Personal Finance

Legal concerns in digital business transformation


Digital used to be about coding and IT, now it is becoming a people business. -Mary Kate Loftus

There are lot of changes that necessitate digital transformation in businesses. The major ones include a changing business environment where many enterprises are digital, and changes in the legal and legislative environment.

Due to the Covid-19 pandemic there has been an increased uptake of digital business. Kenya is undergoing an extensive digital transformation due to the signing of new laws and regulations. Some of the new regulations could be as simple as legislative amendments allowing businesses to use electronic signatures, to more complex legislative policy changes like the Innovation Policy that support digital transformation.

As one business mogul put it, businesses today have to embrace technology-driven strategies so as to be competitive. As businesses undergo inevitable digital transformation there are a few pointers for legal compliance and risk to be observed. I will highlight a few tips that businesses can implement to minimise legal risk exposure when undergoing digital transformation.

Compliance with data privacy laws is recommended when undergoing a digital transformation. There is a lot of data handling when a business goes digital. It could take the form of data storage, for example when creating a business data base, or it could involve data analysis, for example when writing reports or doing research about your clients.

These and many other interactions with data that could fall under the protection of the Data Protection Act, Kenya. There is therefore need to comply with the provisions of this law in so far as data protection is concerned.

There is a deeper level of compliance required if the business provides services to citizens of the European Union (EU), whether they are resident or non-resident. The General Data Protection Regulations require such businesses to comply. Businesses that seek to undertake a globalisation strategy or those with EU clients ought to comply so as to be competitive.

A business should minimise litigation risk arising from intellectual property infringements. Some of the digital solutions available to businesses are protected by intellectual property. There is need to legally procure such solutions, for example by purchase of licences and other available options. This will minimise the legal risk exposure of your business through infringement.

A business should also take steps to protect its own intellectual property if it provides digital solutions. Where such threshold is met, then digital solutions can be protected as copyrights and trademarks. Doing so not only secures your business from losses caused by infringement but also enhances your book value.

One of the emerging areas in digital solutions, is the increased uptake of virtual meeting solutions. These come with their own legal challenges and compliances. There have been amendments to several laws allowing virtual meetings to be held. A recent amendment to the Company Laws, allowed businesses to undertake hybrid annual general meetings which means that the meeting could be done partly physically and partly virtually.

Some of the issue to consider when hosting a virtual meeting (other than data privacy and intellectual property issues) include the need to keep proper records of the meeting and extraction of minutes. Fortunately most virtual platforms allow the host to record the meetings and this can assist in extraction of meetings.

Virtual meetings ought to be recorded and stored in such a way that they can form evidence under the Evidence Act. Such evidence may be necessary in the event of any disputes. The Evidence Act sets the threshold of admissible digital evidence.