Business continuity in the face of lock-down
South Africa’s President’s, Cyril Ramaphosa, presidential address outlining the various measures that will be enforced to prevent the spread of COVID-19 poses many challenges to companies and the continuity of their businesses. However, this is no time for panic and for business owners to press pause on their various operations as there are various solutions to lessen the blow of the lockdown.
Contracts
In light of the lockdown, many contracts will be affected which leaves business owners with various unanswered questions. Some business owners may consider cancelling their contracts whilst others may wish to continue.
For business owners who may not see the continuation of their contracts as feasible in light of the current circumstances, there are various options which may be considered such as cancellation or amendment. Contracts may be amended by agreement between the parties, usually in the form of an addendum to the contract, to allow for the extension of time periods, delayed or renegotiated payment terms or even suspension of certain terms and conditions.
Furthermore, contracting parties should carefully consider and assess the contract itself as to what the contract provides for in circumstances where parties are unable to perform in terms thereof, such as force majeure clauses (as previously discussed) or supervening impossibility clauses. Depending on the clause, the contract may be cancelled, however in many instances it is possible, and may be more beneficial, to merely suspend the enforcement of the contract.
Business support
The President’s announcement did not come without any relief to business owners either. Small and medium enterprises (SMMEs) have been provided with certain tax breaks to assist with lessening monthly expenditure. Such relief includes, inter alia:
providing a tax subsidy of R500.00 per month for the next 4 months for private-sector employees earning below R6,500.00;
accelerating the payment of employment tax-reimbursements to monthly reimbursements to tax-compliant employers; and
delaying 20% of PAYE liabilities for tax-compliant businesses with a turn-over of less than R50,000,000.00 per annum, together with a portion of provisional corporate income tax payments without penalties or interest for 6 months.
Further, the Department of Small Business Development has put measures in place to assist such SMMEs with administering various funding packages via SEFA such as business growth facility, SMME relief finance and restructuring SEFA-funded SMMEs. SMMEs that foresee that this lockdown could threaten their continuity should act quickly to contact SEFA and SEDA to enquire about the relief that may be available to them during this time.
Legal matters
Businesses that find themselves in litigation during the lockdown must not be under the misguided notion that legal matters cannot or should not continue. Various aspects must be considered such as prescription, court rules and processes and other applicable legislation. Whilst certain directives have been issued to restrict access to certain courts, urgent legal matters themselves are still proceeding. Thus, business owners must consult regularly with their legal representatives in order to move their matters forward or even bring urgent new applications for matters which may have arisen in the circumstances.
For further assistance or advise with respect to the above, please do not hesitate to contact our offices.
