Government has decided to protect the average South African consumer by implimenting new business laws. As is the case with the implimentation of new laws a lot of confusion exists as to how it will impact the average person on the street.
Financial consultant Ian van Greunen sent me his view on the new laws:
The Consumer Protection Act
Came into being on 1 April 2011. With very little fan-fare BUT with huge impact on the way that business will be conducted in the country going forward. The reason for the lack of pomp and ceremony, was simply because the Minister of Trade and Industry only released SOME details after inception date!
So what is this act supposed to do?
Well in its broadest form it exists to protect us as the general public from un-lawful and un-scrupulous business practices. The Act inter alia governs such things as:
- Direct Marketing: No more annoying phone calls to join the gym or switch cell phone provider. Also out are viral email campaigns, fax mailers and sms’. A central register will be set up where you can lodge your details in the event you do not want to receive this type of communication. Direct marketers will have to consult this register in future before embarking on a campaign.
- Fixed Term Contracts: These are now limited to no more than two years. No more home security contracts that drag on for years with difficult escape clauses. These are OUT. If the contract does extend beyond the two year mark, then you have to firstly agree to this and the company promoting the contract has to prove to you that the extended term is financially in your favour.
- Alternate Work Schemes: Those very interesting adverts in the papers promoting “wealth from working from home” MUST now highlight the income that is stated is NOT a guarantee or promise.
- Property Syndication Schemes: Must tell you up front that it it is indeed such a scheme. No more fine print and lost details.
- Pyramid and related Schemes: These are expressly outlawed. It also highlghts schemes such as “multiplication schemes” where the interest rate is at least 20% higher than the official repo rate.
- Auctions: There are now regulations governing how auctions may be conducted, auction rules and advertising of auctions. Prohibited behaviour by auctioneers now also comes under the spotlight as do bidding records, mock auctions and electronic auctions.
- Terms and Conditions Apply! Well there is now a list that DO NOT APPLY, quite simply because a lot of them were not fair and reasonable to begin with.
- Consumer Court: A consumer court is now established where you can take any offending party to court and seek restitution.
- Contract Documents: Must be clear, unambiguous, be free of legal and technical jargon and worded in such a way that an ordinary lay-man will be able to understand.
Changes to Trust Deeds
With the advent of the CPA, your trust deed will more than likely need to be changed, depending on who drafted the deed in the first place, and the terminology that was used in the drafting.
It means that if your deed contains Latin references or specific technical terms, then it MUST change. It is essential to consult with a knowledgeable trust specialist who will be able to assist you, so that your deed is compliant going forward.
[notification type=”alert-info” close=”false” ]PLEASE NOTE that a trust deed is in essence a public document since it is lodged with the Master of the High Court. Do NOT think that this change in legislation will not affect you.[/notification]
Please be in touch with my office should you be needing any assistance with this, so that we can direct you to professionals we work with that can help you.
Changes to Wills
Well just as the CPA applies to trust deeds, so it also applies to wills. Now you might argue that your will is in essence your own private document and thus not subject to the new regulations. Well the fact is that immediately upon your death, your will is lodged with the Master of the High Court and immediately the will now become a public document.
So again where the will contains Latin terms or references ( I know for a fact that ALL of the wills I have personally drafted do contain Latin terms!), then the will document will need to change.
Changes to the Companies Act
This is something I have been speaking about for a long time. Well now it is here.
As of 1 May 2011 ALL CC’s that are either NOT yet registered or where CK1 and CK2’s have not been submitted, will simply not be registered. So this is effectively the end of CC’s as we know them.
Already registered CC’s will have a 10 year grace period in which to convert to a small company, and now you will be using a whole new set of documents to do so. Out are the old CM 1 and CM 29’s and in are the new CPO documents.
CIPRO fees also change. Yes you guessed it, they now go UP! Radically.
Small companies will have to indicate if they are going to be audited or simply have their books reviewed. BEWARE of taking the low road however! I say this with caution as I am of the sneaking suspicion that banks and financial lenders MAY still want audited financials before they lend the entity any money. At this stage it is very unclear as to whether the independent review will hold as much strength as a signed off audit. Once we have greater clarity, I will let you know.