Attorneys at Law

South Africa

Some of the services we offer:

Formation of Business Entities

Registration of Companies

Formation of Close Corporations

Partnerships

Trusts

Agreements: Drafting of tailored Articles of Association; Drafting of Shareholders’ Agreements: Drafting of Association Agreements for Close Corporations: Drafting of Franchise Agreements: Drafting of Partnership Agreements: Buy-Sell Shareholders clauses: Share Options: Drafting of employment contracts.

Check list.

The right business entity

Have I chosen the right entity for my business? If you do not have an entity like a Close Corporation or a Company you do not have personal protection for creditors. On the other hand you should not form a company unless your business warrants the expense of such an entity. Companies have become extremely complex to maintain. Close Corporations were designed for smaller businesses.

Choice of name

Have you checked to see whether the name of your business is also being used by someone else? Because the Registrar of Companies or Close Corporations has approved the name you have chosen, does not mean the name is not the same or similar to a registered trade mark or a domain name belonging to someone else. You could find that you have printed stationery that will have to be discarded.

Compliance with the laws

There are several laws that a business must comply with and several ore that are well advised. For example, Some businesses require a licence. Some require certain information to be printed on all stationery and included in publications. If you do not include the information you may have to reprint. In the case of a company you could loose the benefit of limited liability if you do not comply with the Companies Act.

Tax Laws

There are several Income Tax laws that must be complied with. These vary depending upon the choice of entity.

Personal Liability

The office of "Public Officer" required for companies carries the liability for unpaid taxes, even if he or she is not connected with the company.

The signatory to a check that contravenes the Companies Act, becomes personally liable if the cheque is dishonoured, even if that person is only a temporary employee such as a bookkeeper.

Agreements

Having an agreement drawn is the same as having someone write your own legal code for your own specific circumstances. Just as you would not ask your attorney to balance your books, you should not ask your accountant to tailor your own laws for you in an agreement. 

Articles of Association for a company must be drawn by an attorney, unless the standard form is used. Often the standard form is not appropriate. One of the most common problems with the standard form is the manner in which it deals with a sale of shares in a “buy-sell” clause. A shareholder with only say 5% leaves and refuses to sell his shares.

Another point to consider is that when you take out an insurance policy on a shareholders' life you may be given a standard Shareholders' Agreement that contains a "buy-sell" clause. Your insurance broker is not qualified to consider the legal effect of such an agreement, and he may even be unaware that such an agreement could be in conflict with your Articles of Association. 

Shareholders’ Agreements.

One of the most important agreements to consider in a company that has more than one shareholder is a Shareholders' Agreement. The time to have it drawn is when you first take on a new shareholder.

Employment Agreements

An executive director is an employee of the company. He may also hold shares and be a shareholder. Terminating the services of a director (especially a director who is also a shareholder) is an extremely complex task that involves laws like, labour laws, the Companies Act, the life insurance laws and medical aid laws.

If the company structure has been set up properly, many of the complications become a simple matter of procedure. If not, then such action can dramatically affect the company’s internal management and its performance.

Restraint of Trade

A restraint on an employee’s ability to earn an income can be negotiated quite validly. The problems that arise with restraints of trade usually favour the employer simply because there is little incentive to hire a person who has a threat of litigation looming over his head. However, employees in powerful positions can wreak havoc with a company’s clients.

An aspect of an employee’s relationship with his or her employer that is often not catered for is the protection of information that whether it is confidential or not, it is information the company has a right to protect. A list of customers for example. 

Copyright

With IT business’ one of the most frequently ignored problems is who owns the software written by an employee. Often software is written in teams and sometimes one or more member of a team is not a permanent employee.

Design Rights

You can protect your rights to a design. The concerns in this regard are similar to those expressed in the proceeding paragraph. This area often affects marketing and IT businesses.

Work in Progress

Wherever there is work in progress under the control of an exiting employee, there is a need to protect the rights of the company. If no agreements are in place, you have to rely on those laws that may apply as opposed to being able to take advantage of a tailored legal position in an agreement.