Bradley & van der Merwe Chartered Accountants

DO YOU NEED A SHAREHOLDERS’ AGREEMENT?

delene — Fri, 18 Nov 2022 12:38:07 +0000

Having a shareholders’ agreement in place will provide direction in times of uncertainty and may avoid expensive legal disputes. The agreement is important because there are practical aspects of the shareholder relationship that you may not consider when starting a company or joining an existing one.

What will happen to a shareholder’s shares on his death?

Without a properly drafted shareholders’ agreement, the shares of the deceased shareholder will be dealt with just like any other asset in his estate and will be inherited by his heir. This could be a spouse, a child, or any other person, depending on the deceased’s will.

The remaining shareholders could end up with a new shareholder who knows nothing about the business or who has no value to add. The new shareholder is under no obligation to sell the shares he has inherited, and you will be stuck with him.

A properly drafted shareholders’ agreement can include provisions dealing with the death of a shareholder. For example, the remaining shareholders could be given an opportunity to buy out the deceased’s shares, to avoid the above scenario.

Can you force a shareholder to sell his shares?

The short answer – No unless you have a properly drafted shareholders’ agreement in place.

A shareholder cannot be forced to offer his shares for sale, even if he is:

running another business in competition with your company
dismissed for misconduct as an employee of the company
convicted of a crime such as theft or fraud
bankrupt
incapacitated and unable manage his affairs.

Being unable to buy out such a shareholder could result in an awkward situation for the company, and negatively affect the business.

A shareholders’ agreement can also provide welcome certainty on practical issues, including:

funding of the company, loan obligations and the terms of shareholder loans
rules relating to suretyships and guarantees given by the company and shareholders
protections for minority shareholders in certain circumstances, to avoid situations where the majority takes important decisions without their consent
privileges for majority shareholders where permissible, to avoid situations where a minority can block a major decision
appointment of directors and related issues.

If you do conclude a shareholders’ agreement, it is important that your company’s memorandum of incorporation is reviewed to ensure there are no contradictions between the documents. If there are, the relevant terms of the shareholders’ agreement will be void. Professional advice is recommended.

NATIONAL MINIMUM WAGE EFFECTIVE – 1 JANUARY 2019

admin — Wed, 12 Dec 2018 11:05:00 +0000

The long awaited national minimum wage (NMW) has been signed into law. The effective date is 1 January 2019. What exactly does this mean for employers and employees?

The new minimum wage of R20 per hour applies across all sectors, with a few exceptions. The exceptions include domestic workers, farm/forestry workers and workers employed in Expanded Public Works Programmes.

The exceptions will only be temporary. It is envisaged that there will be a gradual adjustment of domestic and farm/forestry workers’ wages to come in line with the NMW. As a first step domestic workers’ minimum wages will be increased to a minimum rate of R15 per hour, and farm/forestry workers’ wages to a minimum rate of R18 per hour. The implementation dates of these increases have not yet been announced.

Some sectors will have to adjust their minima upwards with effect from 1 January 2019 – these include the Hospitality Sector, Wholesale and Retail Sector.

For employees who work 45 hours per week, the minimum monthly wage will be just short of R3900. If the contract of employment makes provision for less than 45 hours per week, the monthly rate can be less than this amount.

Employers are restricted in the way that they structure the remuneration package. The NMW excludes allowances that are paid to enable employees to work (such as transport and equipment), or payment in kind (such as board or accommodation), as well as bonuses, tips or food.

Employers are not permitted to unilaterally change working hours due to the implementation of the NMW. Any reduction of hours of work will have to be negotiated.

There is provision for employers to apply for exemption of up to a 10% reduction by means of an electronic system. At the time of the announcement of the implementation date there was no information available on how to go about this in practice.

IF YOU CARE ABOUT YOUR FAMILY, YOU WOULD MAKE SURE THAT THEY HAVE WHAT THEY NEED

admin — Thu, 07 Sep 2017 11:04:18 +0000

However, dying without a Will can leave your family with less than what they need. By having a valid and updated Will, you are putting your family’s needs first.

Make an appointment with us to draft your basic Will during National Wills Week (11 to 15 September 2017)

NEW VALID TAX INVOICE RULES

admin — Mon, 20 Feb 2017 11:03:29 +0000

South Africa operates a VAT system whereby businesses registered for VAT are allowed to deduct the VAT incurred on business expenses (the input tax) from the VAT collected on the sales made by the business (the output tax). The most important document in such a system is the tax invoice. Without a valid tax invoice a business cannot deduct input tax on business expenses.

In the past a tax invoice was only considered valid if it had the words “Tax Invoice’’ on it. However from 8 January 2016, section 20(4) of VAT act has been amended so that a valid tax invoice can now have the following words on it and still be a valid invoice to claim input VAT:

TAX invoice, or VAT invoice, or Invoice.

There are other criteria that must be met in order to qualify as a valid tax invoice. All the criteria below must be met for an unabridged tax invoice (an unabridged tax invoice is one where the total value of the invoice is equal to or exceeds R5000).

Contains the words “ Tax Invoice” , “VAT Invoice’’ or “Invoice’’
Name, address and VAT registration number of the supplier
Name, address and where the recipient is a vendor (customer), the recipient’s VAT registration number.
Serial number and date of issue of invoice
Accurate description of goods / or services (indicating where applicable that the goods are second hand goods)
Quantity or volume of goods or services supplied
Value of the supply, the amount of tax charged and the consideration of the supply (value and the tax)

For an abridged tax invoice (an abridged tax invoice is one where the total value of the invoice is between R50 and R5000), all criteria above must be satisfied except for points 3 and 6.

TIP

Contact all your suppliers and make sure they have all your details on their database. It’s in your best interest to help suppliers with this, otherwise you might have a problem with SARS disallowing your input tax claims. Also make sure that when you have first contact with a new supplier that you give them written confirmation of all your company details and contact them later to confirm they have them and don’t need anything else. Check your invoices when you receive them against the above criteria for any errors and follow up with the suppliers if you spot something missing, because once they’re paid it’s easy to forget about checking them.

There is a checklist on the SARS website which gives a very good summary of the criteria for valid tax invoices. It would be advisable to keep it on hand so that you can tick the criteria off as you check your invoices. We have included it below.

OUTSOURCE AND DANCE TO YOUR OWN TUNE

admin — Wed, 25 Jan 2017 11:02:34 +0000

BOOKKEEPING

Very often when you run your own business you end up doing a lot of things yourself and this can steal you away from your passion and purpose.

At BVDM PROFESSIONAL ACCOUNTANTS bookkeeping is music to our ears, we love what we do and use our talent for balancing books to your advantage.

Give us a call today and get back to fuelling the music of your soul by focusing on your real business passion!

Contact: 041-3956600 / info@bvdm.co.za

REDUCE YOUR PAPERWORK ON PAYROLL – OUTSOURCE TO US

admin — Tue, 17 Jan 2017 20:49:21 +0000

Payroll is one of those things that has to be done but doesn’t directly help you grow your business. On top of that you never know who is looking at things they are not supposed to or using information for self-leverage. So why not make things easier for yourself and ensure better confidentiality through outsourcing …

REDUCE YOUR PAPERWORK ON PAYROLL – OUTSOURCE TO US Read More »

SME CYBER INSURANCE

admin — Thu, 06 Oct 2016 20:48:32 +0000

It is virtually impossible for any business to function without connecting to the world wide web.

Add to this, the reality that most adults and children walk around with a constantly-connected, super computer in their pockets and you’ve got a veritable hotbed of opportunities for cyber criminals. The commercialisation of cyber crime, has dramatically increased the occurrence and severity of cyber-attacks on businesses regardless of size SHA recognises the far reaching consequences that this ever-expanding cyber risk could have on a business, particularly those that may not have the resources or infrastructure to deal with such an event and therefore we have tailored a complete Cyber, Privacy and Media Insurance solution for small-to-medium sized enterprises

OUR POLICY HAS BEEN DESIGNED FOR SMALL TO MEDIUM SIZED BUSINESSES

IT Security & Incident Response: The expertise and services of an internationally recognised IT Security & Incident Response service provider
Cyber Liability: After a breach, the business may find it has to defend itself against and/or pay damages to third parties. This provides cover for legal defence costs and damages if the case is unsuccessfully defended
First Party Expenses: Once a breach occurs, there are costs and expenses to get the business back on track.

This extension covers the costs

to restore, re-collect or replace data,
of specialists, investigators, forensic auditors or loss adjusters,
of the use of rented, leased or hired equipment, services, labour, premises or additional operating costs (including staff overtime)
Loss of Business Income: There will be a negative impact on the income of the business. This extension covers the net income which would have been earned had the breach not occurred
Crisis Management Expenses: Every business cares about how their customers perceive it. This extension covers the costs of a public relations consultant or related advertising expenses in order to mitigate any reputational or material brand damage
Multimedia Liability: Most organisations use websites, social media platforms and other electronic media, and there is always a risk of copyright or defamation allegations. This extension covers the legal defence costs, legal liability to pay damages, public relations communication costs, claimants costs and claims expenses arising from the performance of multimedia activities
Cyber Extortion & Data Ransom Demand: Should your data or system be locked by ransomware or your company is threatened by cyber extortionists, there may be costs in negotiating with the hackers or paying a ransom demand. This extension covers costs of the investigation into the cause of, or the payment of monies in response to or as a result of, an extortion threat or ransom demand
Internet of Things Liability: Businesses that supply devices that are connected to a network may find themselves the subject of litigation if hackers intercept these devices and cause physical damage or injury. This extension covers the legal defence costs against such actions and possible damages to third parties
Theft of Funds: Businesses that have suffered a Network Security Breach may find that funds are taken by unauthorised third parties. This extension covers the monetary loss sustained as a direct result of a Network Security Breach
Notification Expenses: There will be costs to notify affected parties and monitor any possible identity theft. This extension covers the expenses incurred to comply with privacy legislation and includes legal and communication expenses as well as credit monitoring and identity theft education and assistance
Regulatory fines and penalties to extent insurable by law. Legislation such as POPI

(Protection of Personal Information) introduced the imposition of hefty fines, penalties and even jail time. This extension covers the legal defence costs against the sanction as well as the amount of the actual fine or penalty itself (as long as the regulator allows it

And for technology professionals, there is also the option to include:
Professional Indemnity: insurance for your legal liability to pay damages, claimant’s costs and claims expenses arising from the rendering of Professional Services

Contact Delene Auld on 041-395-6600 or email: delene@bvdm.co.za

DIRECTORS AND PERSONAL LIABILITY: THE LITTLE-KNOWN SECTION WAITING IN AMBUSH

admin — Tue, 27 Sep 2016 20:47:26 +0000

Since the “new” 2008 Companies Act came into effect in 2011, directors and other company officers have had to shoulder a raft of additional responsibilities and risks, amongst them a significantly increased risk of personal liability. Consider for example the little-known section 218(2) which waits in ambush for the unwary in the “Miscellaneous Matters” section at the tail-end of the Act, and which reads: “Any person who contravenes any provision of this Act is liable to any other person any loss or damage suffered by that person as a result of that contravention”.

That’s wide wording –

Anyone who has a duty to comply with the Act – not just directors – is in the firing line
They can be sued for any loss caused by any contravention
They risk personal liability to anyone who has suffered a loss – the company itself, shareholders, employees, creditors, suppliers, customers, etc

And the section has indeed been used several times to successfully attack directors.

A good example:-

A recent High Court case involving a liquidated company which failed to pay R1.5m in levies and provident fund contributions/salary deductions to a Bargaining Council. The two directors were ordered to pay the claims personally having, held the Court, acted in a grossly negligent manner, recklessly and with an intention to defraud only only the Council but also employees.

That of course was a serious contravention of the Act but the wording of the section suggests that even minor or technical contraventions will lead to liability – be warned accordingly!

Our NEW look!

admin — Fri, 23 Sep 2016 20:46:01 +0000

We are very proud of our new website! We hope you enjoy your future browsing at www.bvdm.co.za!
Don’t forget to follow us on Facebook!

SMALL BUSINESS CORPORATIONS

admin — Thu, 22 Sep 2016 08:38:49 +0000

The companies Act 71 of 2008 replaced the incorporated companies with personal liability companies and section 1 of the Companies Act defined a private company as a profit company that is not a public, personal liability or state owned company.

The exclusion of the personal liability company in the definition of a private company resulted in its exclusion from the income list of entities included in the definition of Small Business Corporation.

SAIPA & SAICA is working with the government and proposing that personal liability companies be included on the SBC list.

National Treasury has already acknowledged that they have made a mistake with this legislation. The challenge is the effective date.

On 14 September 2016, SAIPA appeared to the Finance standing committee in order to plea with them to consider back dating the effective date.

We will keep you informed regarding the developments.