With a title like the Electronic Communication and Transactions Bill (“ECT Bill”) it seems obvious to assume that the provisions of the ECT Bill are limited to ICT and e-Commerce companies. A closer look at the contents of the ECT Bill reveals that the scope of application is deceptively wide and that the Bill will have a significant impact on companies whose core business is not IT or communications.

Most companies already invested considerable amounts to convert paper-based communications to electronic documents. These attempts were largely based on the interpretation of the South African common law that our courts would recognize the legal status of such documents. Our courts to date have not tested this interpretation. The ECT Bill now provides clarity on these issues.

Chapter 3 of the ECT Bill contains several provisions, referred to as enabling provisions, stating that electronic documents and electronic communications may not be denied legal effect merely because it is in electronic form.

The provisions of Chapter 3 will have an impact on matters like the electronic formation of agreements through e-mails, electronic VAT invoices, shareholder communications and electronic document retention. This chapter, in particular, provides guidelines on the compliance of electronic documents with legal requirements that a document should be in writing, signed, in original form and be retained for a specific period.

In general two issues from the provisions of the ECT Bill with regard to the use of electronic documents and communications. The first is whether such documents comply with regulatory prescriptions to have documents for example in writing or to keep documents for a certain period of time, and the second issue is whether companies can use electronic documents as sufficient evidence when a dispute arises.

With the release of the King II Report on corporate governance, a matter like IT security becomes the responsibility of the board of directors. The use of electronic documents expands the board’s duty to ensure that not only the IT systems are secure but also to pay attention to the information and the format of documents kept on their IT systems. Proper IP, security, communication and document management policies could limit most risks and liabilities. Company directors may use the free E-Risk Assessment Tool at www.erat.co.za to determine the readiness of their companies.

In our forthcoming weekly newsletters we will discus specific issues encountered by non-IT companies that are affected by the ECT Bill to assist you to keep track of current legal developments that will impact on the way you conduct business.

Reinhardt Buys is a partner at Buys Incorporated, a law firm specialising in internet, media and intellectual property law. Click here to visit their site.

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