Small companies struggling with risks tied to regulatory compliance

Santam’s new legal insurance offering aimed at triggering small business growth, job creation.

A new business legal insurance offering by Santam, South Africa’s leading short-term insurer, will assist small, medium and micro-sized enterprises (SMMEs) to meet the risks and costs of legal compliance.

“A healthy small business sector is universally recognised as a key driver of economic success,” says Joseph Makgopa, Head of Corporate Legal Services at Santam. “Small businesses are job creators, sales generators and a significant source of tax revenue. Obviously regulations are vital to a sustainable market economy; but many small businesses need help navigating the risks associated with regulations applicable to each business.”

“Through Santam’s Business Legal insurance cover, small and medium sized businesses can enjoy the peace of mind of knowing that their legal matters are taken care of with the assistance and guidance of qualified attorneys that are available to assist around the clock.”

The number of formal and informal small and medium-sized businesses in South Africa are estimated to range between one million to three million, employing anywhere from one owner and some family members to up to 250 staff. Many small enterprises find it difficult to absorb the costs and expenses of legal compliance, unlike large firms that may have resources to access legal services.

“Business Legal insurance cover, which is designed to be affordable for small business, is also meant as a convenient and accessible way to receive assistance on compliance with legal issues that may arise during the day-to-day running of a business,” Makgopa said. “The legal risks could range from disputes with a customer or employee labour disputes.

“An astute business owner with one employee, operating a fairly small business, may seem to have a low legal risk profile. However, the fact that the company has someone in its employ is a potential labour related legal risk which they should be aware of. Any business with employees, however small it may be, must be aware of these risks, especially with the rise in employee-rights activism.”

The latest annual Dispute Resolution Digest confirms that worker complaints to the Commission for Conciliation, Mediation and Arbitration (CCMA) had increased to more than 150 000 a year for the past two years, up from 123 472 annually five years ago.

The product also includes a Business Legal Review service to help SMMEs assess and understand legal risks based on their specific needs and situations.

“The review gives a snap shot of a business’ current legal and compliance standing and assesses its legal health and potential legal risks. This high level assessment contains some of the most common legal issues that affect small businesses. It is designed to give useful insight into the business’ legal requirements allowing them to pre-empt and mitigate legal risks that could pertain to any issue from labour disputes to issues under the Consumer Protection Act,” says Makgopa.

Understanding the importance of time and productivity for a company, the Business Legal Review service has been designed as a tool that a business can process online at their own convenience. “Santam’s service providers will then assess whether the business is at risk of non-compliance with applicable laws,” says Makgopa.

Santam’s Business Legal insurance policyholders will enjoy the following benefits:

• Unlimited telephonic access to qualified commercial attorneys 24/7/365

• legal compliance assessment services in order to ascertain the level of compliance or non-compliance with laws as may be applicable to a particular company and in particular the following categories of law: labour law, taxation, consumer protection, competition law, company law etc.

• Legal Services in relation to the drafting or vetting of commercial contracts as may be required in the ordinary course of business such as Confidentiality Agreements, Lease Agreements, Suretyships, Employment Agreements, Sale Agreements, Terms and Conditions of trade, etc.

• Legal costs and expenses for defending any prosecutions for non-compliance with the provisions of the Companies Act or any other legislation as may be applicable to an insured company.

• Legal costs and expenses in any civil legal actions as may be instituted by or against the insured company.

• Legal costs and expenses in any arbitration matters.