VOLUNTARY ASSOCIATION: QUICK,EASY AND CHEAP


VOLUNTARY ASSOCIATION: QUICK, EASY AND CHEAP

The general public is often left in the lurch when it comes to deciding which business organisation to form.  The voluntary association (VA) provides a quick, easy and cheap solution.

What is a VA? A VA can be defined as three or more individuals or corporations entering voluntarily into an agreement to form a private, non-government organisation which will work together for a mutual, lawful purpose, which is not primarily to gain profit.  Often membership fees are payable.

How do I form a VA? A VA is formed by verbal or written agreement, the latter being preferable to avoid disputes.  It is governed by Common Law and founded on a contractual basis, usually in written form.  This contract is crucial in outlining the VA’s activities, as well as the powers of the committee and the rights of the members.

What are the advantages of a VA?

  1. A VA is a separate legal entity, which means inter alia, that the members are not liable for the association’s debts.
  1. It may acquire and dispose of property.
  1. It has perpetual continuity, in other words its existence is not affected by member changes.
  1. It may exercise the same rights and powers as any other corporate entity, for example a company or trust.
  1. It does not have to be registered, so less formality is required than for bodies like trusts or Section 21 companies.
  1. It may appoint employees on a part-time or full-time basis.

Are there disadvantages?

The lack of formality is the main disadvantage, which could affect the VA as follows:

  1. When its objective is to collect donations for charity, many donors prefer dealing with a registered organisation.  However, this stumbling block can be overcome by registering under the Non-Profit Organisations Act.
  1. Especially in bigger organisations, an established set of legally binding rules enhances clarity.
  1. The VA may earn more trust from stakeholders if it is registered.
  1. If it is not properly drafted, the VA’s members may not be protected adequately.

How is a VA managed? The management of a VA is usually carried out by a regularly elected executive committee, of which the powers and duties are set out in the constitution.

Does a VA pay income tax? Income tax exemption will be granted if the VA is registered as a non-profit organisation in accordance with SARS requirements.  The deciding factors are the objectives and activities of such an organisation.

If carefully drafted and well managed, a VA could be the answer to many people’s questions regarding which business route to go.

 

Selling of a HOUSE


Step 1: Decide Whether to Sell Your Property using an Estate agent or privately.
Selling privately could be when you do it by yourself. Selling by
an estate agent is when you get a person who deals with this who acts as a broker and you should get one best known for his/her good work.
Step 2: Determine the Correct Selling Price for your Property.
When deciding the price you should know the correct value of the property and you should
charge a reasonable price depending on the quality and value of the property. Moreover,
taking into account the demand of the property is of utmost importance as this can potentially stimulate a more efficient marketing campaign.
Step 3: Make your Property Attractive.
Keeping your property in the best possible condition will indeed assure a potential buyer. The prospect of this will indeed increase value your property aswell.
Step 4: Market your Property Extensively.
This generally involves the use of photographs, drawing plans and online advertisements as means of marketing‘aids’. These aids can be assured to develop the marketing strategy in order to sell your property– efficiently that is.
Step 5: Finalise the Sale Agreement.
First and foremost, if you wish to sell property in South Africa, an important key to this is the utilizing of the services of a conveyancing attorney. The conveyancer will be responsible for all documentation pertaining to the transfer of the sale thus it is advisable that a well-qualified and experienced conveyancer /attorney is required. A buyer who wishes to purchase your property needs to sign an Offer to Purchase or Sale Agreement, which will become binding once you sign it too. It is wise to get your conveyancing attorney involved before you sign.
(Note: this is not definitive legal or tax advice on how to sell property. That advice is best obtained from your conveyancing attorney.)

GUIDELINES FOR NEW TRUSTEES


passing_an_ira_to_a_trust_what_you_need_to_knowYou have been made a trustee of an inter vivos trust (created during the lifetime of the founder), and the Master of the High Court has accepted your appointment. What exactly does it mean? What do you have to do? Here are some guidelines:

The golden rule is that you must act in the best interests of the beneficiaries, both present and future. According to the Trust Property Control Act 57/1988 a higher standard of care than normal is expected of you, since you manage the affairs of somebody else. In doing this you will:

  1. Have a trustee meeting at least once a year to discuss matters and finalise financial statements (nowadays electronic meetings are also possible, but bear in mind that they must comply with the Electronic Communications and Transactions Act 25/2002);
  2. Know what the trust deed says about the way in which meetings are to be held, what the quorum is and what happens if a deadlock situation occurs;
  3. Fulfil one of your most important duties, namely to ensure that accurate records are kept of all financial matters, as well as of meetings;
  4. Be able to supply proof of separation between your personal assets and those of the trust;
  5. Never act with your personal gain in mind;
  6. Take proper care of the assets and guard them against any form of bribery;
  7. Ensure that the assets are managed fairly and transparently;
  8. Always be impartial;
  9. Not be manipulated by any co-trustee;
  10. Keep the documentation in a safe place for five years after the trust has been terminated.

If you make all decisions about the trust’s investments, income management and asset distribution with these guidelines in mind, your life as trustee should be uncomplicated and not influenced by any other consideration than what is best for the beneficiaries.

 

COPYRIGHT GREEFF ATTORNEYS 2016

 

 

VOLUNTARY ASSOCIATION: QUICK, EASY AND CHEAP


What is a VOLUNTARY ASSOCIATION (VA)? A VA can be defined as three or more individuals or corporations entering voluntarily into an agreement to form a private, non-government organisation which will work together for a mutual, lawful purpose, which is not primarily to gain profit. Often membership fees are payable.

How do I form a VA? A VA is formed by verbal or written agreement, the latter being preferable to avoid disputes. It is governed by Common Law and founded on a contractual basis, usually in written form. This contract is crucial in outlining the VA’s activities, as well as the powers of the committee and the rights of the members.

What are the advantages of a VA?          

  1. A VA is a separate legal entity, which means inter alia, that the members are not liable for the association’s debts.
  2. It may acquire and dispose of property.
  3. It has perpetual continuity, in other words its existence is not affected by member changes.
  4. It may exercise the same rights and powers as any other corporate entity, for example a company or trust.
  5. It does not have to be registered, so less formality is required than for bodies like trusts or Section 21 companies.
  6. It may appoint employees on a part-time or full-time basis.

Are there disadvantages?

The lack of formality is the main disadvantage, which could affect the VA as follows:

  1. When its objective is to collect donations for charity, many donors prefer dealing with a registered organisation. However, this stumbling block can be overcome by registering under the Non-Profit Organisations Act.
  2. Especially in bigger organisations, an established set of legally binding rules enhances clarity.
  3. The VA may earn more trust from stakeholders if it is registered.
  4. If it is not properly drafted, the VA’s members may not be protected adequately.

How is a VA managed? The management of a VA is usually carried out by a regularly elected executive committee, of which the powers and duties are set out in the constitution.

Does a VA pay income tax? Income tax exemption will be granted if the VA is registered as a non-profit organisation in accordance with SARS requirements. The deciding factors are the objectives and activities of such an organisation.

If carefully drafted and well managed, a VA could be the answer to many people’s questions regarding which enterprise to opt for.

 

By: Celeste Roux

The T’s & C’s of your Business and the Consumer Protection Act


 

The Consumer Protection Act 68 of 2008 (“the CPA” and/or “the Act”) came into effect on the 1st of April 2011 with its main focus to protect consumers and to promote a fair, accessible and sustainable marketplace. It also has an impact on the way manufacturers, suppliers and retailers do business. The CPA sets out a range of fundamental consumer rights as well as ways to protect these rights.

The CPA places an obligation on business owners to not only be aware of the implications of the Act but also ensure that the business’s terms and conditions are in line with the requirements of the Act. The Act’s express purpose is to make sure consumers are not treated unfairly – intentionally or not. This means that using plain language is more crucial than ever. From now on, using obscure and confusing wording, especially in binding contracts, is not allowed. Quite simply, it’s illegal!

The Act defines plain language in Part D, section 22 as follows:

“For the purposes of this Act, a notice, document or visual representation is in plain language if it is reasonable to conclude that an ordinary consumer of the class of persons for whom the notice, document or visual representation is intended, with average literacy skills and minimal experience as a consumer of the relevant goods or services, could be expected to understand the content, significance, and import of the document without undue effort, having regard to:

  • The context, comprehensiveness and consistency of the notice, document or visual representation;
  • The organisation, form and style of the notice, document or visual representation;
  • The vocabulary, usage and sentence structure of the notice, document or visual representation; and
  • The use of any illustrations, examples, headings, or other aids to reading and understanding.”

This means that one won’t be permitted to word things so widely that they can be understood in several ways. The Act states that if there is any doubt about the meaning of certain words or terms and conditions, the benefit will go to the consumer.

One of the most frequent questions consumers ask is when goods may be returned under the CPA. There are a number of sections that allow consumers to return goods to the suppliers. It is important to note, however, that there is no general right of return. For example, when you buy an item from a store and the next day you regret spending so much money, or you simply do not like the item in the morning, you cannot return the item simply because you have had a change of heart. Some retailers do allow you to do this, but it is not your legal right to do so. A change of heart is not a legal reason to return an item.

When is it allowed to return goods, then? Generally speaking there are only four instances when one can return goods under the CPA.

  • The Direct Marketing Cooling-Off Period

If a consumer has bought goods as a result of direct marketing, the consumer has the right to cancel the entire agreement without penalty and return the goods within 5 days after receiving the goods, in terms of section 16 of the CPA. The consumer will also be entitled to a full refund. However, the consumer will have to pay the costs to return the goods.

  • Goods which have not been seen before purchase

In terms of section 20 (read together with section 19) of the CPA, if a consumer has not had the opportunity to examine or inspect the actual goods received before purchase, they are entitled to inspect the goods on delivery. If, on this initial inspection, the consumer finds that the goods do not meet the ‘type’ or ‘quality’ one could reasonably expect from the agreement or if the goods were made in terms of a special or ‘custom’ order, and the goods do not reasonably conform to the specifications of the order, then:

  • the consumer may refuse delivery,
  • receive a full refund, and
  • the consumer may cancel the agreement without penalty.

The supplier will be liable for the costs of returning the goods in this instance.

  • Goods do not meet particular purpose

Should a consumer inform a supplier that goods are being bought to fulfill a particular purpose and the supplier advises that the goods will meet this particular purpose then the consumer may cancel without penalty and return the goods if it is not suitable for the particular purpose within 10 days after receiving the goods, according to section 55(3) (read together with section 20) of the CPA. The supplier will also be liable in this instance for the costs of returning the goods.

It is important to note that the consumer will not be entitled to return goods for any of the reasons explained in 1 to 3 above, if:

  • public health or public regulation prohibits the return of those goods to a supplier once they have been supplied to a consumer, or
  • the goods have been partially or entirely disassembled, altered, added or combined with other goods or property after having been supplied to a consumer.
  • Implied Warranty of quality

In terms of section 56 (read together with section 55) of the CPA, all goods sold to a consumer are sold with an implied warranty of quality, that cannot be contracted out of or revoked. The warranty gives the consumer the right to receive goods that:

  • are reasonably suitable for the purpose that they are intended to be used for,
  • are of good quality, free of defects and in good working order, and
  • will be durable and usable for a reasonable period of time.

If goods are found not to comply with these requirements then the consumer may either return the goods or have the goods replaced or repaired within 6 months after receiving the goods. Any of the above should be without penalty to the consumer at the suppliers cost.

A general “voetstoots” clause will be insufficient. However, a consumer will not be able to return the goods because it was defective or not suitable for the purpose if;

  • The consumer was made aware of the specific defects; and
  • the consumer agreed to receive the goods in the specific condition.

Due to the fact that a supplier has to make mention of the specific defects, a general ‘voetstoots’ clause will be insufficient to get out of the section 56 warranty.

Each business requires careful scrutiny of its specific relationship with consumers in order to develop appropriate terms and conditions which will not only match the business’s unique circumstances but also determine which transactions fall within the scope of the Act.

Contact Greeff Attorneys on info@greeffattorneys.co.za should you wish to have your current terms and conditions reviewed or should you require it to be drawn up to suit your business’s specific needs.

 

BINDING OFFER IN BUSINESS RESCUE


Section 153(1)(b)(Ii) Of The Companies Act Clarified By The Supreme Court of Appeal

Since the inception of the new Companies Act, No 71 of 2008 (“the Act”), there has been countless decisions regarding business rescue proceedings. South African courts have also more recently considered section 153(1)(b)(ii) (“the section”) of the Act which introduces and deals with the concept of a “biUntitlednding offer”.

According to this section any affected person, or combination of affected persons, may make a binding offer to purchase the voting interests of one or more persons who opposed adoption of the business rescue plan [of a practitioner], at a value independently and expertly determined, on the request of the practitioner, to be a fair and reasonable estimate of the return to that person, or those persons, if the company were to be liquidated, where a business rescue plan has been rejected as contemplated in section 152(3)(a) or (c)(ii)(bb) and the practitioner does not take any action contemplated in section 153(1)(a).

This section therefore allows an affected person to make an offer to purchase, at liquidation value, the voting interests of those persons who opposed the adoption of the practitioner’s business rescue plan.

The Supreme Court of Appeal (“the SCA”) has recently crystallised the manner in which this section must be interpreted, in its recent decision of the case African Banking Corporation of Botswana v Kariba Furniture Manufacturers & Others.

The court a quo (the court of first instance) initially held that the legislature intended to ensure the ‘co-operation’ of opposing creditors in business rescue proceedings. The court a quo therefore found that the ‘binding offer’ envisaged in the section “did not anticipate an ‘option’ or an ‘agreement’ in the contractual sense, but was rather ‘a set of statutory rights and obligations’, from which neither party could resile”, and that the offer was automatically binding on both the offeror and the offeree once made.

The court a quo also found, with regards to voting interest, that dissenting creditors (the bank in this instance), whose voting interest was transferred in terms of a binding offer, would suffer no prejudice as the liquidation value of the transferred voting interest would be determined by an independent expert and would be paid prior to implementation of the revised business rescue plan.

However, the bank contended on appeal that it could not be bound by an offer which it had not been allowed to respond to. It also contended that the offer was improper in that it lacked clarity as to the identity of the offeror, what the amount and terms of payment thereof were and whether there were any conditions attached thereto. The company, the business rescue practitioner and the shareholder on the other hand, maintained that the finding by the court a quo was correct.

The SCA dismissed the judgment by the court a quo, holding that a binding offer in terms of the section is binding only on the offeror, and not on the offeree. It further held that “the terms of an offer must cover the minimum requirements of the proposed contract. A mere regurgitation of the provisions of the section i.e. that the offer was or would be to purchase the voting interest at a value to be independently determined, could not constitute a proper binding offer”.

The SCA also emphasised that the bank was entitled to know who exactly was making the offer and what the details thereof were, and that any failure to divulge such information could not have constituted a proper offer.

This recent judgment is unfortunate in light of section 7(k) of the Act, which provides that the purpose of business rescue proceedings is to rehabilitate companies in financial distress in a manner that balances the rights and interests of all relevant stakeholders although one can empathise with the bank in the circumstances of this case.

The view that a binding offer in terms of the section is in fact not binding on the offeree, even though such offeree will not be prejudiced if the provisions of this section is properly implemented, diminishes the likelihood of achieving the ultimate purpose of business rescue proceedings. That notwithstanding, at least this decision has brought significant clarity to the interpretation of the section.

TRUSTING YOUR TRUST


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A trust is an important part of any client’s estate plan, providing one of the only legal vehicles by which a client can divest himself of his assets, yet still remain involved in their day-to-day management.

No matter how well your trust deed is prepared, it will all come to nothing if the trust is not properly administered. The greatest danger facing most clients who create trusts to house their wealth is the trust being successfully attacked as their alter ego, rendering the trust null and void ab initio. To avoid this, it is essential that trustees are always kept involved in the trust’s decisions and administration, guarding against any attack on the trust on the basis that only one trustee is making the decisions and administering the trust.

The following are the fundamental rules which trustees and parties that transact with trusts should be wary of:

  1. Ensure the trust is properly established
  2. Ensure trustees who act have letters of authority
  3. Guard against the rule of subminimum number of trustees
  4. Ensure correct decision-making process was followed

We are experts in the field of trusts. Contact us for more information on info@greeffattorneys.co.za.