������Ƶ

A Disclosure Letter is a crucial document that sellers use during business deals to reveal important facts about their company or assets to potential buyers. In South African M&A transactions, it works alongside the main sale agreement to protect sellers by listing exceptions to their warranties and guarantees.

The letter details everything from pending lawsuits and regulatory issues to financial obligations and JSE compliance matters. By putting these facts in writing before closing the deal, sellers limit their liability while giving buyers a clearer picture of what they're purchasing. Under South African contract law, these disclosures become legally binding parts of the transaction.

Use a Disclosure Letter when selling a business or significant assets in South Africa, particularly during mergers, acquisitions, or major investment deals. This document becomes essential once you've drafted the main sale agreement and need to protect yourself by declaring important facts about your business.

The timing matters—prepare your Disclosure Letter before finalizing price negotiations and signing contracts. You'll need time to gather information about everything from employment contracts and BBBEE status to property leases and tax matters. Getting these disclosures right helps avoid future disputes and legal complications under South African commercial law.

• Conflict Of Interest Disclosure Letter: Used by directors and employees to declare potential conflicts in business dealings
• NDA Agreement Form: Focuses on protecting confidential information during business transactions and due diligence
• Confidentiality Agreement Form: Broader coverage for general business secrets and proprietary information sharing
• Employee Confidentiality Agreement Form: Specifically tailored for staff members handling sensitive company information
• Confidentiality And Nondisclosure Agreement Form: Combines comprehensive confidentiality protections with non-disclosure obligations

• Selling Companies: Draft and submit Disclosure Letters to protect themselves when selling assets or shares, often through their executive teams and legal departments
• Legal Practitioners: Review and refine the disclosures, ensuring compliance with South African corporate law and JSE regulations
• Potential Buyers: Receive and analyze the disclosures to understand risks and liabilities before completing transactions
• Company Directors: Sign off on disclosures and take responsibility for their accuracy under the Companies Act
• Due Diligence Teams: Use the letter to verify claims and assess business risks during transaction reviews

• Review Main Agreement: Carefully examine all warranties and representations in the sale agreement to identify needed disclosures
• Gather Documents: Collect key records including CIPC certificates, tax clearances, BBBEE status, contracts, and property deeds
• Check Compliance: List any regulatory issues, pending litigation, or breaches of permits and licenses
• Draft Systematically: Use our platform to generate a comprehensive Disclosure Letter that meets South African legal requirements
• Internal Review: Have department heads verify disclosures in their areas before finalizing
• Organize Attachments: Create a clear bundle of supporting documents referenced in your disclosures

• Opening Statement: Clear identification of the related sale agreement and parties involved
• General Disclosures: Broad statements covering company-wide matters affecting warranties
• Specific Disclosures: Detailed exceptions to each warranty, organized by clause reference
• Supporting Documents: Listed attachments providing evidence for each disclosure
• Time Frame: Clear statement of when disclosures are effective and any updates
• Signature Block: Full details of authorized signatories with company registration info
• Governing Law: Explicit reference to South African law and jurisdiction
• Warranties: Confirmation that all disclosures are true and complete

A Disclosure Letter differs significantly from a Disclosure Statement in both scope and application within South African business law. While both documents involve sharing information, their purposes and legal effects are distinct.

• Legal Context: Disclosure Letters specifically protect sellers in M&A transactions by qualifying warranties, while Disclosure Statements serve broader regulatory compliance needs
• Timing and Use: Disclosure Letters accompany sale agreements as one-time documents, whereas Disclosure Statements often require regular updates for ongoing compliance
• Content Focus: Letters detail specific exceptions to warranties and representations, while Statements provide general information about business operations or financial status
• Legal Protection: Disclosure Letters actively limit seller liability in transactions, but Statements primarily fulfill transparency obligations without creating direct liability shields
• Binding Effect: Letters form part of the transaction documentation and bind both parties, while Statements typically inform stakeholders without creating mutual obligations