When conducting any kind of business in South Africa there is one reality no one can escape from: The dreaded requirement of document retention. Whether you are a one-man operation working from the boot of your car or a multinational corporation, the rules are the same.

To further complicate one’s life, there is no consistency in the rules and regulations prescribing retention of documentation. Different types or classes of documents must be retained for different reasons and for different periods of time. Most types of documents can also be retained in different formats with another set of requirements and prescribed times for each format. Retention times varies from as little as 0 years to as long as 40 years.

The retention of documents can be a major headache for businesses and can cause endless problems and cost a fortune, directly and indirectly, if not done correctly. Failure to retain documents can, in certain instances, constitute a statutory offence and can also have serious other legal and financial implications.

The retention of documents is covered by a large array of legislation and regulations which sometimes causes confusion due to apparent contradictions.

All businesses, small, medium and large are similarly affected by the rules and legislation pertaining to the retention of documents and it is impossible to escape the reality and the consequences of this aspect of the law. A few examples of the types of documents that must be retained are VAT- and income tax records, employee and pension records, insurance and investment records, sales and accounting records, contracts, correspondence and electronic data. This is by no means and exhaustive list of the types of documents that must be retained for prescribed periods by businesses but simply an example of a few of the more obvious types form a very large body of documentation affected by the rules of retention.

Failure to retain records can have serious consequences and can constitute a statutory offence exposing the business and its owners to prosecution and possible criminal sanction. Failure to retain accounting records can also place a business and its owner in the unenviable position of being unable to disprove allegations on which, for example, a tax assessment is based, or the period of and type of employment held by certain employees in the event of retrenchment. The list of potential areas of exposure is endless.

Failure to retain records can further expose business in the event of civil actions as it can neutralise one’s ability to discharge an onus of proof or to rebut evidence against it

There are three acceptable methods of document retention being the physical retention of the original documentation, electronic storage and micro filming (microfische).

Both physical and electronic retention can by done on site or off site at specialised storage facilities. Physical retention is straight forward and requires no further discussion.

Electronic retention includes storage of computer records as well as scanned images of physical records on suitable storage media like for example hard disk drives, tapes or CD and DVD disks etc.

Microfilming can be done either from physical documents or from computer generated information directly onto microfilm without first generating a hard copy.

The most important part of document retention is having a good management system in place that guarantees instant accessibility to avoid having to constantly look for a very small needle in a very large haystack.

RMI4Law members can contact the legal advice and assistance line for any further information regarding the topic discussed, on 0861 668 677.

Contributed by:

Hugh Clarkson

Barnard Incorporated Attorneys 

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