Legal Consultation

The first step is to determine whether a partnership or joint venture is the best structure for your business goals. A partnership typically involves two or more people sharing ownership, profits, and liabilities. A joint venture, on the other hand, is usually a separate entity created by two businesses to undertake a specific project or business activity.

Whether you are forming a partnership or joint venture, it is crucial to have a written agreement in place. This agreement should outline key aspects such as:

This agreement helps prevent misunderstandings and provides a clear framework for the partnership or joint venture’s operations.

If you’re forming a partnership, it should be registered with the Companies and Intellectual Property Commission (CIPC). In the case of a joint venture, if you plan to create a separate legal entity, you will need to register a new company with CIPC. This ensures that your venture is legally recognised.

Both partnerships and joint ventures are required to comply with tax obligations in South Africa. Ensure that your partnership or joint venture is registered with SARS for VAT and income tax purposes. Keep proper financial records and consult with a tax professional to understand the tax implications of your business structure.

If your business will involve intellectual property (IP), ensure that ownership of any IP developed during the partnership or joint venture is clearly defined in your agreement. You may also want to include confidentiality clauses to protect sensitive business information.

Forming a partnership or joint venture can be a powerful way to grow your business in South Africa, but it is essential to address the legal considerations carefully. By choosing the right structure, drafting a solid agreement, registering your business, and complying with tax requirements, you can set your partnership or joint venture up for long-term success.

Public liability insurance is a policy that protects your business against claims made by third parties for injury or property damage resulting from your business activities. Essentially, it covers you if someone is harmed or their property is damaged due to your business operations.

For example, if a customer slips and falls while visiting your store or office, public liability insurance can help cover the cost of medical expenses, legal fees, and compensation. It also protects your business if a third party's property is damaged while you are providing a service or delivering goods.

Even if your business is small, accidents can happen. A seemingly minor incident can lead to significant financial losses if you are not properly insured. Here are some practical reasons why public liability insurance is vital for small businesses:

As you explore options for public liability insurance, here are some important aspects to consider:

3.  Policy Terms 

4.  Premiums 

To secure public liability insurance, follow these steps:

4.  Read the Fine Print 

Public liability insurance is a vital safeguard for small businesses in South Africa. By protecting your business from the financial implications of accidents, lawsuits, and property damage, it offers peace of mind and ensures you are prepared for unforeseen events. As a business owner, it is crucial to understand your insurance needs, assess the risks your business faces, and secure the right coverage to protect your assets, your clients, and your reputation.

Crowdfunding is the practice of raising small amounts of money from a large number of people, typically via an online platform. These platforms, such as BackaBuddy or Thundafund, allow businesses to present their funding needs to the public. In return, contributors might receive rewards, equity, or simply the satisfaction of supporting a business they believe in.

For SMMEs, crowdfunding can be a flexible and accessible way to raise capital, but it is important to ensure that the process is legally sound to avoid potential pitfalls.

The first step is to understand the different types of crowdfunding available:

As an SMME, understanding which type of crowdfunding suits your business model and financial goals is crucial.
 

In South Africa, the financial regulations governing crowdfunding depend on the type of crowdfunding you pursue. If you are raising funds through equity or debt-based crowdfunding, there are stricter regulations that apply.

Before launching your crowdfunding campaign, consult with a financial advisor or legal professional to ensure you are in compliance with the relevant regulations.

For a crowdfunding campaign to be successful, you will need a clear and compelling business plan. This not only helps you communicate your goals but also demonstrates to potential investors or backers that your business is viable. A strong business plan includes:

By presenting a detailed, well-thought-out plan, you build trust with potential contributors and set realistic expectations.

If your crowdfunding campaign offers rewards to contributors, you must ensure compliance with consumer protection laws. This includes:

The Consumer Protection Act (CPA) in South Africa requires that businesses provide fair and accurate information to consumers. Misleading information could lead to legal consequences and damage your business’s reputation.

Raising funds through crowdfunding has tax implications that vary depending on the type of funds raised. For example:

Consulting with a tax professional is highly recommended to understand the specific tax obligations your business may have.

If your business is sharing new ideas or products through crowdfunding, it is important to protect your intellectual property (IP) rights before launching your campaign. For instance:

Ensure your campaign materials and any rewards offered do not infringe on the IP rights of others.  

Crowdfunding offers SMMEs an exciting opportunity to raise capital, but it also comes with a range of legal considerations. By understanding the regulatory environment, preparing a solid business plan, complying with consumer protection laws, addressing tax implications, and protecting your intellectual property, you can navigate the crowdfunding process successfully. It is important to approach crowdfunding with careful planning and professional advice to ensure that your business is legally protected and that you can meet your obligations to contributors.

Here is a basic guide to registering your trademark in South Africa:

1.  Understand What Can Be Trademarked

A trademark can be a word, logo, slogan, shape, or even a combination of these. It is important to make sure what you are looking to protect is distinctive enough to be registered. For example, unique names or logos are more likely to succeed.

2.  Conduct a Trademark Search

Before you register, search the South African Trade Marks Register to check if your trademark is already taken. You can do this yourself on the CIPC (Companies and Intellectual Property Commission) website or hire a professional to do it for you.

3.  Prepare Your Application

Once you have confirmed your trademark is available, prepare your application. You will need to:

4.  Submit Your Application

You can submit the application through the CIPC website. The process involves paying the application fee and providing all necessary documents. Make sure all the details are correct, as errors can delay the process.

5.  Wait for Examination and Publication

After submission, the CIPC will examine your application to determine if it meets the registrability requirements. If everything is in order, your trademark will be published in the Government Gazette. This allows others to object the registration if they believe it conflicts with their trademark.

6.  Final Approval

If no objections are filed or successfully pursued, your trademark will be registered, and you will receive a certificate of registration. You can now legally protect your brand for ten years, and renew it thereafter.

Tips for SMEs:

By following these steps, you can safeguard your brand and give your business the protection it deserves.

Before registering your business, decide on the structure that best suits your needs. In South Africa, you can register different types of entities, such as:

      o  Pros: Easy to establish, minimal paperwork.   

      o  Cons: Unlimited personal liability, limited access to funding.   

  

      o  Pros: Shared resources, potential for greater expertise.   

      o  Cons: Joint liability, potential for disagreements.   

  

  

      o  Pros: Limited liability (it limits your liability to the amount you invest in the company), greater access to funding and investors.

      o  Cons: More complex to establish and maintain, higher compliance requirements.   

For most business owners, a Private Company is the preferred choice due to its limited liability and flexibility.

Before you can register your business, you will need to choose a unique company name. You can either:

If you are opting for your own name, use the CIPC website to check if your desired name is available. If the name is taken, you will need to come up with alternatives.  You can submit a name reservation request on the CIPC website and pay a small fee. The process can take a few days, so be sure to plan ahead. 

Once your business structure and name are chosen, you will need to gather the following documents:

Having all your documentation ready will make the registration process faster and smoother.

Now that you have prepared your documents, it is time to officially register your business. The process can be done entirely online through the CIPC website. Here is how you do it:

The CIPC will process your application, which can take several days. You will receive your registration certificate (Certificate of Incorporation) once the process is complete.

Once your company is registered with CIPC, you need to comply with tax regulations. Here are the key registrations you may need to complete:

You can do all of this on the SARS eFiling portal.

With your business entity legally registered, it is time to open a business bank account. This is necessary for separating your personal and business finances. To open an account, you will need your company registration certificate, proof of business address, and identification documents.

Registering your business with CIPC may seem like a daunting process, but following these steps will ensure that your business is legally compliant and ready to grow. By registering your business, you are laying the foundation for future success, protecting your brand, and ensuring you are on the right side of the law. Take each step carefully and seek professional advice if needed, especially for tax and compliance matters.

The purpose of Business Rescue is to restructure your business, to make it solvent and stable. It takes the business out of your hands for some time and entails the temporary supervision and management of your business, its affairs, property, and business activities by a Business Rescue Practitioner (BRP). There is also a temporary stay on claims against your business and its property during the Business Rescue proceedings.

The purpose of liquidation is not to rescue a business but rather to end it when it is insolvent. This entails an application to court and various procedural requirements. Further, the company cannot trade. A liquidator, appointed by the Master of the High Court, will take over the estate of the business and will facilitate its liquidation for the benefit of the business’ creditors.

Business rescue can also become liquidation proceedings. The BRP will prepare a Business Rescue plan setting out how to save your business. The BRP will determine if there is a reasonable probability of rescuing the business. If not, liquidation of your business will be considered.

Only consider Business Rescue proceedings if you are willing to accept the potential conversion of Business Rescue to liquidation proceedings. Liquidation should be considered only when your business is not eligible for Business Rescue- in other words, there is no business to rescue or there are no reasonable prospects that your business can be rescued.

Liquidation relates to companies governed by the Companies Act and close corporations. A company cannot continue trading if it is insolvent.

An application for liquidation of your company may be made to a High Court with jurisdiction. The application can be made by your company, one of its creditors, one of your company’s members, jointly by any or all of the aforementioned entities, or the Master of the High Court.

Your application to the Court must be accompanied by a certificate by the Master, “issued not more than ten days before the date of the application” confirming that security was given as required.

A copy of your application and all supporting affidavits must be lodged with the Master. A copy of your application must also be provided to:

In addition, you must, before or during the hearing, file an affidavit by the person who furnished a copy of the application which sets out the manner that the application was sent to the above parties.

If your company elected to be voluntarily liquidated, there must be a resolution to this effect. The directors and officers of your company must also prepare a Statement of Affairs setting out your company’s affairs which must be presented before the meeting at which the resolution will be made. The Statement of Affairs must be lodged, in duplicate and certified, with the Master within 14 days from the date of the liquidation order.

The liquidation will commence on the registration of a special resolution of your company authorising the liquidation of your company. Certified copies of these resolutions must be lodged with the Master of the High Court within 28 days of their registration. Your company must further give notice of the voluntary liquidation in the Government Gazette within 28 days of the registration of the resolution authorising the liquidation of the company.

When your company is liquidated, all property of your company vests in the Master, or, where a liquidator has been appointed, the liquidator. The Court may order directors, officers, and others to deliver property to the liquidator to pay into the estate. When your business is liquidated, all contracts concluded you’re your business remain in effect. The liquidator then decides whether to abide by each contract or terminate it, depending on what is most beneficial to your creditors. The liquidator will also have the power to decide whether to terminate or continue employment contracts of your company. The decision must be in line with the LRA and the BCEA. Employment contracts are suspended upon the liquidation of your company.

Your company will cease to operate after liquidation as all assets will be sold, liabilities settled, and the residue will be paid to shareholders, if any.

Consult with an attorney specialising in liquidation before you take any steps. The process can be quite onerous and may have dire consequences which must be considered and weighed against the consequences of not liquidating your business.

Sequestration consists of the surrender of the insolvent’s estate and the declaration of the insolvent as bankrupt. The estate is managed by a trustee or curator for the benefit of the estate’s creditors.

Sequestration can be voluntary or compulsory. Compulsory sequestration is where creditors apply to a Court to have a debtor’s estate sequestrated. Voluntary sequestration is where the debtor applies to a Court to sequestrate their own estate.

The Insolvency Act, 1936 (the Insolvency Act) applies to the sequestration of an estate. A debtor who has insufficient assets in their estate to discharge their liabilities may have their estate sequestrated a Court.

The purpose of sequestration is to ensure an equitable and organized distribution of the debtor’s assets to their creditors. Certain creditors will be determined to be preferential creditors, meaning that they will be paid first.

To voluntarily sequestrate your estate, you must be able to prove that you are insolvent, and that sequestration would benefit your creditors. If you are able to do this, you can apply to Court in accordance with the following process:

Step 1: Not more than 30 days but no later than 14 days before the hearing date for your application, publish a notice in the Government Gazette and a newspaper that your creditors will likely have sight of, announcing your sequestration. The notice must include your full details, the date of the hearing, and where the stamen of affairs will be kept for inspection by creditors. You will need to prove publication of this notice through an affidavit with copies of the published notice attached.

Step 2: Within 7 days of publishing the notice, you must supply your creditors with copies of the notice, insofar as you are aware of the creditors’ addresses. The notice must also be sent to SARS. It is best practice to use registered mail. You will be required to prove compliance with this step by affidavit which explains the process used to deliver the notice.

Step 3: Prepare a Statement of Affairs detailing your income, expenditure, assets, debtors, creditors. It must also include details of your financial situation and an affidavit confirming accuracy of the Statement of Affairs. The Statement of Affairs must be submitted to the Master’s office, in duplicate.

Step 4: Submit an application for surrender and hearing to Court. This will consist of a notice of motion, affidavit and supporting documents. Your application will show the Court that you have met the above requirements and that you are insolvent. Your application will be placed on the court roll, and you will receive a hearing date. On the hearing date, the court will accept your application to surrender your estate or reject it.

The benefit of sequestration is that some of your debt will be written off, legal action against you is stayed, and, once you are rehabilitated, full control of your debt-free estate will be returned to you. Once rehabilitated, your credit status will change from sequestrated to rehabilitated, to be automatically removed from your credit record after 5 years. This process is fairly complicated. It is recommended that you make use of legal assistance when you consider voluntary sequestration or when your estate is subject to compulsory sequestration.