessary if both employers and employees (a) understand the law, (b) prepare and plan properly, and (c) communicate effectively long before hopes are raised then shattered.

Firstly, what does our law say?

It is a persistent myth that our law automatically forces employers to pay annual bonuses.  Not so – nothing in our labour legislation or employment law says anything of the sort.

What our law does say to employers is this

  • If your employment contracts say you must pay bonuses, your employees have an enforceable legal right to receive them. This is just standard contractual law – both you and your employees are held to your agreements.
  • You must consider not only what your employment contracts themselves provide, but also any company policies, collective agreements and the like.
  • Check also whether any conditions – like profitability of the business or employee performance or contribution to profitability – are specified. And are you given unlimited discretion in deciding whether or not to award bonuses?
  • Even where nothing has actually been agreed as above, you may still be bound to pay annual bonuses if you have paid them regularly in the past. This is because departing from any established practice or custom without prior employee consultation can be seen as an unfair labour practice.  The law aside, employee morale will naturally plummet if expectations of a bonus have been built up over the years but are then dashed at short notice.
  • Be careful of differentiating between employees performing the same or similar work – that’s a recipe for dispute and accusations of unfair labour practice.

Prepare and plan

Employers: Have your lawyer check all your employment contracts and company policies to make sure that you have full discretion and will never be forced to pay bonuses your business can’t afford. Take advice on how you can regularly pay bonuses in good years without creating “rights of expectation” enforceable by your employees in bad years. Use cash flow projections to give you (and your employees) early warning of any inability to pay bonuses this year.

Employees: Don’t spend your bonus until you know for certain how much (if anything) is actually coming your way. And remember that SARS could be taking a bigger than normal slice out of this particular pie – ask your employer for an estimate of how much from the PAYE deduction tables.

Communicate, communicate!

Whichever side of the employment contract you are on, open and effective communication will always be the key to avoiding false hope and bitter disappointment when it comes to bonus time.

So as an employee don’t be shy to ask the boss about his/her bonus plans and if as an employer you have any doubt at all about your business’ capacity and/or willingness to pay bonuses this year, tell your employees what to expect before expectations build up. After, of course, taking legal advice if you have any doubt as to your legal position in this regard – our labour laws are complex and getting them wrong can be costly!

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For more information and assistance, contact Tracey Mouton, HR Director, Goldberg & de Villiers Inc on 041 5019800.

 

NEW COMMERCIAL COURT FOR BUSINESS DISPUTES

The Commercial Court has been revived in the Gauteng Division of the High Court of South Africa.

Although the court was established 15 years ago, it was never fully operational. The court aims at resolving company disputes faster and more efficiently and will consider any case that has a commercial transaction and/or relationship as its foundation. The claim made must, however, arise from or relate to the following:

  1. the export or import of goods;
  2. the carriage of goods by land, sea, air or pipeline;
  3. the exploitation of oil and gas reserves or other natural resources that do not involve Administrative Law;
  4. insurance and reinsurance;
  5. banking and financial services;
  6. the operation of markets and exchanges;
  7. the purchase and sale of commodities;
  8. medical scheme matters;
  9. commercial matters arising out of business rescue and insolvency cases;
  10. all commercial matters affecting companies arising out of the Companies Act 71 of 2008 and its interpretation;
  11. arbitration;
  12. delictual cases that take place in a commercial context for, e.g. unlawful competition cases;
  13. generally, appropriate contractual matters; and
  14. intellectual property cases.

Although the court is only available in Gauteng for now, it is hoped that similar courts will be established in other High Courts in the future to help alleviate the backlog experienced with many court rolls.

Visit https://www.businessinsider.co.za/sa-now-has-a-commercial-court-again-this-is-how-it-will-work-2018-10

For professional legal advice, contact Goldberg & de Villiers Inc on 041 501 9800.

 

 

CAN I HAVE PETS IN A RESIDENTIAL COMPLEX?

 

“I never married because there was no need. I have three pets at home which answer the same purpose as a husband. I have a dog which growls every morning, a parrot which swears all afternoon, and a cat that comes home late at night” (Marie Corelli, English novelist)

Residential complexes and estates are becoming more and more popular for the many advantages they provide. Remember however that – in everyone’s interests – they also come with restrictions on your freedom to use and enjoy your property, and that you bind yourself to whatever Conduct Rules apply in your community scheme.

One of those restrictions is likely to be your right to keep a pet, and that’s a topic that can be a source of much conflict and unhappiness.

Residents tend to fall into one of three camps

  1. “I really need to have my little dog/cat/parrot/lizard living with me”
  2. “I simply cannot handle any more of that parrot-screeching/lapdog-yapping/midnight-cat-yowling – it has to go!” or
  3. “Pets – don’t need them myself but hey, fine so long as they don’t cause me any trouble”.

Regardless of which category you fall into, it’s important to understand before you move into any form of residential complex whether or not you and other residents are allowed to keep pets, and to obtain any necessary prior authority to do so.

Sellers, buyers and estate agents would do well to address this specifically in sale agreements to avoid disappointment and dispute down the line.

Sectional title schemes

Your Body Corporate has the right to impose limits on pet ownership. It can for example prohibit pets altogether, or it can impose limits on the number of pets allowed, types of pet, breeds or sizes allowed, access to common areas, noise-control, replacement on the pet’s death and so on. Trustees should take care here to define clearly what is allowed and what isn’t. Are only dogs banned or also cats and cage birds? What about pet pigs? Guide dogs? Hamsters? Pet snakes? Goldfish? The more detail the better.

You need to find out exactly what rules apply in your particular complex, but the standard “Prescribed Conduct Rule” below will be in force unless your Body Corporate has amended it. This Rule reads –

“Keeping of animals, reptiles and birds

  1. The owner or occupier of a section must not, without the trustees’ written consent, which must not be unreasonably withheld, keep an animal, reptile or bird in a section or on the common property.
  2. An owner or occupier suffering from a disability and who reasonably requires a guide, hearing or assistance dog must be considered to have the trustees’ consent to keep that animal in a section and to accompany it on the common property.
  3. The trustees may provide for any reasonable condition in regard to the keeping of an animal, reptile or bird in a section or on the common property.
  4. The trustees may withdraw any consent if the owner or occupier of a section breaches any condition imposed in terms of sub-rule (3).”

Note that where this Prescribed Rule applies unamended, the body corporate is specifically required to act “reasonably” in all the circumstances of each matter. That entails a delicate balancing act between the competing rights of pet-owning residents and their neighbours, which means grey areas and fertile ground for dispute.

Hence the advice to get clarity on your rights before buying into a complex.

Home Owners Associations (HOAs)

HOAs have similar rights to restrict the keeping of pets, but no “Prescribed Rules” apply as they do with sectional title and their powers will depend on whatever founding documentation underlies them. HOAs normally govern free-standing estate houses rather than apartments and so are perhaps more likely to be pet-friendly but again, find out what the complex’s Rules say before you buy.

Trustees barking up the wrong tree? Polly ruffling feathers? The ADR alternative

If you find yourself embroiled in a dispute with your body corporate/HOA or a fellow resident or owner, first prize will of course always be a chat over a friendly cup of coffee to find common ground and a win-win outcome.

If that fails, the (relatively) new Community Schemes Ombud Service provides an alternate dispute resolution (ADR) service designed to assist with just this sort of situation. Contact the professional legal team at Goldberg & de Villiers Inc on 041 5019800 for help in any doubt.

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AGING EMPLOYEES : WHEN MUST THEY RETIRE?

“Retirement at sixty-five is ridiculous. When I was sixty-five I still had pimples” (Comedian George Burns)

Record numbers of Baby Boomers are now reaching their 60s, and if you are an employer in any size of business (from the smallest family-owned enterprise to the largest corporate), make sure now that you have a policy in place to handle the thorny question of compulsory retirement.

This is vital – sooner or later you are going to have an employee turning 55 or 60 or 65, and if you think you can just say “Happy Birthday Kim, time for you to retire, see you around” you are in for big trouble.

So what’s the legally required retirement age?

The problem is that nothing in our law imposes a standard retirement age on employees. So trying to force someone to retire at an age that you unilaterally choose (no matter how much you may think that 65 is the universally-accepted gold standard for being put out to pasture) opens you up to a claim for ‘age discrimination’. And that would amount to an automatically unfair dismissal, for which our courts will make you pay dearly.

What our law does say is that “a dismissal based on age is fair if the employee has reached the normal or agreed retirement age for persons employed in that capacity” (our emphasis).

Let’s look at each of those options

“Agreed”: Clearly your best course of action is to have a written agreement with every employee specifying a compulsory retirement date. Ideally have such a clause in every new employment contract, and if any existing contracts have no such clause, negotiate one now (it’s essential to do this bilaterally not unilaterally – see case below).

“Normal”: You can always try to convince a court that you have, through past practice in your business, established a “normal” retirement age. You will have to prove that you have consistently applied this age in previous retirement situations and that the employee in question was aware of it. Far safer of course is to have in place a formal “retirement policy”.

Whatever you do, don’t act unilaterally

A recent Labour Court case shows how dangerous it can be to try to alter any term of employment without negotiating and agreeing it with your employees –

An employee’s employment contract made no direct mention of a compulsory or automatic retirement age, but his employer’s ‘Human Resources Policy and Procedure Manual’, which was incorporated into and formed part of his contract, stipulated a retirement age of 65.

This was reduced to 60 when the Manual was replaced by a “Terms and Conditions of Employment” policy. The new policy excluded employees “expressly entitled to retire at 65 in terms of their individual contracts of employment”.

The employee’s services were terminated when he turned 60 and he approached the Labour Court for assistance.

The Court held that the employer is “not permitted to unilaterally amend terms and conditions contractually agreed to” and was therefore in breach of contract. The employer must now reinstate the employee retrospectively to the date of termination, his compulsory retirement age being confirmed at 65.

What to do when retirement age is reached

Preferably your employment contracts should specify an agreed procedure to be followed on retirement date, but in any event don’t let the date just float past. Rather, if you agree on an extension period, have your lawyer draw up an amended employment contract to avoid any uncertainty or dispute.

Employees – know your rights

Age discrimination is just one form of automatically unfair discrimination prohibited by law. Stand up for your rights if you think you are being discriminated against, directly or indirectly, “on any arbitrary ground, including, but not limited to race, gender, sex, ethnic or social origin, colour, sexual orientation, age, disability, religion, conscience, belief, political opinion, culture, language, marital status or family responsibility.”

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For assistance and more information, contact the professional legal team at Goldberg & de Villiers Inc on 041 5019800.

 

THE IMPORTANCE OF DIRECTORS’ MEETING MINUTES – “WHO, WHAT, WHERE, WHEN AND WHY?”

 

 

 

“A company must keep minutes of the meetings of the board, and any of its committees…” (Extract from the Companies Act)

Steinhoff and other high profile corporate scandals both here and overseas highlight the need for directors to ensure that their board and committee meetings (and the decisions taken at them) are correctly and accurately recorded.

The point is that as a company director you are given wide powers by our Companies Act, but you also have to comply with a raft of fiduciary duties and statutory responsibilities. Failure to do so exposes both your company and you personally to substantial risk.

A vitally important aspect of managing this risk is ensuring that proper minutes of your meetings are kept.

Good minute keeping – Who? What? Where? When? Why?

Here’s an idea worth following. U.S. law firm Patterson Belknap Webb & Tyler’s article “A Minute Guide to Minutes” (available here) suggests that you always cover the “5Ws”. In a local context these cover

  • Who? The names of all attendees, their capacities and, if anyone was present for only part of the meeting, which part. Record also any apologies or non-attendances. Remember that you may need to prove later that there was a quorum.
  • What? What happened in the meeting in relation to the agenda, the subjects discussed, decisions made and actions taken (resolutions passed must by law be numbered sequentially and dated), summaries of any presentations made by outsiders (such as staff or outside advisers like your lawyers), any important regulatory issues like declarations of conflict of interest (this latter is again a legal requirement), and so on.

Bear in mind the fundamental duty of directors to act in the company’s best interests, to understand the issues facing the company, and to formulate their own, independent views so they can actively contribute at board meetings. The minutes should reflect this. In addition, all directors should be sent a comprehensive pack at least 7 days before the meeting to give them time to prepare, and on an individual basis they should keep their own notes during the meeting and retain them as proof of having applied an independent mind to the issues.

Have your lawyers review the minutes in relation to any contentious issues discussed, particularly where there is any possibility of litigation or investigation by statutory bodies like SARS or the Competition Board.

Generally, strike a balance between too much detail and too little here – ensure that the minutes reflect everything of importance and give an accurate sense of the meeting without drowning in unnecessary detail.

  • Where? Ensure that the minutes (and any relevant documents referenced in them) are kept securely by the company secretary or a director for at the very least the statutory minimum of seven years.
  • When? It’s important that the minutes be written and approved shortly after meetings, and circulated to all directors whilst the meeting is still fresh in their minds.
  • Why? Directors’ meetings are fundamental to the good management of your company and to the decisions that you as a board make on its strategic direction. How these meetings are minuted could prove critical if for instance disputes or litigation or regulatory issues arise in the future.

In a nutshell, since minutes are, once signed by the chair, “evidence of the proceedings of that meeting” and of resolutions adopted, they provide the most important historical record of how and why decisions were taken. Prioritise this vital and legally-required recording process accordingly.

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For more information, contact the legal team at Goldberg & de Villiers Inc on 041 5019800.