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Non-compliant companies will feel the pain from Sars from December

The South African Revenue Service (Sars) will be using information supplied by the Companies and Intellectual Property Commission (CIPC) to determine which companies are not tax compliant and impose penalties accordingly, from 7 December 2018.

The national revenue collector issued an official notice to registered accountants and tax practitioners’ during October to confirm Fabian Murray, acting Sars chief officer’s announcement of the implementation of the new line of attack earlier this year.

The notice, which is signed by Acting Sars Commissioner, Mark Kingon, states that administrative penalties for late corporate income tax (CIT) returns will be imposed on over 300,000 companies. Such penalties can range from R250 to R16,000 per month of lateness.

It is a well-known public fact that Sars is short on collection, and as the Tax Administration Act determines a penalty per month of lateness, this will boost their collection. The law also looks at when a company should have been registered for tax. For instance, if you opened a company five years ago and never registered it, the minimum penalty is R250 x 12 months x 5 years = R15,000.

However, this minimum penalty is only applicable in instances where a company was dormant, as the law still demands CIPC and Sars compliance. Where a company is active, depending on various factors, the Tax Administration Act will determine the level of penalties applicable.

Directors could feel the pain

The directors of companies that are found to be not tax compliant, should rightly feel uneasy, as Sars will undoubtedly come after them personally, especially where the company does not have means to pay penalties, or plainly ignores it.

There are very clear company law provisions creating a personal liability against being reckless and delinquent on statutory duties.

Therefore:

  • A head in sand approach will not be wise here, as everyone dealing with Sars will agree – fx the problem before Sars targets and/or the system penalises you.
  • Where you have ever setup a company or been a director, and you are unsure whether the company is tax compliant, immediately get the status checked up with a CIPC registered tax practitioner, who can access both CIPC and Sars systems and give you a complete and accurate picture. This only takes a day or two to complete. This process is generally known as a tax diagnostic which gives you a complete update and visibility of your situation.
  • If there are any sensitivities about your situation, deal with tax attorneys, which ensures you have legal privilege. This is not obtainable from accountants or normal tax practitioners.
  • Where you are on the wrong side, fix anything outstanding, before the penalty is imposed. Your ideal skill set is someone who can provide full accounting sign-off, tax attorneys and those who know how to fix tax issues proactively, without causing you to be placed automatically on the Sars audit list.
  • The issue comes in in cases where the penalty has already been imposed, as they are not easily waived. Sars makes penalty waiver decisions by committee and you therefore need an experienced accountant, or ideally a tax attorney on more complex matters.
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Land reform an economic necessity, says Ramaphosa

Land reform is not only about correcting a grave historical injustice, it is an absolute economic necessity, says President Cyril Ramaphosa.

“Accelerated land reform, undertaken within the framework of the country’s Constitution and in adherence with the law, can be an effective catalyst for greater agricultural production, rural development, employment creation and broader economic growth

“Emerging farmers will have the land, security and support they need to establish viable businesses. Poor people in urban areas will have affordable housing in areas that are located near economic opportunities and social amenities,” the president said, speaking at the Discovery Leadership Summit in Sandton, Johannesburg, on Thursday, 1 November.

Ramaphosa said through fair, transparent and comprehensive land reform, the country seeks to unlock the full economic potential of land and its people.

“The current focus on accelerated land reform is therefore a vital opportunity to address economic exclusion. Without assets, most South Africans are unable to accumulate wealth, are unable to break the intergenerational cycle of poverty, and are unable to finance whatever entrepreneurial ventures they may conceive,” the president said.

Lack of access to land and other assets

Ramaphosa said another reason for economic exclusion is the lack of access by black South Africans to land and other assets.

Government is intensifying the implementation of land reform and restitution programmes so that South Africans can leverage land for the betterment of their lives and the growth of the economy.

Last month Ramaphosa said more than 20 land claimants will have their land returned to them as part of government’s land reform programme.

“It is our firm belief that communities must take great interest in their land restitution processes and be active participants in all enterprises and activities taking place on their land.

“The concept that will be developed through piloting the Mkhwanazi land claim settlement will be rolled out to other land claims across a number of sectors and industries. This is the first of a number of land claims that we aim to unlock over the next few months,” Ramaphosa said at the time.

Parliament is currently considering public submissions on the proposal for the Constitution to be amended to pave the way for land expropriation without compensation.

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(www.fpslaw.co.za) (021-9820665)

Going back to B-BBEE basics with 10 transformation tips

If you have signed an employment contract that specifies something different to the Basic Conditions of Employment Act (BCEA), this will supersede what's outlined in the Act provided that there is agreement between the parties and the conditions specified are not less favourable than the BCEA, warns Cathie Webb, member (and prior executive) of the South African Payroll Association (SAPA).

The BCEA is committed to regulating fair labour practice for both employers and employees in South Africa. It clearly explains what needs to be done when notifying an employer that you are leaving and what the employer needs to do when it comes to final salary payments. The Act also covers a multitude of additional issues and challenges that could face the business or the employee in the workplace, providing clear guidelines that are upheld by law.

However, when it comes to calculating remuneration during termination periods, there are some complexities that need to be addressed, which may not be covered by the BCEA.

The BCEA states that the notice period must be four weeks (for someone who has worked for more than a year with the company). Many companies, though, require a calendar months’ notice. If the signed contract is for a calendar month, then the employee and payroll have to adhere to this timeline. Generally, the terms and conditions outlined in a signed contract will trump those outlined by the BCEA and employees need to be aware of this from the outset.

“That said, an employment contract may not offer working conditions worse than the basic conditions specified in the BCEA,” says Webb. “Employees do need to check their contracts before signing them to avoid unpleasantness. It is exciting to have a new job lined up, but the time to negotiate your employment terms is before you start, not after.”

Payroll needs to know

“It is critical that payroll be aware of what’s outlined in an employees’ contract to avoid any confusion when the person resigns,” adds Webb. “For example, many companies do not allow you to take annual leave in your resignation period, but situations may arise that make taking leave during this period a necessity. This possibility needs to be planned for, so that both the employer and the employee know how this would be dealt with, and what is to be paid out in the final payslip. Clarity from both sides is essential.”

Payroll needs to know and understand the rules of the third parties who are paid from employee deductions / contributions. Medical aids run from calendar month to calendar month, and contributions are usually made in arrears. This means that the final deduction from payroll pays for their final contribution to the medical aid. Pension and provident funds may work differently, with their month running from the 16th of one month to the 15th of the next. This may mean that, in a company where a 30 day notice period applies and an employee resigns before the 16th of the month, they do not contribute to the fund in their final month, while if they resign after the 16th, there will still be a deduction.

Other pay elements like final commissions, travel claims and re-imbursements, shift allowances, etc., should also follow what has been stipulated in the contract of employment.

Employees are also not aware that quite often they are not paid on the 25th of their last month. Companies have been burned by employees leaving the moment they receive their final salary, and not working the last 5 or so days of their final month. So companies may have a policy to pay employees who are leaving on first day of the following month. This must be outlined in the contract and will affect the employee if not clearly communicated when they resign. This may result in an employee having to make special banking arrangements to deal with debit orders which may be set to be processed towards the end of the month. Payroll can make this process a lot smoother.

“The BCEA also outlines how much notice is required according to how long a person has worked at a company,” says Webb. “If you have worked for less than six months it is one week’s notice, if for more than six months it is two weeks’ notice, and if it is more than a year it becomes four weeks’ notice.”

Webb emphasises that payroll plays a vital part in ensuring that both employee and employer finish their last month amicably.

“Things need to be maintained by both payroll and HR so that when a person leaves all elements are calculated correctly and comply with the conditions outlined by the BCEA,” concludes Webb.

get a daily news update via Whatsapp or sign up to the bizcommunity newsletters Read the original article here

(www.fpslaw.co.za) (021-9820665)

Going back to B-BBEE basics with 10 transformation tips

You'd be hard-pressed to find a responsible South African business that doesn't believe in the critical need for representative transformation and inequality reduction in South Africa. However, the intricacies of B-BBEE are confusing at best and can be incredibly expensive and stressful at worst. And the pressure from clients to be Level 2 or higher, and preferably black-owned, has never been greater.

Navigating the B-BBEE landscape and ensuring your business plans properly and invests in the right areas is even more difficult in a recession, when it’s hard enough just keeping your business above water.

If your organisation is still majority white-owned (i.e. more than 50%) and works with Government, SOEs or listed companies – or businesses that sit within their supply chains – then it probably does.

South African companies need to transform if they have any hope of succeeding and flourishing in future. This is not a political or legal threat, but simple business logic. This is especially pertinent in the marketing, advertising and communications (MAC) sector: brands and their agencies need to build strong and meaningful relationships with our black South African audience, and those that truly understand and represent this audience will win. The transformed will beat the untransformed in the marketplace.

Know you need to transform, but don’t know where to start? Here, 10 practical tips to help those charged with managing B-BBEE in businesses…

  1. Get board and CEO buy-in and lead from here.

    If your senior-most decision makers aren’t on board with transformation and aren’t prepared to give it the strategic and operational focus and support it deserves, B-BBEE and the next nine tips below are going to be difficult. The journey has to start here.

  2. Get a B-BBEE consultant.

    A lot of companies try to go it alone and flounder along. Unless they are very lucky, this will inevitably lead to B-BBEE plans that don’t align with organisational strategy, wasted expenditure and sub-optimal scores. There are a number of good consultants out there who can help get you started, and grow with you as you go. Your time is better spent on running your business and not on re-inventing the basics of SME B-BBEE planning.

  3. Become a black-owned company.

    This might seem radical, but there are tremendous advantages for SMEs (under R50m in annual turnover) in securing 51% black shareholding. The immediate benefit is that you will immediately and automatically qualify as Level 2 (minimum) and your black-ownership status is far more attractive to many clients than your recognition level.

    Following recent amendments to the Generic Codes (carried forward into the MAC Charter), black-ownership status is more lucrative in terms of points than recognition level. In other words, all other things being equal in a pitch, an agency that is Level 2 and black-owned will win over an agency that is Level 2, but not black-owned. Another big advantage of black-ownership for SMEs is that they don’t need to comply with any other elements on the scorecard (they will be at least Level 2 regardless). As responsible South African businesses, they should arguably continue to contribute to transformation at an industry level nevertheless.

  4. Get some books on B-BBEE for your business, read up on it, and go to seminars and workshops.

    There is plenty of this stuff around. A lot of it is free or very inexpensive, and B-BBEE seminars and workshops happen weekly across the country. Sign up to some mailing lists, buy a few books on the subject for your company and/or read articles online. Be curious.

  5. Run basic internal B-BBEE training.

    Once you’ve established a high-level understanding of how the Codes work, spend some time with your Exco and Managers unpacking the various elements, how they piece together and the impact that they have on your business. You need buy-in across the business, and helping your colleagues understand why they need to prioritise black hires, and invest in training and mentorship, and support black-owned suppliers and businesses makes this task a lot easier. If you can get a consultant or specialist to come in and do this for you, even better.

  6. Get intimately acquainted with the Learning Programme Matrix

    The matrix, which serves as an annexe to the Codes, breaks down all of the various forms of training in which a company can invest into 7 categories. Each of the categories carries different B-BBEE advantages (or disadvantages) which are stipulated in the Codes themselves (primarily under Skills Development). Some are tremendous (such as the ability to recognise salary costs for employees engaged in learnerships, apprenticeships and internships). Seta funding and tax deductions are also available for some categories of training. If you’re going to be investing up to 6% of your payroll in Skills Development, it’s probably a good idea to invest a bit of time and effort into understanding how you plan on doing this.

  7. Support small, black-owned businesses.

    Enterprise and Supplier Development points are available for companies that contribute towards small, black-owned suppliers (companies within their value chain) and enterprises (companies outside their value chain). The contribution can be in cash, but also in any number of non-cash means provided there is a ‘fair market’ means of valuing the contribution. Examples could include providing office space and facilities, back-office support, training, mentorship or free or discounted products or services. This can often be done at relatively low marginal cost to the business itself.

  8. Build a relationship with your Seta.

    A large number of companies don’t take full advantage – or any advantage – of training grants available from Setas (Sectoral Education and Training Authorities). Although navigating their bureaucracy and inconsistencies can be highly frustrating at times, when they do come to the party, the grants they award can help drastically reduce the net cost of training. If you don’t know which Seta you belong with, check your Income Tax or PAYE registration certificate, or chat with your accountant. All companies in South Africa are registered with a Seta, and the SDL that you pay monthly gets allocated to them. Find out where their closest office is, and make an appointment to go and introduce yourself to them. Time and time again, we find that the companies that nurture their relationships with Setas have the best experience with them.

  9. Plan.

    Once you have an understanding of how the B-BBEE elements work, do some basic modelling. I’m not talking about a massive spreadsheet exercise here (although that would be brilliant); just some basic three- to five-year forecasting, with rough estimate numbers that shouldn’t be hard to extrapolate into the years ahead, will make a huge difference. High-level projections on revenue, profit and payroll (for agencies, probably somewhere between 50% and 70% of revenue) a few years into the future will allow you to calculate targets across the Scorecard elements and give you a framework to build and test scenarios. Do it. It really helps.

  10. Embrace transformation through training.

    B-BBEE aside, the companies that will win time and time again are those that view money spent on training as a critical investment in their most valuable resource, and not merely a necessary cost of doing business. At Red & Yellow, we have developed the TTT (Transformation Through Training) Pyramid, which represents a medium-to-long term (three to five years) training and development philosophy that delivers against short-term development and transformation (B-BBEE and diversity) goal, whilst simultaneously building the foundations for management and succession planning at an organisation level, and focused, targeted career-path planning at an individual level.

The most important thing for SMEs is that they start tackling transformation and B-BBEE proactively and methodologically and stop burying their heads in the sand until the 11th month. I’m not for a second saying B-BBEE is easy, but it certainly shouldn’t be as hard as many businesses make it.

Read the original article here

(www.fpslaw.co.za) (021-9820665)

Technology dominates our lives - that's why we should teach human rights law to software engineers

Artificial intelligence (AI) is finding its way into more and more aspects of our daily lives. It powers the smart assistants on our mobile phones and virtual "home assistants". It is in the algorithms designed to improve our health diagnostics. And it is used in the predictive policing tools used by the police to fight crime

Each of these examples throws up potential problems when it comes to the protection of our human rights. Predictive policing, if not correctly designed, can lead to discrimination based on race, gender or ethnicity.

Privacy and data protection rules apply to information related to our health. Similarly, systematic recording and use of our smartphones’ geographical location may breach privacy and data protection rules and it could lead to concerns over digital surveillance by public authorities.

Software engineers are responsible for the design of the algorithms behind all of these systems. It is the software engineers who enable smart assistants to answer our questions more accurately, help doctors to improve the detection of health risks, and allow police officers to better identify pockets of rising crime risks.

Software engineers do not usually receive training in human rights law. Yet with each line of code, they may well be interpreting, applying and even breaching key human rights law concepts – without even knowing it.

This is why it is crucial that we teach human rights law to software engineers. Earlier this year, new EU regulation forced businesses to become more open with consumers about the information they hold. Known as GDPR, you may remember it as the subject of numerous desperate emails begging you to opt in to remain on various databases.

GDPR increased restrictions on what organisations can do with your data, and extends the rights of individuals to access and control data about them. These moves towards privacy-by-design and data protection-by-design are great opportunities to integrate legal frameworks into technology. On their own, however, they are not enough.

For example, a better knowledge of human rights law can help software developers understand what indirect discrimination is and why it is prohibited by law. (Any discrimination based on race, colour, sex, language, religion, political or other opinion, national or social origin, property, association with a national minority, birth or other status is prohibited under article 14 of the European Convention on Human Rights.)

Direct discrimination occurs when an individual is treated less favourably based on one or more of these protected grounds. Indirect discrimination occurs when a rule that is neutral in appearance leads to less favourable treatment of an individual (or a group of individuals).

Similarly, understanding the intricacies of the right to a fair trial and its corollary, presumption of innocence, may lead to better informed choices in algorithm design. That could help avoid the possibility that algorithms would presume that the number of police arrests in a multi-ethnic neighbourhood correlates with the number of effective criminal convictions.

Even more importantly, it would assist them in developing unbiased choices of datasets that are not proxies for discrimination based on ethnicity or race. For example, wealth and income data combined with geographic location data may be used as a proxy for the identification of populations from a certain ethnic background if they tend to concentrate in a particular neighbourhood.

Legal code

Likewise, a better understanding of how legal frameworks on human rights operate may stimulate the creation of solutions for enhancing compliance with legal rules. For instance, there is a great need for technological due process solutions, by which individuals could easily challenge AI-based decisions made by public authorities that directly affect them. This could be the case of parents who would be wrongly identified as potential child abusers by opaque algorithms used by local authorities.

Such solutions could also be relevant to the private sector. For example, decisions on insurance premiums and loans are often determined by profiling and scoring algorithms hidden behind black boxes. Full transparency and disclosure of these algorithms may not be possible or desirable due to the nature of these business models.

Thus, a due process-by-design solution could allow individuals to easily challenge such decisions before accepting an offer. As our contemporary societies inexorably evolve towards intensive AI applications, we need to bear in mind that the humans behind the AI curtain have the power to make (mis)informed decisions that affect us all.

It is high time that resources and energy are reverted towards educating them not only in cutting edge technology – but also on the relevant human rights rules.

This article is republished from The Conversation under a Creative Commons license. Read the original article here

(www.fpslaw.co.za) (021-9820665)

Understanding obligations and the law when it comes to immigrant employees

Many people throughout Africa, look at South Africa as a place which offers socio-economic opportunities; and as a result, it has become home to many inter-regional and inter-continental migrants seeking gainful employment. What many employers don't realise is that there are particular laws applicable to employing (and dismissing) these immigrants, which all employers will need to be aware of. We set out below a high-level summary of the key considerations you ought to be aware of in employing foreign nationals.

In terms of the Immigration Act, it is unlawful for an employer to knowingly employ a foreigner who is not authorised to be employed in South Africa. Any foreigner requires a valid work visa to work in South Africa. Often such visas are linked to a specific employer and are not transferrable. All employers are also required to make a good faith effort to ensure that they do not employ illegal foreigners. Employing a foreigner without the required visa and/or a failure to make the required good faith effort to determine an employee's status are offences which could result in a fine or imprisonment. This means that it is incumbent on all employers to obtain the identity documents and, where appropriate, the visas of all its employees and ensure their continued validity.

Immigration vs labour relations laws

In our experience, the dilemma that many employers face is how to address a situation where post-employment they realise that members of their workforce do not have the required permit to legally work in South Africa either because the employee never had the required visa (the employer failed to check this at the time of employment) or because the employee's work visa has expired.

An employer's inclination may be to simply terminate the relationship on the basis that due to the Immigration Act the relationship is unlawful. Such a termination, however, falls short of the requirements set out in the Labour Relations Act which protects all employees regardless of the employee's legal status to work in South Africa. As with any other employee, the employment relationship between the parties may only be lawfully terminated for a fair reason and after following a fair process.

Reviewing work permits

There are only three grounds on which an employer may lawfully terminate an employment relationship: misconduct; incapacity; and the employer's operational requirements.

The specific ground for termination determines which process an employer must follow. A failure to hold the required visa may be treated as an incapacity issue. Case law has, however, indicated that the employer must provide the employee with reasonable assistance to attempt to rectify his or her illegal status. This includes affording the employee an opportunity to engage with the Department of Home Affairs (giving reasonable time off) and completing and submitting necessary forms to support the employee's efforts. Paramount to the entire process is that an employer must ensure that the employee is treated with dignity and respect.

Notwithstanding the general guidelines set out above, the facts and circumstances of each individual are unique, and each situation must be addressed and dealt with on its specific merits. As a starting point, all employers need to conduct careful and periodic reviews of their employees' work permits to ensure that they are not falling foul of the law and are appropriately managing any risks.

original ariticle here

(www.fpslaw.co.za) (021-9820665)

Waging war on minimum wage in South Africa

South Africa's labour market, currently fraught with high rates of poverty, inequality and unemployment, will soon see an overhaul as far as employee wages are concerned. With the National Minimum Wage Bill on the cusp of becoming law, the time for employers to familiarise themselves with the looming change is now. The only thing standing in the way of this ground-breaking legislation is the president's signature.

The main objectives of the Bill are to provide for a national minimum wage, advance economic development and social justice through improvements to wages of the lowest paid in society, promote collective bargaining and support economic policy.

Once enacted as law, the Bill will apply to all workers and their employers. It will not, however, apply to members of the South African National Defence Force, the National Intelligence Agency, the South African Secret Service as well as volunteers who perform work for another person without remuneration. The Bill currently proposes a minimum wage of R20 per hour for ordinary hours of work.

No shortcuts

Employers cannot circumvent the national minimum wage by agreement with employees, nor can the minimum wage be lowered through collective agreement or law (unless it is an amending law). The minimum wage will form part of the employee's employment contract, unless the employment contract provides for more favourable remuneration.

The Bill further provides that where an employer unilaterally alters the hours of work or other conditions of employment in implementing the national minimum wage, this would constitute an unfair labour practice, thus affording the CCMA jurisdiction to hear such matters.

There are, however, temporary exceptions to the national minimum wage for the first year of its operation. These exceptions are for farm workers, domestic workers and workers in the expanded public works programme.

Annual review

A Minimum Wage Commission will be established, which is tasked with reviewing the national minimum wage annually and submitting a report to the Minister of Labour indicating the recommended changes to the national minimum wage. The Minister will then make any adjustment to the national minimum wage by no later than 31 March each year.

Employers should be mindful of the looming changes to the country's national minimum wage and be forewarned that any attempts to circumvent the national minimum wage may constitute an unfair labour practice.

original ariticle here

(www.fpslaw.co.za) (021-9820665)

Rhino poachers sentenced

Over 360 suspected rhino poachers have, in the past six, months been handed ranging sentences as authorities continue to combat the scourge. The arrests were a culmination of investigations by the National Joint Operational and Intelligence Structure's Operation Rhino 9 Task Team responsible for prevention, combatting and investigating the crime.

An additional 15 suspects, aged between 33 and 50 years, were arrested last week during intelligence-driven operations in Mpumalanga. Four unlicensed firearms and ammunition were seized during the arrests, national police spokesperson Vishnu Naidoo said in a statement.

“Between January and June 2018, the Rhino 9 Task Team secured various convictions, the maximum nine years’ imprisonment and the least being three months’ imprisonment with the option of paying a R1500 fine,” Naidoo said.

165 in custody

Of the 365 suspects arrested, he said 165 remain in custody while court processes unfolded. During this period, six were deported to their countries of origin while 11 received fines and 57 are serving their various jail terms.

“These convictions are evidence of the commitment of law enforcement agencies and game reserve parks to preserve endangered species for future generations,” Naidoo said.

“The arrested suspects have since appeared in various courts on charges of unlawful possession of firearm/s, unlawful possession of ammunition, possession of dangerous weapon/s, trespassing, hunting of protected animal, kidnapping, assault, possession of the remains of a wild animal, possession of suspected stolen property and being in the country illegally or without proper documentation.”

An assortment of incriminating evidence, which included cell-phones and axes, was seized during the arrests.

Rhino 9 Task Team

The Rhino 9 Task Team is a multidisciplinary team operating in Mpumalanga and comprises various government departments such as the police, customs and excise, the South African National Defence Force, as well as Ezemvelo and SANParks game rangers.

“The strategies that we have put in place in the fight against rhino poaching are significantly reducing the chances of smugglers operating at our ports of entry in our national parks. These arrests should serve as a warning and deterrent to other potential poachers,” Naidoo said.

“Community support and assistance is welcomed in the fight against this scourge. Poachers and smugglers are warned that over and above facing criminal prosecution, their ill-gotten gains will also be confiscated in terms of the Prevention of Organised Crime Act 121/1998 (POCA).”

Police have urged the people of South Africa to continue supporting the police in its efforts to bring down the scourge of crime. Anyone with information related to rhino poaching may contact the nearest police station or SAPS Crime Stop number: 0860010111.

original ariticle here

(www.fpslaw.co.za) (021-9820665)

New tax law doesn't put your passport at risk

The tax law amendment designed to compel expatriates to pay tax is going ahead, causing many citizens living abroad to consider the legal formalities of terminating their South African tax and exchange control residency.

Under the new law, which will come into effect on 1 March 2020, the first R1m of foreign remuneration will be exempt from tax in South Africa if an individual is outside of the republic for more than 183 days, as well as for a continuous period of longer than 60 days during a 12-month period.

However, the exemption threshold should reduce the impact of the amendment for lower- to middle-class South African tax residents who earn remuneration abroad. The exemption also means it is unlikely that South African tax residents in high-income-tax countries will have to pay any additional top-up payments to the South African Revenue Service (Sars).

The financial emigration process does not impact South African citizenship status, as this is purely a compliance formality from a Sars and South African Reserve Bank perspective.

Passport status does not impact tax status

Sars is aware of the differences between laws falling under the Department of Home Affairs and the Income Tax Act, and released a statement noting that “…the change is not related to citizenship and should not lead to South Africans giving up their passports, as its application rests solely on tax residency. Individuals who give up their passports may find they are still tax resident in South Africa and may still be liable for South African tax.”

Simply put, giving up your passport does not release you from your obligations to pay tax to Sars. Conversely, doing financial emigration which confirms you are not liable for tax on your world-wide income, does not impact your South African passport status.

When can you lose citizenship?

In terms of the South African Citizenship Act No. 88 of 1995 where a South African citizen makes an application to obtain citizenship of another country, once obtained, you automatically lose your South African citizenship. The question on many expatriate’s lips is how this is possible, when we know you are constitutionally guaranteed of South African citizenship by right of birth?

To give effect to your entrenched right, the Citizenship Act makes provision for “dual citizenship”. Section 6(2) of this Act states: “Any person referred to in subsection (1) may, prior to his or her loss of South African citizenship in terms of this section, apply to the Minister to retain his or her South African citizenship, and the Minister may, if he or she deems it fit, order such retention.”

This application must be done before you have obtained your second citizenship and, in our view, cannot be legally declined where application is correctly done.

Where you have missed this deadline, you have technically given up your South African passport. However, I have consulted with Marisa Jacobs, immigration specialist at Xpatweb, who has pointed out that the loss of South African citizenship is not always equally enforced.

There may be many South Africans who hold two citizenships and have never applied, neither had any issues with renewing their South African passport. Jacobs further mentioned that the prudent approach, where you have obtained a second citizenship, but have missed the opportunity to proactively apply for dual citizenship, is a special process which can be followed to get this still ratified with Home Affairs.

original ariticle here

(www.fpslaw.co.za) (021-9820665)

Changes to the Constitution may boost, not weaken, South African property rights

The South African government's plan to change the constitution to mention land expropriation without compensation could, ironically, end up strengthening the property rights on which investment depends.

Pressure to change the Constitution to allow the government to expropriate land without compensation is currently the country’s most contentious issue. Supporters insist that the measure is essential to end racial land ownership patterns which continue to favour whites a quarter century after the end of apartheid. Critics insist that this will threaten property rights and choke off investment.

President Cyril Ramaphosa has now announced that the governing African National Congress will support a change to the constitution’s property clause. This was greeted with predictable anxiety among pro-business commentators. But their fear that the change will weaken property rights seems misplaced. To see why, we must look at what property rights are, what the constitution says and what Ramaphosa and the ANC leadership may have in mind.

Much of the fear seems based on a view of property rights which sounds credible but does not describe reality in market economies. It sees property rights as the right to do whatever you like with what you own. The philosopher CB MacPherson pointed out four decades ago that this is not how property was understood until fairly recently, and not how property rights actually operate.

There is no unlimited right to property anywhere. People who own homes cannot use them to make banned substances or to fire missiles at neighbours. People who own factories cannot use them to enslave labourers or to pump poisons into the air and water. If owners ignore these rules, they will be forced to give up some of their property. Some might even lose the property – think of restaurant owners whose businesses are closed down by health authorities to protect consumers.

None of this is inconsistent with a market economy. On the contrary, these rules are essential to markets. A good analogy is a set of traffic lights. They limit what car and truck owners can do with their property, but they are essential to keeping the property safe.

The property rights of owners are, therefore, strong enough to allow them to invest with confidence when they know what the rules are which decide whether they keep their property.

Certainty is the key – not a blank cheque.

original ariticle here

(www.fpslaw.co.za) (021-9820665)

Too early to consider lifting water restrictions, says DWS

While a report on the country's dam levels paints a stable water situation across the country, the Department of Water and Sanitation has warned that the country is not out of the woods yet.

“Recent rains in parts of the country have given hope that perhaps the days of the water crisis may be over, even though it is too early to consider lifting water restrictions in affected provinces,” the department said.

A weekly report released by the department on Wednesday, 25 July, shows that South Africa's dam levels are showing signs of stability at 78.7%, compared to last year when they were at 69.7% during the drought that had ravaged the country.

Gauteng dams almost at capacity

Gauteng tops the charts, with dam levels almost reaching their capacity at 99.7%. The figures indicate a great improvement in the province compared to 2017 when the levels were recorded at 90.2%. The Vaal Dam is among the water resources that have recorded the highest levels in the country at 97.6%. The dam has improved by 3% compared to 2017 when it was 94.0%.

The heavy downfalls in the Western Cape have increased dam levels to a whopping 50.1% this week, compared to 25.7% in the same period last year. Levels at Theewaterskloof Dam, which feeds Cape Town, have almost doubled to 41.3%, compared to 20.5% a year ago.

However, despite the good rains, the department said it will only review the current water restrictions when the dam levels have reached 85% capacity. The Cape Town Dams System, with six dams serving the Cape Town Metro, has also increased from 54.8% to 56.1%. More rains are predicted for the region.

Eastern Cape worst affected

The Eastern Cape came out the worst province with the lowest dam levels in the country at 62.9%. The Algoa System, with five dams serving Nelson Mandela Bay, decreased from 19.7% to a perilous 18.9%. Last year, the system stood at 32.9%. Kouga Dam has decreased from 7.4% to 7.2% this week; Groendal decreased from 40.1% to 39.7%; Katrivier improved by 1% this week and Macubeni is at 97.2%. The Amathole System, which has six dams that serve East London, decreased from 90.1% last week to 89.9%.

In the North West, Haartebeespoort Dam improved from 66.9% to 97.3% this week, while Sehujwane is at 85.1%. In KwaZulu-Natal, dam levels decreased from 64.2% to 63.8% compared to last week. Umgeni Dam System, which boasts five dams that serve eThekwini and uMsunduzi in Pietermaritzburg, decreased from 75.4% to 74.8%. The system was at 60.3% in the same period last year.

Northern Cape improved from 87.2% to 93.1% this week. Boegoeberg Dam increased from 91.3% to 99.6%. In Limpopo, the average dam levels decreased from 72.6% to 72.1%. Polokwane Water Systems decreased almost by 3% in the past week to 91.5%. In Mpumalanga, the average dam levels decreased from 79.9% to 79.5%, representing a 3% increase compared to the same period last year.

The department reminds water users to continue adhering to water restrictions imposed by their respective municipalities.

original ariticle here

(www.fpslaw.co.za) (021-9820665)

Wage agreements ends postal strike

The South African Post Office (SAPO) and trade unions have reached an agreement on salary adjustments, bringing an end to the two-week postal strike.

SAPO and its recognised trade unions - Communication Workers Union (CWU), the Democratic Postal Workers Union (DEPACU) and the SA Postal Workers Union (SAPWU) - signed the agreement on Wednesday, 18 July 2018.

In terms of the agreement, Post Office employees across the board will receive a salary increase of 6.5%, backdated to 1 April 2018.

Furthermore, the contracted working hours for permanent part-time employees have been moved from 21.5 hours a week to 27.5 hours a week. Five hundred of these positions are earmarked to be phased in as permanent full-time employees in due course, following the necessary processes.

Post Office CEO Mark Barnes said accumulated mail is expected to take roughly 20 work days to be processed.

SASSA payments

Barnes said SAPO appreciates the importance of the South African Social Security Agency (SASSA) project and is committed to work closely with its employees to ensure the livelihoods of the most vulnerable are not put under unnecessary strain.

SAPO has reached a milestone of migrating 2.2 million SASSA beneficiaries to the new SASSA/SAPO issued gold card.

“We want to assure all beneficiaries that the IT challenges that impacted last month’s payment run have been resolved. We encourage all social grant beneficiaries to migrate to the new gold SASSA/SAPO card at pay-points,” Barnes said.

Barnes thanked customers for their patience and understanding, and trade unions for negotiating in good faith.

He also thanked the Department of Telecommunication and Postal Services, as well as the Council for Counselling, Mediation and Arbitration (CCMA) for their support and guidance.

Meanwhile, Telecommunications and Postal Services Minister Siyabonga Cwele has welcomed the agreement reached by SAPO and its recognised unions. He said SAPO and its unions have a common interest in ensuring a sustainable future for the organisation in the face of increasing competition in its traditional markets.

The agreement follows a meeting Minister Cwele held with the SAPO board, management and unions on Monday.

“It is clear that the parties were already close to reaching an agreement at the time we met. I am pleased that they were able to resolve the outstanding issues in such a short space of time.

“The Post Office remains an important organisation which enables citizens in rural areas to access government services. The latest example of this is the partnership it has with SASSA to pay social grants,” said Minister Cwele.

Cwele encouraged all the parties to continue engaging each other to seek a common approach to ensuring a sustainable Post Office by focusing on opportunities brought about by e-commerce and the Fourth Industrial Revolution.

He further called on citizens who have not yet migrated to the new SASSA/SAPO card to urgently do so.

(www.fpslaw.co.za) (021-9820665)

FairPlay demands enquiry into SA sugar tariff debacle

The FairPlay movement has called for a public enquiry into the fiasco that saw a zero tariff for sugar being set and gazetted in South Africa last year, which allowed importers to bring in and stockpile sugar duty-free, "and which plunged the South African industry into a crisis”.

“This is more than an administrative error. It was a brief period, but together with months when tariffs were wrongly kept low, it assisted a huge surge in sugar imports in 2017,” said Francois Baird, founder of the FairPlay movement. “This blunder has been a disaster for the sugar industry and has cost the country millions, if not billions of rand in tariffs that should have been collected. It must never happen again, and those who allowed it to happen must be called to account,” he said.

Key employer

The South African sugar industry provides direct jobs for 80,000 people and is one of the biggest employers in the job-starved rural province of KwaZulu-Natal. According to FairPlay, in a country with unemployment figures of 27% it is unthinkable that a government blunder would allow imported sugar into the country at an import tariff of zero, to flood the market and knock the legs out from under sugar farmers. And yet that is exactly what happened in South Africa and why the sugar industry, supported by the FairPlay movement, took to the streets to march to the Department of Trade and Industry in Pretoria at the end of last month.

“The process for calculating and triggering the sugar tariff in South Africa is a straightforward empirical calculation,” explains Baird. “This is based on the 20-day moving average of the global price of sugar as established by the daily settlement price for sugar on the London commodity exchange.

“If there is a difference of more than $20 per tonne between the London settlement price and South Africa’s Dollar Based Reference Price based on the 20-day moving average, a new tariff rate is triggered.”

The International Trade Administration Commission (ITAC) verifies the calculation and recommends to South Africa’s Minister of Trade and Industry to change the sugar duty accordingly, Baird explains, adding that the actual amendment to the tariff is implemented when the Minister of Finance amends the duty by gazetting the change in tariffs.

According to the movement, the failure of the Minister of Finance to gazette the tariff changes that are triggered by changes in the international price of sugar has caused South Africa to be flooded by imports, causing great damage to small and large sugar-cane growers and sugar producers, at a cost to the South African Treasury of billions of rands; not to mention the job losses and hardship for families dependent on the sugar industry for their livelihoods.

Series of blunders

“This series of unconscionable blunders has been a disaster for the South African sugar-cane industry and the South African economy,” says Baird.

  • In April of 2017 the 20-day average of the international sugar price triggered a tariff of R1,117 but the tariff increase was not implemented and remained at R636
  • In June of 2017 a tariff or R1,558 was triggered but again not implemented and the tariff remained at R636.
  • In July of 2017 a tariff of R2,111 was triggered but again there was no implementation and the tariff remained at R636. That same month the international price of sugar dropped and should have triggered a tariff of R1,807. But in this instance, even the exiting tariff of R636 was not implemented and no tariff was collected… at great expense to the South African Treasury. Further large quantities of imported sugar were dumped into South Africa during this period since they could enter the country duty-free.
  • In August of 2017 the tariff trigger was set at R2 131 and finally a tariff of R2 131 was implemented. Unfortunately, the damage had been done

Ten months later, the South African sugar industry, which has been further beset by the implementation of a tax on sugary beverages on 1 April 2018, is teetering on the brink of collapse. A government spokesperson addressed the rallied farmers and millers at the 25 June march in Pretoria and promised that the relevant departments were addressing the issue and would resolve the issue of insufficient tariffs by July.

(www.fpslaw.co.za) (021-9820665)

original article found at bizcommunity.com

Free Trade Area agreement means for SA

South Africa has signed the African Free Trade Area (AfCFTA) agreement with the African Union, which will pave the way for the country to benefit from inter-regional trade within the African continent.

“This agreement is an important step towards South Africa’s participation in a market of over one billion people and will create opportunities and many benefits for South Africa, which would enable South African companies to export goods and services across the continent.

“It will contribute to the growth and diversification of our economy and therefore create jobs, as well as reduce inequality and unemployment,” said President Ramaphosa.

The President signed the agreement during the AU Summit that took place from 1 - 2 July 2018 in the Republic of Mauritania under the theme “Winning the Fight against Corruption: A Sustainable Path to Africa’s Transformation.”

“South Africa remains committed to a coordinated strategy to boost intra-Africa trade and to build an integrated market in Africa that will see a market of over one billion people and approximately $3.3 trillion in GDP.

“New markets in West Africa and North Africa will provide opportunities for the export of South African products. To date, the agreement has been ratified by six countries, namely Chad, eSwatini, Ghana, Kenya, Rwanda and Niger,” said the President.

The main objectives of the AfCFTA are to:

  • Create a single continental market for goods and services, with free movement of business persons and investments;
  • Accelerate the establishment of the Customs Union;
  • Expand intra-African trade through better harmonization and coordination of trade liberalisation and facilitation and instruments across the RECs and across Africa in general and
  • Enhance competitiveness at the industry and enterprise level through exploitation of opportunities for scale production, continental market access and better reallocation of resources.

President Ramaphosa said to take full advantage of this agreement, investment in infrastructure that connects countries must be made.

“There are many other areas of cooperation where we can foster integration, particularly at a regional level, such as tourism, energy and transport. This agreement offers the prospect of a new dawn for Africa,” said the President.

The agreement will soon be submitted to Parliament as part of the process towards its ratification.

(www.fpslaw.co.za) (021-9820665)

original article found at bizcommunity.com

DUTY OF CARE CONSIDERATIONS FOR TRAVELLING EMPLOYEES

Business travel is part of the day-to-day job for a growing cohort of employees, from senior company executives to junior sales staff, across all company types and often across borders and continents.

Travelling for business brings with it its own set of risks, demanding that organisations of all sizes exercise the utmost duty of care in managing and mitigating the risks to employees, operations, business continuity, reputation and profitability.

‘Duty of care’ refers to the legal and moral responsibility that employers have to ensure the health, safety and wellbeing of their employees in the workplace and while travelling for business. It helps to ensure business continuity and compliance, as well as protecting against reputational damage and potentially costly legal issues. Most fundamentally, it helps safeguard the primary business-critical assets of any organisation: its people.

According to Claudia Lemon, accident and health underwriting manager at Chubb South Africa, duty of care is a complex risk that is difficult to quantify and manage and has the potential to create fundamental damage to a company’s reputation and bottom line if not addressed thoroughly. “The scope of business travel risks are truly global, which is why corporate responsibility and governance must work hand in hand with insurance risk management to protect employees, the business and the brand reputation,” says Lemon.

A key challenge for those responsible for corporate stewardship is to ensure that the right insurance solution is chosen that enables the provision of duty of care. A good place to start is with a group personal accident as well as travel insurance for those employees who go away on business.

“Besides the more obvious insurance cover for medical emergencies, political instability, on-the-ground expert response and even emergency extraction while travelling for business, many companies are unfamiliar with the additional technology support and tools that the insurance industry has developed, such as preventive information, country risk assessments, post-accident support, smartphone apps and guidance notes for staff travelling internationally for business,” says Lemon.

“Technology can also allow the company to send alerts directly to employees in the middle of an event in addition to tracking and locating them using the GPS on their phones in case an extraction is required. Given the proliferation of smartphones and mobile devices, there is great potential for growth in digital services that can support employees when they travel for business, and these tools should be considered a standard offering for all companies that send their staff on business trips,” Lemon explains.

It is also vitally important that the insurance partner chosen has the capacity and ability to cover all potential risks, no matter the complexity.

“With foresight, planning and expertise, insurance solutions can be designed to facilitate the organisation’s commitment to duty of care provision, mitigate reputational damage and legal repercussions, and demonstrate its absolute commitment to protecting employees in the execution of their work responsibilities,” says Lemon.

Companies can benefit from partnering with experienced insurers and brokers to protect their staff from unwanted business travel outcomes. At present, many companies appear to be undervaluing the support they can get from the insurance industry, but the range of available products and services can help companies to significantly upscale their duty of care. Insurance can offer more than just coverage and the range of tools and services that are often included can enhance significantly corporate duty of care procedures and responses.

(www.fpslaw.co.za) (021-9820665)

original article found at bizcommunity.com

NEW SYSTEM FOR LIQUOR LICENCE

The newly developed online renewal Case Management System (CSM) will see ease the process of liquor licence applications and renewals, said the National Liquor Authority on Wednesday, 20 June 2018.

Director of Education and Capacity Building at the National Liquor Authority (NLA), Khabonina Maxatshwa, said the launch of the CSM will ensure that registrants and consultants enhance the ability to make use of the system for liquor license applications and renewals.

Maxatshwa was speaking at a compliance consultative workshop held in Belhar in the Western Cape on Wednesday.

The online system came into effect on 18 May 2018 and mainly targets consultants, clients and registrants.

“The purpose of the automation is to improve on our efficiencies concentrating on service delivery because we have been doing everything manually in the past. We are however trying to enhance and progress on our system so our turn-around times can advance and our registrants can be able to get their renewals on time,” said Maxatshwa.

She further highlighted that the implementation of the system has been divided into three phases with each of them delivering certain components of the administration process in the form of both business processes and system functionality.

Some of the benefits of the renewal system by NLA include that:

  • The online renewal case management system does not require pre inspections to be conducted;
  • The registrants will not be required to submit the documents that have already been uploaded in the system, Identification and Zoning; and
  • Only South African National Accreditation System (SANAS) accredited Broad-Based Black Economic Empowerment (B-BBEE) certificates will be considered.

The NLA is located within the Consumer and Corporate Regulation Division (CCRD) of the Department of Trade and Industry.

(www.fpslaw.co.za) (021-9820665)

original article found at bizcommunity.com

STRIKE ACTION LEAVES SA IN THE DARK

Eskom left large chunks of the country in the dark on Thursday night when it implemented stage one load shedding, blaming the black out on sabotage by striking workers.

The financially troubled power utility is in a labour dispute with unions after it announced a 0% wage increment for employees.

The National Union of Mineworkers (NUM) and the National Union of Metalworkers (Numsa), demanding a 15% wage increase, rejected the offer and staged pickets on Thursday. They were joined by Solidarity, which is asking for a 9.5% increase. Eskom reported that the strike action had led to several incidents of road blockades, attacks on staff, and wilful damage of electricity infrastructure.

Eskom has obtained an urgent interdict from the Labour Court against the three unions on the basis that the majority of workers at the state-owned enterprise (SOE) fall under the category of essential services and are barred from striking.

Meeting with Gordhan

Meanwhile, Public Enterprises Minister, Pravin Gordhan, departmental officials and Eskom board members met with the leadership of Cosatu at their invitation on Wednesday.

“The minister wanted to understand the concerns from organised labour about the wage dispute with Eskom and related matters. Amongst the concerns expressed by Cosatu were the manner in which wage negotiations have been conducted, the zero percent wage offer, and allegations that the independent power producers programme is crowding out jobs in the mining sector,” the department said.

At the meeting, Gordhan explained the current challenging environment, including the contraction in economic growth in quarter one of 2018 and lower growth projections for 2018, and that government does not have the money to continuously bail-out SOEs.

“The minister agreed that it was improper to raise the issue of down-sizing Eskom at the same time as the current wage negotiations. He undertook to discuss the resumption of negotiations with the Eskom board and to ensure that a constructive and respectful atmosphere for negotiations is created,” said the department.

Gordhan said it is the responsibility of the board to determine what kind of wage increase Eskom can offer its employees, within the framework of the board’s fiduciary responsibilities.

“The minister is in no position to instruct the board on this issue,” said DPE, adding that the he has offered to convene an information-sharing session between Eskom and Cosatu so that the company’s financial position is understood and taken into account by all parties.

(www.fpslaw.co.za) (021-9820665)

original article found at bizcommunity.com

NHI OPEN FOR PUBLIC COMMENT SOON

The National Health Insurance (NHI) Bill of 2018 will be published in the Government Gazette shortly for public comment.

A key provision of the bill will be the establishment of an NHI fund to pay for health services so that all South Africans have access to quality care.

“The bill seeks to establish the NHI Fund of South Africa, as a public entity, so as to provide for a sustained universal health access that is affordable and of high quality. It also sets out its functions, powers and duties,” Cabinet said in a statement following its regular fortnightly meeting.

The bill provides a framework for the active purchasing of health care services by the fund on behalf of users and creates mechanisms for the equitable, effective and efficient use of the resources of the fund to meet the health needs of users.

The NHI, which government began piloting in 2011, proposes a single, compulsory medical scheme for all, with private medical schemes being reduced to offering complementary services.

All citizens and permanent residents will be covered by the NHI, while a special fund will be set up for refugees. Documented asylum seekers will be able to access emergency care. Everyone else will need medical insurance.

NHI is being introduced in three phases, starting with preparing central hospitals to provide specialised services to all citizens, under the control of central government.

Health Minister Dr Aaron Motsoaledi is next week expected to hold a full media briefing to unpack this bill.

(www.fpslaw.co.za) (021-9820665)

original article found at bizcommunity.com

WHAT CAN BUSINESSES DO TO DEAL WITH PUBLIC LIABILITY CLAIMS?

You own a business and you put a sign up saying, "Park at your own risk" - which effectively amounts to a 'contract'. Simply put, you are saying that anyone can enter your premises on that basis - if they don't want to then they shouldn't enter - and that you are not liable for any damages howsoever arising, whether due to your negligence or anything else. In reality though, the sign actually means nothing and offers a business no protection against public liability claims.

This can be contested in terms of Section 48 of the Consumer Protection Act (CPA) on the basis that ‘a supplier must not offer to supply, supply, or enter into an agreement to supply any goods or services on terms that are unfair, unreasonable or unjust (and here’s the kicker), they cannot require a consumer or any other person to waive any rights or assume any obligation on terms which are unfair, unreasonable or unjust.’

PJ Veldhuizen, managing director of Gillan & Veldhuizen, says that when dealing with consumers, what businesses need to do is to ensure a contractually sound relationship between them and the consumer which promotes the objectives of the Consumer Protection Act. This includes fair and reasonable treatment of consumers by suppliers when supplying goods and services.

There is a clear injunction in the legislation which requires a court or tribunal to interpret the provisions of the CPA purposively – by that, it means that a presiding officer, when attributing meaning to any part of the legislation, must do so in the light of the purpose which it seeks to achieve. “For example,” says Velhuizen, “any ambiguous provision in the act must be interpreted in favour of the consumer and although it may seem like an oversimplification of matters, the interests of consumers will generally win the day.”

When suppliers are wishing to consider the fairness of any provisions on which they seek to rely, they should consider who their consumers are, especially in relation to those consumers who could be considered vulnerable as result of poverty, illiteracy, age or any other vulnerability.

At store level, suppliers need to ensure that their staff are adequately briefed on how to deal with the public, are aware of the CPA, and know to whom they should refer any complaints.

If you work with clients or customers in public spaces, have visitors to your premises, or manufacture products, suppliers are encouraged not to simply rely on so-called exclusionary clauses or signs which may have assisted them prior to the CPA and should now adequately insure themselves against claims.

While claims made against you may be opportunistic and ultimately unsuccessful, the costs of defending even spurious claims can be debilitating and these defence costs should also be insured against all public liability claims.

Veldhuizen adds that whilst it is often a David and Goliath game, there are many lawyers who are prepared to take on matters on contingency basis, i.e. a no-win-no-fee in circumstances where consumers have been injured and significant damages incurred. Veldhuizen, therefore, advises that when confronted by a public liability claim, one should always consider appointing a mediator to assess whether there is scope for alternative dispute resolution.

Without necessarily admitting liability, the purpose of mediation is to explore whether it is not simply an apology that somebody wants – furthermore, mediation will see you as being a responsible and worthy supplier, and will ultimately save the business money and preserve its reputation.

(www.fpslaw.co.za) (021-9820665)

original article found at bizcommunity.com

DO SA LABOUR LAWS APPLY TO FOREIGN NATIONALS?

"The recent raids on businesses employing illegal foreign nationals in Cape Town underscores the Department of Labour's mission to ensure that employers comply with labour legislation as it relates to the employment of foreign nationals," says Advocate Tertius Wessels, legal director at Strata-G Labour Solutions.

On 9 May, raids were conducted in China City in Milnerton and Canal Walk in Century City where 25 foreign nationals were arrested for contravening the Immigration Act. In addition, a manager at one of the businesses was charged with contravention of the Act, which regulates the employment of foreign nationals in South Africa.

Wessels says many employers provide employment to foreign nationals without understanding the legal implications of their decision. “There is a misconception that if someone is a foreign national, normal labour laws, such as the Basic Conditions of Employment Act and Labour Relations Act, do not apply to them.

“It is important that employers know that foreign employees, including those who do not have valid work visas or permits, are afforded legal protection in terms of South Africa’s labour laws and they enjoy all the rights, privileges, duties and obligation of a ordinary South African citizen. They are also protected against unfair dismissal and/or unfair labour practices,” he adds.

Employers must ensure that when they dismiss a foreign national, it is done for a fair reason and in accordance with fair processes. “Employers should not be under the false impression that South Africa’s labour law does not apply to foreign nationals or that foreign nationals do not have any recourse against their employers,” says Wessels.

He adds if people are in the country illegally, they can be deported. Furthermore, section 49(3) of the Immigration Act provides that “anyone who knowingly employs an illegal foreigner or a foreigner in violation of the Immigration Act shall be guilty of an offence and liable to a fine or a period of imprisonment not exceeding one year for a first offence.”

When employing foreign nationals, a duty is placed on an employer to make an effort, in good faith, to ensure that no illegal foreigner is employed by it and to ascertain the status or citizenship of the persons it employs. It is up to the employer to check if the individual has valid enabling documents to work in South Africa. “Employers also need to check the expiry date and make sure the employment contract is for the duration of the work permit.

Alternatively, such employees must take steps to renew the documentation timeously. If they don’t, the employer will have grounds to terminate their services,” concludes Wessels.

http://www.bizcommunity.com/Article/196/548/177401.html

ARE WE SUPPLIERS OR SELLERS UNDER THE CPA

are we suppliers or sellers under the cpa

WHO ARE ‘SUPPLIERS’ UNDER THE CPA?

When the Consumer Protection Act became law in April 2011, there was considerable confusion in the real estate industry as to who was actually affected by it. Some conveyancers, industry-related bodies and others said that all property transactions would be affected by the Act and that all property sellers had to comply with its requirements. Today it has become widely accepted that only certain persons are affected and it is important to know who they are. John Gilchrist, director of Property Law Publications, explains.

THE DEFINITION OF A SUPPLIER

In the definitions at the beginning of the Act a supplier is defined as anyone who markets goods or services. This means it is not only manufacturers, wholesalers and retailers who are affected by the Act (they all supply goods), all conveyancers and estate agents qualify as suppliers as they market their services to the general public. They are bound by the provisions of the Act in respect of these services.

This does not mean, however, that estate agents are responsible for the condition of any property they are selling because the property does not belong to them. Some roleplayers have claimed that the moment a seller engages an agent to sell his property, he becomes bound by the Act because his agent is bound by it, but this is not true. Agents only qualify as suppliers in respect of their services and this does not bind their sellers in respect their homes or other properties.

THE DEFINITION OF A CONSUMER

The Act defines a consumer as someone who deals with a supplier ‘in the ordinary course of the supplier’s business.’ This means that all sellers are excluded from the definition of a supplier unless they are dealing with their buyers in the normal course of their businesses. Note that it does not say ‘ín the normal course of business’. It is expressly says that a consumer must be dealing with his supplier in the normal course of the supplier’s business. This means the seller must be dealing with the sale or letting of properties as a normal business enterprise that he actually operates as such.

If a property owner runs his panel-beating business on a business property and sells the property, he does not qualify as a supplier in this instance because selling properties is not done in the normal course of his business. Only panel-beating qualifies as his ‘normal’ business. The only people in the real estate industry who qualify as suppliers are developers who are developing cluster, sectional title, or other property schemes as well as any other natural or juristic persons who are selling and buying properties or letting them in the normal course of their business.

IMPORTANT EXCEPTIONS TO BE NOTED

Even people who invest in a few properties as a long-term investment designed purely to create asset-based wealth for their retirements do not qualify as suppliers. Just because they own a few properties does not mean that they have suddenly become suppliers in terms of the Act. The expression ‘normal course of business’ must be interpreted to mean that the property owner must be operating an income-based enterprise (not something created purely for capital growth in the long-term) and such an enterprise must have an ongoing basis to be ‘normal’ in a business sense. The VAT Act talks about going concerns and this is a good definition of anything being operated in the normal course of business.

Any single sale of a property will invariably be excluded from the provisions of the CPA. Estate agents only need to ascertain whether their sellers are engaged in regular buying and selling of properties as a form of income-creation to determine whether they are bound by the Act or not. This applies equally to sellers who derive their monthly income from letting such properties to respective tenants. Please feel free to contact our offices or any assistance in Consumer and Property Law contact FPS Attorneys.

(www.fpslaw.co.za) (021-9820665)

Source and extract from the Property professional Article 15 may 2018 written by J Gilchrist

PANEL OF EXPERTS ON VAT CALLS FOR SUBMISSIONS

The Independent Panel of Experts, set up to review the current list of zero-rated Value Added Tax (VAT) items, has invited all interested stakeholders to make written submissions for their consideration.

Minister of Finance Nhlanhla Nene on 25 April 2018, published the terms of reference for the panel of experts which will consider the most effective way to mitigate the impact of the increase in the VAT rate on poor and low-income households.

The panel is mandated to take public submissions, convene hearings, and engage with different stakeholders from civil society organisations, organised labour and business, and all other interested parties.

As part of carrying out its mandate, written submissions and any other queries can be submitted via e-mail to vatsubmissions@treasury.gov.za by close of business on 24 May 2018.

South Africa’s VAT system includes 19 basic food items that are zero-rated. These are:

  • dried beans
  • samp
  • maize meal
  • rice
  • brown bread
  • vegetables
  • fruits
  • vegetable oil
  • mealie rice
  • pilchards in tins
  • edible legumes and pulses of leguminous plants
  • eggs
  • milk
  • dried mealies
  • dairy powder blend
  • lentils
  • cultured milk
  • milk powder
  • brown wheaten meal

The R1.67 trillion Budget tabled by former Finance Minister Malusi Gigaba in the National Assembly in February raised VAT by a percentage point to 15%.

VAT had previously been pegged at 14% since 1993.

http://www.bizcommunity.com/Article/196/512/176960.html

DO WE NEED HUMAN RIGHTS LAW?

In a world of unprecedented refugee flows, seemingly endless wars and rising levels of xenophobia and inequality, many have been questioning the point of human rights. What do they mean to the huge numbers of asylum seekers detained across the globe? To the Rohinyga, fleeing ethnic cleansing in Myanmar? To the children dying in bombings across Syria and Yemen?

For many the optimism of the post-WWII era when the international human rights system was set up is dead. Some critics go further, arguing that not only have human rights not delivered greater justice, they have in fact been part of the problem. Their individualistic focus has taken attention away from structural issues like global economic inequality. Their claims to universalism have failed to properly address the legacies of Western imperialism. And their legalistic form has done little to empower the world’s most marginal, simply creating a new industry of “international experts”. As a result, more and more radical scholars and activists in the West are rejecting human rights in search of a new, more revolutionary social justice project.

Without disagreeing with these critiques, I would like to tell another story of human rights. It is the story of Amali, who lives in a small village in eastern Sri Lanka.

Amali’s story

In 2009, Amali’s husband was abducted while working in his paddy field. He sadly represents the fate of thousands of men, women and children: victims of the decades of political violence that have marked Sri Lanka’s modern history.

Until then, Amali had been a housewife focused on raising her two daughters and relying on her husband to take care of all the financial and administrative needs of the family. The search for her husband catapulted her into a new complex, frustrating and often terrifying world of dismissive and threatening police officers and soldiers, ineffective and indifferent bureaucrats and politicians and suspicious and unsympathetic community members. In the face of this, a courageous and resourceful woman emerged, drawing on human rights to reframe her personal suffering as rights violations requiring redress.

Amali now travels all over the country, protests in the streets of the capital, Colombo, and lobbies political leaders. She has even met with the president. She has also become a recognised local community leader, offering support and advice to others in similar situations. While clearly an exceptional woman, Amali is not alone.

Giving women a path

Across Sri Lanka many individuals, particularly women, have mobilised and become politically active as a result of human rights violations suffered by themselves or their loved ones.

When I ask them what human rights mean to them, and tell them about the increasing scepticism with which many of us in the West view human rights law, they are pragmatic. They are not stupid. They know better than we do that the law all too often favours the powerful and that governments all over the world loudly proclaim human rights while engaging in abusive and repressive behaviour. They too understand the hypocrisy that leads to selective attention to certain types of rights violations and certain types of victims.

But as people who have never had the luxury of feeling valued as citizens, they also experience a different relationship to human rights law. Even if the outcome is not as desired, there is something to be said for the process made possible by human rights law. As another remarkable female activist (and wife of a disappeared man), Jeyatheepa explained to me, human rights had provided her with the opportunity to speak for herself in a public sphere that otherwise treated women like her as passive objects to be controlled, “saved” or spoken for.

Both Amali and Jeyatheepa are part of a group of women who together decided to study the Right to Information Act passed in Sri Lanka in 2016. Without any legal background and often with limited formal education, these women independently made applications to the authorities, demanding information be released on what happened to their family members. In making use of this new law, they see it as another tool to maintain pressure on a state that wants the issue of disappearances to just go away.

A new human rights?

The stories of Amali and Jeyatheepa suggest that perhaps we do still need human rights law. Not because the critiques described above are wrong. On the contrary, we clearly need to revisit our assumptions about what human rights law can and does offer in such an unjust world.

But this assessment must recognise the many ways in which human rights law is currently being used by different types of people in different situations. Up until now, most of the debate about the advantages and limitations of human rights has focused exclusively on elite actors (international human rights organisations, Western governments) and on institutional spaces like the UN. These may be the most powerful players in the human rights world and they do dominate the ways in which human rights are interpreted and applied.

But they do not have a complete monopoly. There are also many brave individuals in situations of great difficulty and with very limited power and resources that are using human rights law to make claims and assert themselves as political agents.

The ConversationBy only focusing on and criticising dominant versions of human rights, we run the risk of further excluding and ignoring the voices and perspectives of those who are already neglected and disempowered. Ironically, just as human rights currently often fail to protect and empower those most in need, so do critiques of human rights that treat these populations as passive, ignorant victims. By shifting our attention to the ways in which disenfranchised people experience and engage with human rights law, we can remain attentive to its failings while also recognising and paying tribute to the sometimes unexpected ways in which people do make human rights law work for them.

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FAIRPLAY APPEALS FOR ADDITIONAL TIME FOR VAT EXPERT PANEL

FairPlay is appealing to the Minister of Finance, Nhlanhla Nene, to allow additional time for the panel of experts reviewing the list of VAT zero-rated food items to undertake a thorough investigation, including public consultation.

“We welcome the appointment of the panel, and their terms of reference, but are concerned at the time pressure under which they will work according to the timeline announced by the minister,” said FairPlay founder Francois Baird. “If the panel is going to do the thorough review that the public expects of them, they have a near-impossible task to complete their work by 20 June,” Baird said.

Timetable too demanding

FairPlay is involved in the “VAT-free chicken” campaign to have chicken added to the list of zero-rated items because chicken is the major source of protein for South Africa’s poor. FairPlay is a not-for-profit trade movement that fights for jobs and seeks an end to predatory trade practices. It has highlighted the job losses caused by dumped chicken imports in South Africa. Baird said the timetable set by the Minister was too demanding.

It requires the panel to call for submissions until 11 May, prepare empirical work by 15 May while simultaneously compiling a summary of submissions, and then to hold workshops with commentators from 18 to 23 May. The panel then has to submit a report to the Davis Tax Committee by 20 June, and the Davis committee will submit a report to the Minister of Finance by 30 June.

“This is too rushed a process,” Baird said. “This is an important matter which requires rigorous and constructive public engagement, and then careful consideration of the issues before the panel. These include evaluation of items currently zero-rated, the consideration of additional zero-rated items, and consideration of other mitigatory measures, including how best to target poor and lower-income households.”

Planned tax legislation

The pressure for the committee to deliver an initial report “with all the options and recommendations” to the Davis committee and then the Minister of Finance by 30 June is because of planned tax legislation. The panel’s schedule would give the cabinet time to consider the recommendations for inclusion in draft tax legislation that will be published in July.

“I would like the minister to explain the reason for this compressed timetable, which is likely to lead to hasty and possibly cursory examination of important aspects,” Baird said.

“The chair of the independent panel of experts, Prof Ingrid Woolard from the University of Cape Town, has admitted that the time frame is extremely tight, and it would definitely benefit the expert panel to have some additional time to plan and complete their work,” Baird said.

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MINING COMMUNITIES' RIGHT TO SAY NO TO BE TESTED IN COURT

A test case will be heard in North Gauteng High Court today, which could set a precedent on a communities' right to say no to mining activities on their traditional land.

The Bench Marks Foundation will be submitting an affidavit as the primary support for an application by community members to oppose attempts to mine titanium on their land in Xolobeni on the Wild Coast in the Eastern Cape.

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The historic application is being brought against the minister of mineral resources and senior officials in the Department of Mineral Resources, the minister of rural development and land reform, and Transworld Energy and Mineral Resources (SA) Pty Ltd.

The court case is a crucial landmark in long struggle of opposition to mining by the community which goes back at least to 2008 when a mining licence was first issued, but later retracted when it was found that no consultation had taken place with the community.

Communities should be empowered

“While mining can provide benefits, communities are vulnerable to grievous harm that often outweighs any gains. The Bench Marks Foundation has therefore come to believe that communities should be empowered to determine whether mining should occur on their land. This would enable communities to decide whether mining should occur, and to level the playing field for communities to negotiate the terms of mining, relocation and compensation should it be embraced.

“For this right to be meaningful, communities’ decisions should be made without political pressure on the basis of full information on the costs of the proposed mining, including alternative development paths,” says John Capel, executive director of the Bench Marks Foundation.

“The foundation therefore associates itself with the international movement to require free, prior and informed consent (FPIC) before extractive activities occur on community land,” he says.

Capel notes that there is a lack of clarity on whether FPIC is required under South Africa mining law. This has seen mining companies flagrantly disregarding this principle.

Declaratory relief

Since 2007 to now, Bench Marks has produced 12 policy gap studies on mining in the last 11 years, all of which point to the harmful effects of mining. These impacts include destroyed local economies, where people lose access to their land, way of life, subsistence farming, only to suffer health impacts, and in many cases ‘forced’ removals, leaving communities worse off than before mining. Communities on whose land mines want to operate must have the right to say no. as the 129th applicant after all the community members, we hope that the court will agree with our submission, said Capel.

“The foundation believes that the declaratory relief sought by the applicants is urgently required, not just for the Umgungundlovu community, but across South Africa.”

In the affidavit, Capel outlined two case studies – that of the Mothlothlo community some 45kms north of Mokopane, Limpopo, and Kopano in Limpopo province.

From these case studies, Capel noted that mining rights are being granted to companies that make no effort to comply with the Interim Protection of Informal Rights to Land Act (IPIRLA), that mining commences without this compliance, and that it commences despite pending appeals and in the face of requests for the suspension of mining rights, pending the adjudication of appeals.

Consent must be meaningful

He also notes that the case studies establish the principle that consent on a piecemeal, individualistic basis is insufficient.

Referring to the Mothlothlo case study, Capel says: “It is clear that no members of the community were forcibly removed from their homes. It may be argued that this means that all persons who relocated ‘consented’ to their relocation. But this is clearly inadequate as agreement to relocate was generated through immense pressure including the loss of agricultural land, social disarticulation through the relocation of neighbours, and other factors.

“For consent to be meaningful, it must be required after full information is provided and free of coercion, including the coercion that comes with the commencement of mining activities.”

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COURT RULES THAT BANKS CAN SELL YOUR HOUSE FOR NEXT TO NOTHING

When a person obtains a home loan from the bank, a mortgage bond is usually registered over their home as security by the bank. The bank will use this to recover any debt should the debtor default on their home loan repayments, in which event the debtor may lose their home.

This has raised the question of whether the bank should be allowed to sell the debtor’s home for an amount that is at least equivalent to the outstanding debt or to sell the property at any price.

This was the subject of a Pretoria High Court judgment handed down on 22 March 2018. The court dismissed a challenge against the constitutionality of certain rules of court which enable the home of a debtor to be sold without a reserve price.

Background

Given Nkwane obtained a home loan from Standard Bank in September 2011 for an amount of R380,000 and had a mortgage bond registered in favour of the bank. Nkwane defaulted on his home loan in February 2012. For the rest of that year he continued to default and only managed to make some of his payments intermittently.

In January 2013, he applied for debt review, but this was unsuccessful. In March 2013, he applied for rehabilitation (this would enable him to pay substantially less for his monthly instalment). This application was approved by the bank.

However, by July 2014, Nkwane informed the bank that he could no longer afford the instalments and wanted to sell his property. The bank informed him that he must use the bank’s Easy Sell mandate to do this (this is Standard Bank’s programme to help distressed home owners sell their properties). Nkwane was unable to do this, however, because his wife refused to sign the Easy Sell mandate.

The bank then instituted legal proceedings against Nkwane and successfully obtained a warrant of execution against Nkwane’s home. A warrant of execution enables a creditor, such as a bank, to attach a person’s property and sell it.

At the sale of execution, the house was sold for R40,000. At the time of the sale the insurable value of the house was nearly R500,000.

Court proceedings

The primary issue the court had to determine was the constitutionality of rule 46(12) of the High Court rules which enable a creditor to attach and sell a debtor’s home without a reserve price being set. Under this rule, it is possible for the bank to sell a debtor’s home for any price and recover any amount they can for the outstanding debt.

After proceedings had already begun, the rules which were the subject of the dispute were amended in December 2017. In terms of the amended rules, a court can set a reserve price in certain circumstances but has to consider at least nine factors before making such a determination.

Before considering the constitutionality of the rule in question, the court considered two other related High Court judgments which had been handed down after proceedings had begun. These two judgments had upheld the constitutionality of the rules. In its reasoning, the court placed much reliance on these two judgments and effectively reached similar conclusions.

In reaching its decision, the court considered four main issues, explained below.

Will a reserve price result in a home being sold for a higher price?

Nkwane argued that setting a reserve price will ensure that a debtor’s home is always sold for a higher price. The court however found that this contention was unsubstantiated. Instead, the court found that the bank had provided ample evidence as to why a reserve price would not result in a higher price being obtained.

These reasons included: a sale in execution is a forced sale and consequently results in lower prices being obtained; the conditions of a forced sale often render the buyer liable for outstanding rates and taxes; and a buyer may be faced with long and drawn out eviction proceedings to remove any occupants from the property. The bank also pointed out that a reserve price will reduce interest in the sale and may result in the property not being sold at all. This would inevitably prejudice both the debtor and creditor. The court accepted the bank’s submissions.

Does a sale without a reserve price constitute an arbitrary deprivation of property?

In terms of the Constitution, everyone has the right to not have their property deprived of them arbitrarily. Nkwane argued that the sale without a reserve price affects a debtor’s right to equity in the property because the property is not sold for its real value but a forced value. Nkwane also argued that because the sale may not even result in the recovery of the full outstanding debt (as in Nkwane’s case) the sale without a reserve price is arbitrary and serves no legitimate purpose.

But the court found that to the extent that the sale does result in a deprivation of property it could not be regarded as arbitrary. This was because the rules enabled a relatively cheap and expeditious process for the bank to recover some of the outstanding debt. Furthermore, the court relied on previous High Court decisions that maintained that there are compelling socio-economic reasons for the existence of mortgage bonds and the existing debt recovery process.

Lastly, the court found that in any event the deprivation of property did not flow from the sale per se but rather from the failure to pay the outstanding debt.

Does the fact that the rules were subsequently amended mean that the previous rules were defective?

The court considered the fact that the amended version of the rules enables more judicial oversight over the process and allows a reserve price to be set in certain circumstances. However, the court found that while the amended version of the rules may well be an improvement, they did not render the previous version of the rules irrational or unconstitutional.

Does the rule infringe upon the right to adequate housing?

Nkwane contended that the rule did so because it may result in a debtor being blacklisted which would prevent them from accessing the housing market in future. Secondly, Nkwane contended that it could never be considered fair, balanced or justifiable to sell a house valued at R470,000 for R40,000 to realise a debt of R370,000.

The court found that any resultant blacklisting is not as a result of the sale in execution but rather the debtor’s failure to pay the outstanding debt. The court also found that because there is judicial oversight over the process of determining whether a house is specifically executable before a warrant of execution is issued, the right to adequate housing is already protected. As such, there was no need for further protection in the form of a reserve price.

Lastly, the court found that the question of whether a reserve price should be set or not is in fact a policy decision which is best left to Parliament to determine. For this reason, the court rejected the submissions of the South African Human Rights Commission who had been admitted as a friend of the court. The SAHRC had highlighted the fact that several jurisdictions including Ghana, Germany and South Korea do require a reserve price as the default position.

Decision will be appealed

The judgment has major implications for the right to access adequate housing and the financial position of debtors generally. Although the amended version of the rules, which came into effect in December 2017, enable a reserve price to be set in certain circumstances this is still not the default position.

Debtors whose homes were attached prior to the amended rules will still be in a potentially precarious position. For this reason, Nkwane’s lawyers, Lawyers for Human Rights, intend to appeal this judgment. It remains to be seen whether a higher court will reach a different decision.

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DATA BUNDLE RULES DUE IN APRIL

Final regulations on the expiry of data bundles are set to be published by the end of April, telecommunications regulator the Independent Communications Authority of SA (Icasa) told MPs on Wednesday. Icasa said the regulations were part of measures to reduce the cost to communicate.

These are expected to bring relief to consumers, who have long bemoaned usage limits.

The government is pulling out all the stops to reduce the cost of communicating, pointing out that it is only through legislative means that it can ensure reasonable pricing and market structure in the sector.

Network operators have been under intense scrutiny in recent months for allegedly ripping off consumers, especially when it comes to data expiry dates and out-of-bundle billing.

Briefing members of Parliament's select committee on communications and public enterprises on the cost of communications, Icasa councillor Leweng Mphahlele said the regulator had introduced various measures to reduce the exorbitant costs of communicating. The measures had resulted in the significant reduction in voice tariffs over the years.

However, Icasa remained concerned about the costs of data for the public, particularly out-of-bundle rates. "SA's data bundles are one of the highest compared to the countries we have benchmarked ourselves against," Mphahlele pointed out.

He said Icasa had concluded public consultations on the end user project and final regulations would be published by the end of April.

"Icasa is proposing that data should not expire within three years, operators must send users notification of service depletion at specific intervals ". the current practice is that if you buy a data bundle and you deplete it, the operator charges you out-of-bundle rates. This current practice exposes users to bill shock. Operators must give end users the option to opt in or out of out-of-bundle rates," said Mphahlele.

Cell C's group general counsel, Graham Mackinnon, told MPs that there was no incentive for the dominant players to reduce their prices. The market is currently dominated by Vodacom and MTN.

"They haven't done it up until now. [The] only thing that will drive prices down is competition. There are tools which Icasa can use to stimulate competition and reduce competition, such as termination rates and number portability " moving networks is hard. Number porting needs to be made easier," he said.

Telkom's chief risk officer, Tsholofelo Molefe, said the Vodacom and MTN duopoly was entrenched and, together with high barriers to entry, it made reducing the cost to communicate much more difficult.

Source: Business Day

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PRESIDENT RAMAPHOSA CLARIFIES FORMER PRESIDENT'S LEGAL FEES

President Cyril Ramaphosa says former President Jacob Zuma's legal fees will be paid in exception to cases where the court finds that he acted in his personal capacity.

“The State Attorney decided that it was appropriate to grant the request of the former President, subject to the condition that he make an undertaking - which he did - to refund monies thus spent should it be found that he acted in his personal capacity and own interest in the commission of the alleged offences,” - said President Ramaphosa in a statement.

President Ramaphosa said this was done in line with section 12.2.2 of the then applicable Treasury Regulations, issued in terms of the Public Finance Management Act, 1999, read with section 3(1) of the State Attorney Act.

The Act states that if it is found that an official was acting outside the course and scope of his employment and lost a case, that official must refund the state.

The President provided clarity on the former President’s legal fees following questions from Economic Freedom Fighters (EFF) leader Julius Malema during an oral reply session on 14 March 2018.

The EFF’s questions referred to cases in which it is alleged that the former President committed criminal offences took place during his tenure as a government official both at provincial and later at national level.

The request made by former President Zuma for legal representation at state expense, considered section 3(3) of the State Attorney Act, 1957.

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YOU CAN'T FIRE ME, I RESIGN!

Another day, another high level resignation. The past year has seen many heads opt to duck out of a sticky situation rather than face the music in a disciplinary inquiry; Matshela Koko, Anoj Singh and Shaun Maritz - and that's just from Eskom. Now although a company can still proceed with criminal charges to seek reparations for damage caused, does a company have any right or reason to reject a 'resignation with immediate effect' and hold the employee to contractual obligations and make them go through the disciplinary process?

I posed the question to Johan Botes, partner and head of the Employment and Compensation Practice over at Baker McKenzie, Johannesburg, and this is what he had to tell me...

Resignation to avoid dismissal

"'You can’t fire me, I resign!' sounds like something one of Harvey Spectre’s clients might say. But if your employment relationship is not in Hollywood, but South Africa, what would the legal position be in respect of resignation to avoid dismissal? May an employee resign in the face of disciplinary action to avoid dismissal? The truth will raise even a seasoned scriptwriter’s well-sculpted eyebrow," said Botes.

"Notice periods are inherent in every employment contract. The Basic Conditions of Employment Act (BCEA) prescribes a minimum notice period. Thus, even where there is no written employment contract between parties, the employee may terminate the employment contract by providing the notice prescribed in the BCEA. If the parties agreed to a longer notice period in a written employment contract, the employee has to serve the longer notice period. Of course, where the employee agrees to work for a fixed period, the contract will typically provide that the employee may not give notice (resign) prior to the expiry of the fixed term.

"This becomes very relevant when the employer initiates disciplinary action against the employee and the employee seeks to avoid having his or her employment terminated by means of dismissal. In a country with a 27% official unemployment rate, finding a job is difficult: finding a job with the tag of having been dismissed from your previous employment is nigh impossible. An employee facing a hearing could thus resign with the hope of avoiding the disciplinary enquiry," Botes continued.

"Employers feeling strongly that the reason for termination should reflect 'dismissal' rather than 'resignation' would typically continue with the disciplinary hearing during the notice period, even where the employee plays truant or refuses to participate. Thus, provided the employer could wrap up the hearing before the end of the notice period, it could dismiss the employee even where the employee had resigned.

"But what happens when the employee does not serve out the notice period?" Botes asked. "The employment contract provides that the employee must give the contractual notice to resign. If the employee fails to serve notice, the employee would be in breach of the employment contract. As many often forget, the employment contract – though clothed with notions of equity and fairness and infused with the common law and supplemented with statutory rights – is still a contract. If one party to the contract breaches it, the other may exercise its right on how to deal with such a repudiation. It can either accept the breach and sue for damages or approach a court for an order of specific performance (asking the court to order the other party to do what it agreed to do in the contract). However, considering that specific performance would mean that a court forces an employee to continue working for an employer, our courts are reluctant to order specific performance against an employee where the employee breached the contract.

"Forcing employees to work against their will sounds a lot like slave labour, even when they get paid for their labour. In select circumstances, our courts have been willing to order employees to return to work and serve out their notice periods or the remainder of their employment contracts. For example, in cases where an airline could not readily replace a pilot who otherwise would have to serve a three-month notice period, or where a football coach did not want to stay bound to a fixed-term contract in order to take up a position with another club. In both instances, the court agreed that it could make an exception to the general apprehension to force an employee to continue an employment relationship," Botes explained.

The erstwhile employee

"But, in Mtati v KPMG Services (Pty) Ltd (2017), the court went one step further. It held that the employee terminated the employment relationship when she resigned, notwithstanding the fact that she did not serve the requisite notice period. The court concluded that once the employee resigns, even without notice, her status changes from being an employee to an erstwhile employee. In this case, the court interdicted the employer from proceeding with the hearing and dismissing the employee. An employee could thus assail an adverse finding in a hearing and exit an employment relationship as having resigned rather than being dismissed.

"It remains conceivable that an employer may approach the court, on an urgent basis, to interdict an employee’s resignation and obtain an order holding the employee to the contractual notice period. It is difficult to conceive those facts that will cause a court to agree that the employer will suffer irreparable harm, warranting the court interdicting the resignation to allow the disciplinary hearing to be concluded. The upshot of the law as it stands is that we are likely to see more employees opting to resign rather than stay and face the music when confronted with allegations of misconduct," Botes concluded.

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WHAT FOREIGN LENDERS SHOULD KNOW ABOUT SOUTH AFRICA LOAN AND CREDIT REQUIREMENTS

South Africa has extensive exchange control rules that govern the inflow and outflow of capital, as well as some stringent legal requirements pertaining to credit and financial assistance, which are pivotal to the success of lending transactions involving a non-South African lender and a South African corporate borrower.

When a foreign lender advances a loan to a South African borrower (or its group members), the country’s exchange control regulations, the National Credit Act and the financial assistance section of the Companies Act are of key relevance.

Exchange control regulations

The exchange control regulations apply to any cross-border lending transaction pertaining to a South African borrower, as well as to the taking of security for such a transaction. No South African borrower is permitted to borrow any foreign currency from any person who is not an authorised dealer, unless that borrower has prior approval from the Financial Surveillance Department (FSD) of the South African Reserve Bank.

The onus of obtaining exchange control approval rests on the South African borrower, not the foreign lender. Even so, it is prudent for a foreign lender to confirm that the borrower has properly and timeously obtained the requisite approval.

We recommend including appropriate representations and warranties in the transaction documentation. Generally, once the FSD has approved a loan, the interest payable and loan repayments are freely transferable from South Africa. Where a loan was made without exchange control approval, the foreign lender’s claim against the South African borrower could be at risk; the FSD has the authority to prevent repayment or enforcement and could declare the loan invalid. The most recent case law on this issue confirms that although a lack of exchange control approval does not render an agreement void, it could be declared invalid for contravening the regulations. While the FSD may retrospectively grant exchange control approval, it can also impose certain penalties on the South African borrower.

National Credit Act

The National Credit Act (NCA) regulates the provision of credit in South Africa and applies to all credit agreements made in or having an effect within the country.

In other words, the NCA applies even if the credit provider has its principal place of business outside South Africa. This means the provisions of the Act have general application to foreign lenders extending loans to South African borrowers. Lenders whose credit agreements fall under the NCA must register as credit providers with the National Credit Regulator (NCR).

The NCR takes various factors into account in determining whether a credit or loan agreement has an effect within South Africa. These include whether or not the proceeds of a loan from an offshore credit provider to an offshore credit receiver will be remitted to South Africa; whether or not the credit facility will be utilised in South Africa, and whether or not any security for the loan or credit is situated or located in South Africa.

There are certain exemptions to the application of the NCA. Unless exempted, a foreign credit provider must have NCR approval as a credit provider to lawfully extend loans or credit (or to market these) in South Africa. When a lender should be, but is not, registered with the NCR, it will not be able to enforce a credit agreement against a South African borrower, as the credit agreement will be void in terms of the NCA. The registration requirements with the NCR are triggered where credit is made available to a corporate borrower in South Africa with a net asset value or annual turnover of less than R1m.

Companies Act

Section 45 of the Companies Act provides that a company may not provide direct or indirect financial assistance to a related or inter-related company or corporation unless certain conditions are met. One is that the financial assistance must be made pursuant to an employee share scheme or a special shareholders’ resolution adopted within the previous two years.

The other is that the board of the company providing the financial assistance (typically in the form of security in favour of the lender) should be satisfied on two counts.

  • Immediately after providing the financial assistance, the company would satisfy the solvency and liquidity test stipulated by the Companies Act.
  • The terms proposed or the financial assistance should be fair and reasonable to the company. Any financial assistance provided in contravention of section 45 is void and can attract personal liability for a director votes for or fails to vote against a financial assistance resolution knowing that this is inconsistent with section 45. Financial assistance includes lending money and guaranteeing a loan or other obligation, as well as the security of any debt or obligation.

Under certain circumstances, a South African company providing security may on a practical level not be able to pass the solvency and liquidity test required by section 45.

Specifically, this could happen when the financial assistance sought from the South African security provider is intended to support the entire indebtedness arising under a (multi-jurisdictional) loan, but the balance sheet of the South African security provider is less than the aggregate indebtedness. For the success of the funding transaction, it is vital that the auditors of the company providing the financial assistance adequately advise its directors, who must satisfy themselves that the financial assistance sought is adequate to cover the indebtedness arising under the loan.

Notably, the Companies Act provides no guidance on what constitutes fair and reasonable terms to the company granting the financial assistance. Similarly, South African case law is silent on the matter given that the Act is still relatively new. It seems, though, that in determining whether the terms are fair and reasonable, the financial wellbeing of the South African company providing the financial assistance should be the most important factor for the directors.

Conversely, they should not place paramount importance on the financial health of the group to which the company belongs, to the detriment of the company. Also, not to be overlooked is whether the company satisfies the solvency and liquidity test immediately after providing the financial assistance to the board’s satisfaction. This introduces subjectivity in the directors’ analysis and should be carefully considered by the board.

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DO YOU KNOW WHAT YOUR RENTAL RIGHTS ARE DURING THE WATER CRISIS?

With Day Zero in Cape Town projected for 9 July, a number of questions have been raised about how the water crisis affects the rights of tenants and landlords. Both parties have contractual obligations to fulfil as part of their lease agreements, but what happens when these become impossible because of circumstances outside of our control?

According to Cilna Steyn, director of SSLR Attorneys and advisor to the Rawson Property Group, a drought of this severity is classified as an Act of God under South African Common Law. As such, both parties are indemnified against claims made by one another for damages suffered as a direct result of the crisis.

“To put it simply, nobody can be held responsible for not fulfilling an obligation if the drought has made that impossible to do,” says Jacqui Savage, national rentals business development manager for the Rawson Property Group.

Reasonable penalties still apply

For tenants, that means the lack of water supply can’t be used as a convenient excuse to cancel a lease, penalty-free.

“Any lease that falls under the CPA can be cancelled by the tenant with twenty business days’ notice, subject to reasonable penalties,” says Savage.

As stated above, a tenant may not hold a landlord in breach of the lease agreement due to non supply of water. It’s an Act of God – the landlord can’t be held responsible – so early cancellation penalties will still apply. Likewise, landlords can’t blame tenants for failing to maintain items that require access to water.

“Things like gardens and pools are typically the tenant’s responsibility to maintain,” says Savage, “and under normal circumstances, tenants have to foot the bill for any repairs arising from their neglect. Of course, water restrictions now make watering gardens and backwashing pools impossible, which means landlords can’t hold tenants responsible for damages that occur as a result.”

Protecting property investment

That doesn’t mean landlords are powerless to protect their investments, however, or that tenants can completely ignore their maintenance responsibilities and claim “Act of God”.

“There’s a lot you can do to prevent drought damage that doesn’t require doing the impossible,” says Savage. “Tenants are still expected to take reasonable measures to prevent unnecessary damage, including complying with restrictions and collecting greywater for strategic use. When it comes to bigger issues like dealing with stagnant pool water and protecting dry pool pumps, there’s a dual responsibility for landlords and tenants to find workable solutions, together.”

Drought damage isn’t the only issue tenants and landlords face, however – there are cost implications that need to be considered as well.

“In many cases, water and utilities are included in monthly rental,” says Savage. “With water tariffs rising so steeply, landlords can’t be expected to just absorb this cost. Depending on the wording of the lease, most agreements make provision for municipal tariff increases to be passed on to the tenant as long as the landlord can provide proof of the higher charges.”

Avoiding costly legal intervention

This knife cuts both ways, though: should Day Zero arrive and water supply gets entirely cut off, Savage says landlords can’t continue to charge tenants for services they no longer receive. Tenants would be within their rights to negotiate a reduced rental amount to account for the reduced utilities charges that their landlord would be paying on their behalf.

“The key is really just for everyone to be as fair and as understanding as possible,” says Savage. “The law is there to protect us, but if we act with empathy and work together to the best of our abilities, we can get through this crisis without needing to resort to costly legal intervention.”

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CAN A LESSEE WITHHOLD RENTAL IF DENIED FULL OCCUPATION OF LEASED PREMISES?

The Supreme Court of Appeal dealt with the question of whether or not a lessee can withhold rental if it is not given full occupation of the leased premises in the recent case of Tudor Hotel Brasserie & Bar v Hencetrade 15. The lessee, Tudor Hotel Brasserie & Bar was evicted from the leased premises by the lessor, Hencetrade 15, as a result of Tudor's failure to make payment of rental.

Tudor admitted failing to pay rental but claimed that it had not been given vacant possession of the entire premises as the third floor had been retained by Hencetrade for the storage of property and that this entitled it to withhold rental. In its argument, Tudor relied on the legal principal of reciprocity.

This principle operates where both parties to an agreement have an obligation to each other. In certain circumstances, if one party has not yet performed its obligations, the other may raise as a defence that its obligation to perform has not yet arisen because of the other party’s lack of performance and Tudor argued that Hencetrade was not entitled to cancel the lease and evict Tudor as it was not required to make payment of rental until vacant possession had been provided to it.

But the lease agreement also included a clause recording that “all payments in terms of this lease ... shall be made on or before the first day of each month without demand, free of exchange, bank charges and without any deductions or set off whatsoever”.

The Court held that this clause of the lease imposed an obligation on Tudor to make payment of rent in advance which meant that its payment of rent was not contingent upon prior performance by Hencetrade. Tudor was therefore not entitled to withhold rental and its eviction was justified.

The agreement also included a clause recording that “the tenant shall not have any claim of any nature whatsoever against the landlord whether for damages, remission of rent or otherwise, for the failure of or interruption in the amenities and services provided by the landlord ... unless such failure or interruption is caused by the negligent or wrongful act or omission by the landlord ...”.

Ordinarily, if a lessee were deprived of beneficial occupation, it would be entitled to a remission of rental or damages proportional to its reduced use and enjoyment of the property, but because of the above clause, Tudor was not entitled to such claim.

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CALL FOR COMMENTS ON DRAFT ROAD TRAFFIC REGULATIONS

The Gauteng Provincial Government has published the Draft Fifteenth Amendment of the Gauteng Road Traffic Regulations for public comment.

The regulations were published in the Gauteng Provincial Gazette on 1 February 2018. Interested parties are now invited to make comments on the regulations on or before 8 March 2018.

Treasury Regulation section 7.1.3, states the Accounting Officer of an institution must review annually all fees, charges or the rates, scales or tariffs of fees when finalising the budget.

In support of this, Section 25(1) (g) and (h) of the Gauteng Road Traffic Act, 1997 (Act 10 of 1997) provides for the MEC to make regulations with regard to adjustments of fees pertaining to certain road traffic management transactions. In line with this section, the MEC has effected amendments to the Gauteng Road Traffic Regulation every financial year.

A recommendation of fee increase of 7.7% (CPI + 2%) is made for implementation by the Provincial Treasury for financial year 2018/19.

Comments can be sent to:
Office of the Director:
Policy, Legislation, Research and Knowledge Management Life Centre Building - 25th Floor, 45 Commissioner Street Johannesburg
Tel no: (011) 355 7140
Mobile: (082) 788 8889
Email address: gdrtpubliccomments@gauteng.gov.za

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ONLINE SYSTEM FOR NATIONAL MINIMUM WAGE EXEMPTIONS

The Department of Labour is developing an online system to help analyse data submitted by employers when applying for national minimum wage exemptions.

Exemptions cover employers who can demonstrate that they are not able to pay the national minimum wage.

This is according to the Department of Labour’s Director of Collective Bargaining, Thembinkosi Mkalipi.

He said while exemptions were not new, as the department was currently dealing with them on sectoral determinations, he cautioned employers that there were serious consequences in the case of misrepresentation of facts.

Mkalipi was addressing a briefing session at the Premier Hotel Regent in East London on Thursday to inform trade unions/shop stewards on the implementation of the national minimum wage and amendments to the Basic Conditions of Employment Act (BCEA), the Labour Relations Act (LRA), the coming into effect of the Accord on Collective Bargaining and Industrial Action and the Code of Good Practice on Collective Bargaining, Industrial Action and Picketing.

He explained that the minimum wage, once it comes into force, will affect all workers who work in South Africa.

The national minimum wage is set for implementation from 1 May 2018.

The agreed national minimum wage at Nedlac is pegged at R20 an hour for major sectors, with the exception of sectors such as farm workers, domestic workers and Expanded Public Works Programme workers.

According to the National Minimum Wage Bill, employers may not pay wages that are below the minimum wage and the national minimum wage cannot be varied by contract, collective agreement or law.

The Bill further states that national minimum wage constitutes a term of the worker’s contract except to the extent that the contract provides for a more favourable wage.

The Bill further states that it is unfair labour practice for an employer to unilaterally alter hours of work or other conditions of employment in implementing the national minimum wage.

Mkalipi said the national minimum wage was an outcome of a compromise.

“There are things in this Bill that business does not like, and there are things in this Bill that labour does not like.

“This Bill is an outcome of a compromise. It is an agreement of win-win and lose-lose for all parties. At Nedlac we managed to strike a balance in that while we do not destroy jobs we also save jobs,” he said.

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LAND - NOT SIMPLY FOR THE TAKING

Deputy minister Mcebisi Skwatsha reportedly said, during a meeting of the Portfolio Committee on Rural Development and Land Reform, the ANC would hold a conference in March to discuss expropriation without compensation, and that the decision would then be implemented by all relevant state departments. He was cited as saying the ANC would determine whose land to take and how it would be done.

However, Ernest Pringle, chair of Agri SA’s land centre of excellence, said land would not be simply for the taking. This was also not a decision the ANC can take unilaterally and simply start implementing.

Constitution must be amended

No expropriation without compensation can take place unless the Constitution is amended, said Pringle. This will be a time-consuming process during which wide consultation must take place, and which would require the necessary majority votes in Parliament in favour thereof.

Private property rights are an internationally recognised principle that is protected by international human rights instruments, such as article 17 of the United Nations’ Universal Declaration of Human Rights. Moreover, the threats of expropriation without compensation is contrary to the policies adopted by vital international agencies such as the World Bank and the IMF. The economic impact of ‘taking’ land will be catastrophic, as already pointed out by various economists.

The poor will be worst affected

The poor will be affected worst by the outcome of such an irresponsible step, added Pringle. “This type of statement issued by politicians plays into the hands of opportunists who want to use it as an excuse to invade land. It is extremely dangerous.”

Pringle also pointed out that enormous expectations were created around the issue of land reform without compensation, which could also boomerang politically. “Has anyone thought what would happen after land has been taken? To whom will it be given, who will be denied access, and where will the capacity suddenly come from to assist those who receive land to use it productively?”

Agri SA called on Ramaphosa to take the organisation and the public into his confidence as soon as possible regarding what exactly is being envisaged. Agri SA has not received an invitation to attend the conference in March, although it is a critical role-player in the matter and would like to debate with the ANC leadership in this regard,” said Pringle.

Agri SA

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HOW WILL YOUR RIGHT TO PRIVACY CHANGE UNDER POPIA?

The Protection of Personal Information Act (POPIA) is set to kick in in the first half of 2018, according to the Information Regulator. Businesses have been scrambling to get their information governance practices in line with POPIA's requirements. But what difference will it make to the lives of consumers?

    According to the preamble of POPIA, it intends to:
  • promote the protection of personal information processed by public and private bodies.
  • provide for codes of conduct.
  • introduce certain conditions that will establish minimum requirements for the processing of personal information.
  • provide for the rights of persons regarding unsolicited electronic communications and automated decision making, amongst others.

Your personal information is valuable and needs to be managed carefully. Know your rights, and protect your privacy.

    Let’s look at some of the new consumer rights created by POPIA:
  1. The right to know what information is collected.

    If a company asks you for your information, for example when you complete an application form for a store account, they must tell you what information about you they are collecting. If they are getting information from other sources, for instance if they do a credit check with a credit bureau, they must tell you from where they get the information. They must also indicate what information is voluntary and what is mandatory, and explain the consequences if you don’t provide the information.
  2. The right to know who your information will be shared with.

    Companies that have your information must notify you about what they do with it. For instance, they must indicate who they share it with and if they will be sending it overseas.
  3. The right to access to your information.

    You have the right to request access to the personal information in the possession of a company. You may ask them to confirm whether they have your information, a description of what information they have and the identity of any third parties who have had access to that information.
  4. The right to request correction or deletion of information.

    You may ask a company to correct or delete inaccurate, irrelevant, excessive, out of date or incomplete information. In some circumstances, the company can refuse such a request, but these are limited and must be explained.
  5. The right to refuse direct marketing.

    A company must ask you for your consent before they can send you direct marketing communications if you are a potential or ‘new’ customer. They must ask you to confirm how you want to receive the communication, for example via email or SMS, and for which goods or services. They may only contact you once to get your consent. If you say no, they may not contact you again about that same topic. If you are an ‘existing customer’, for instance if you have previously bought goods or services from the company, they may market similar goods or services to you until you opt-out.
Keep informed about privacy

28 January is Data Privacy Day, created to raise awareness and promote privacy and data protection. To read more about how you can protect your data and your rights in terms of POPIA check out this site series on data and privacy.

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HOW TO FILL SA'S IMMEDIATE SKILLS GAP

A new report compiled by expatriate solutions provider Xpatweb, titled Critical Skills Survey Results 2017, confirms that local companies are hard pressed to find the right expertise to achieve their corporate goals. It is therefore to every business and professional body's benefit to engage with government to make work visa applications as easy as possible.

Simply stated, South Africa needs access to better skills to prosper and compete in the global market.

However, this is not a new revelation. The country’s skills gap - the difference between the professional talents needed by employers and those available among the working public - has been widely discussed and reported on in the media for over a decade. Rather, the study serves as the springboard for a viable solution. The results were obtained from 86 respondents, many of whom represent South Africa’s largest employers and international groups.

Recognising the problem

76.74% of those surveyed agreed that there is, in fact, a skills shortage in South Africa. The Critical Skills List published by the Department of Home Affairs contains a catalogue of the country’s most needed competencies. These include the broad categories of business, economics and management; information communication and technology; engineering; health professions and related clinical science; life and earth sciences; professionals and associate professionals; trades; business process outsourcing; and academics and researchers. As can be seen, the demand ranges over a wide set of sectors.

Solving the skills problem will take hard work and starts with an honest appraisal of the constraints. The sooner we do this, the faster we can address it. The first admission we must make is that the gap exists now and a primary, immediate solution is required. Yes, formal learning and development programmes will produce a future, technically-competent national workforce - not just adequate but world-beating. Until that day dawns, we need a stopgap.

Learning takes too long

According to one study (Young, 2010), South Africa’s universities and HEI’s are not able to produce these critical skills fast enough. For example, Young estimated that creating 34,000 additional engineers, technologists, draughtspersons and technicians needed over a 2-year period would take roughly 100 years in terms of current educational capacity. Likewise, learning and development programmes cannot scale to meet the immediate needs of the economy. Neither can businesses afford to wait, so an alternative solution is inevitably required.

75.29% of respondents in the Critical Skills Survey Results 2017 reported that they are better able to find scarce skills when they expand their search to include foreign nationals. This is a perfectly sensible solution - the right skills at the right level of expertise, available immediately to fill a skills gap that cannot otherwise be closed. This is supported by the fact that most of those interviewed asserted that the local market has been fully scouted for critical skills and found lacking.

Unfortunately, expatriates are seen by government and occupational stakeholders as a threat to the local workforce, taking jobs from South Africans. However, since the skillsets offered by foreign workers are evidently unavailable here, this couldn’t be further from the truth. Even so, employers will need to evangelise several fundamental changes in thinking to promote their case.

First, expats are a resource, not a threat. Importing critical skills into the country is no different from importing any other essential factor of production.

Second, not only do they offer the competencies companies desire but also the opportunity to transfer their expertise to many local workers. As such, expatriates do not diminish employment opportunities for South Africans; instead, they create jobs by their very presence.

Third, the use of expats is temporary. They are simply a bridge between today’s urgent business needs and tomorrow’s acquired competencies. Rather than replace South African talent, they will hold the fort until the reinforcements arrive.

Making it happen

89.53% of those surveyed find the work visa process an obstacle to filling critical skills positions. The procedure is laborious and time consuming. However, not acquiring these vital talents will prove most costly in lost business opportunities and low competitive advantage.

The South African workforce of tomorrow will energise the economy. In the meantime, the country needs a concrete way to source the critical skills to compete globally. As our survey reveals, businesses believe that the acquisition of foreign skills is the only sensible response.

http://www.bizcommunity.com/Article/196/536/172421.html

THE TAXING PROBLEM OF E-COMMERCE

The digital commerce environment is developing and evolving at such a rate that global tax systems are struggling to keep up. VAT and its application to e-commerce, for example, has given rise to a variety of compliance challenges for governments because digital commerce transcends traditional jurisdictional boundaries.

Staying relevant

In South Africa, taxing electronic services was implemented on 1 June 2014, ahead of many other countries. The rules impose a liability on the supply of electronic services by any supplier from a place in an export country (any country other than South Africa) where at least two of the following factors are present:

  • the recipient is a South African resident;
  • payment for such electronic services originates from a registered bank; and/or
  • the recipient of the supply has a business, residential or postal address in South Africa.

Certain qualifying electronic services were prescribed by the minister of finance, by regulation, in the Government Gazette on 28 March 2014. Simply stated, the VAT rules compel foreign merchants to register as South African VAT vendors and to account for VAT, among other things, where the foreign merchant provides electronic services to South African consumers or receives payment for such electronic services from a South African bank and the revenue exceeds R50,000 a year.

This compulsory registration is significantly less than the registration threshold of R1m that applies in relation to all other types of supplies. A foreign merchant who supplies electronic services and who has registered as a vendor in South Africa is required to account for VAT at the standard VAT rate of 14% on all the defined electronic services provided by the foreign merchant to South African customers. The rules in relation to taxation of electronic services were initially well-received by business and it thus important to ensure that the VAT rules regarding e-commerce remain relevant and true to South Africa's VAT principles.

Davis Tax Committee recommendations

As part of its comprehensive review of the South African tax system, the Davis Tax Committee (DTC) made certain recommendations in relation to VAT and e-commerce transactions in its Interim Report on VAT, released on 7 July 2015 (DTC VAT Report). These include, among other things, the following:

  • that supplies between group companies be excluded from the ambit of the VAT rules;
  • that the invoice basis of accounting for VAT be the default position; and
  • that no distinction be made between supplies made between businesses, so-called business-to-business (B2B) and business-to-consumer (B2C) supplies and no concessions be granted by manipulating the list of qualifying electronic services. In considering the VAT e-commerce regulations in a broad manner, the DTC recommends that more flexible legislation is required to ensure South African VAT e-commerce legislation stays relevant.

Keeping legislation current

The escalating problems of deteriorating tax revenue collection and further downward revisions to economic growth projections have significantly eroded government's fiscal position. Tax revenue, as described in the Medium Term Budget Policy Statement, is projected to fall short of the 2017 Budget estimate by R50.8bn, the largest under-collection since the 2009 recession.

Fortunately, South Africa has a relatively low VAT policy gap owing to the relatively straightforward and simple VAT policy structure in place. To ensure that this position is maintained, it is imperative that South Africa's e-commerce legislation keep pace with recent developments and takes heed of the recommendations in the DTC VAT Report.

The proposal contained in the 2015 budget that software be included in the list of electronic services in the regulations would also assist with broadening, strengthening and consolidating the VAT e-commerce base and will ensure that South Africa's e-commerce legislation remains current thereby enabling the fiscus to realise the maximum potential tax revenue possible from e-commerce transactions ending in South Africa.

Source: Webber Wentzel
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ECB GOVENOR CALLS FOR TAX, REGULATIONS ON BITCOIN

BERLIN - A top European Central Bank official called for governments to regulate and tax bitcoin, labelling the cryptocurrency an object of speculation and a tool for money laundering.

"One ought to apply what the basic rule is in any other financial transaction: everyone involved should reveal their identity," ECB governing council member Ewald Nowotny told the German daily Sueddeutsche Zeitung.

"We need a value-added tax on bitcoin, since it's not a currency," said Nowotny, who is head of Austria's central bank.

Nowotny's comments echo those by other ECB officials, who regard the bitcoin's spectacular surge in value as a bubble, rather than a sign it could be a digital competitor to the euro single currency used by its 19 member nations.

Nevertheless, the "digital gold" is a concern for central bankers as it can allow money launderers to dodge around increasingly strict rules in the traditional financial system.

"It can't be allowed that we've just decided to stop printing 500-euro notes to fight money laundering, that we've slapped strict rules on every tiny savings club, and then have to watch people blithely laundering money around the globe with bitcoin," Nowotny said.

Bitcoin, launched in 2009, is a virtual currency created from computer code. It and other virtual currencies use blockchain, which records transactions that are updated in real time on an online ledger and maintained by a network of computers.

Bitcoin is perhaps the best known and most popular virtual currency and its value surged as high as $19,500 in December from around $1,000 in January, but has slipped back after a series of warnings from governments and analysts about the risk and volatility associated with cryptocurrencies.

While blasting the cryptocurrency's bubble-like characteristics, Nowotny acknowledged the topic had "reached the heart of society," with people now asking him on the Vienna metro whether they should buy bitcoin, rather than gold as in the past.

But "the central bank would only have to intervene if (bitcoin) were to change people's behaviour. There are no signs of that yet," he said, noting that wild gyrations in bitcoin's value and slow transaction speeds made it hard to use for everyday payments.

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GOOD NEWS FOR JOB SEEKING GRADUATES

Cabinet has approved the Public Service Graduate Recruitment Scheme Framework.

The framework forms part of the development programme within the public service to attract talented graduates.

“The framework includes earmarking a percentage of each department’s vacant posts for the recruitment of graduates in scarce occupations,” Communications Minister Mmamoloko Kubayi-Ngubane said at a post Cabinet media briefing on Thursday, 7 December 2017.

The Minister of Public Service and Administration is expected to align this framework to the Youth Employment Service Programme, which aims to empower one million unemployed youth over the next three years by offering them quality work experience.

Bills approved for submission to Parliament

Cabinet has approved four bills for submission to Parliament.

The Social Assistance Amendment Bill of 2017, Property Practitioners Bill of 2017, National Qualifications Framework Amendment Bill of 2016 and International Crimes Bill of 2017, are among the bills approved for submission.

The Social Assistance Amendment Bill provides improved benefits with respect to child support grants for orphaned and vulnerable children, including those residing in child-headed households.

The Property Practitioners Bill repeals the current Estate Agency Affairs Act, 1976 (Act 112 of 1976). It creates an enabling regulatory environment to enhance economic activity within the real estate industry while also addressing a need to ensure transformation in the sector.

The National Qualifications Framework Amendment Bill strengthens the current National Qualifications Framework Act, 2008 (Act 67 of 2008). It introduces measures to deal with issues of misrepresentation and imposes consequences on persons, who misrepresent their qualifications or organisations that issue qualifications that are invalid.

The International Crimes Bill provides an improved legislative framework to deal with international crimes committed in South Africa and across borders. It also provides improved protection and justice for victims of international crimes.

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WHY MUST I PAY LEVIES TO CSOS?

Most people know of the Community Schemes Ombud Service (CSOS) and that levies must to paid to fund its operations. In this article I will address some of the issues that are causing confusion.

From when are CSOS levies payable? The CSOS Act and Regulations came into effect on 7 October 2016, and in terms of section 29(1)(b) of that Act, all community schemes must pay levies to the CSOS. The Regulations that detailed the levies came into effect 90 days after the Act, so the CSOS levies are payable from 7 January 2017.

Who is liable to pay the CSOS levies? The CSOS levies are not debts owed by individual owners to the CSOS. Even though the amounts of the levies, and waivers of, are calculated by reference to the contributions payable by individual owners, the total amount due by all owners in a community scheme is a debt payable by the scheme to the CSOS. Section 59(a) of the CSOS Act provides that every community scheme must pay the prescribed CSOS levies.

When are CSOS levies payable? In terms of General CSOS Regulation 11(1) every community scheme must pay CSOS levies on a quarterly basis.

Can schemes insist that CSOS provide an invoice before they pay levies? There is no provision in the CSOS Act or Regulations that requires the CSOS to issue schemes with invoices for levies. Schemes are legally obliged to remit levies to CSOS as soon as CSOS is in a position to accept payment. At this time CSOS does not have details of all community schemes. While its staff are trying to get as many community schemes as possible recorded on its database, this is an ongoing process.

What will happen if a scheme collects the levies but withholds payment to CSOS? In terms of General CSOS Regulation13 any community scheme which fails to pay a CSOS levy on due date is liable to pay interest at a rate prescribed by the National Credit Act, 2005. This is likely to be a rate of 22% per annum on the basis that the debt arises from an incidental credit agreement.

    Community scheme executives should:

  • Work out the amount of the CSOS levies owed by their scheme (get help from your managing agent, if necessary);
  • Take whatever administrative action is necessary in your scheme to raise the levies so that the owners become legally liable to the scheme for their share of the CSOS levy, e.g. in a sectional title scheme, take a trustee resolution levying special contributions and send notices to all owners requiring payment (get help from your scheme’s managing agent or lawyer if necessary, particularly if you are in a scheme that is part of a bigger development);
  • Take active steps to collect the amounts (if owners leave the scheme without paying, the scheme will have to collect their share from the remaining owners);
  • Make sure your scheme is registered with the CSOS as soon as possible (details of the various CSOS offices are available at http://www.csos.org.za);
  • Even if you have no confirmation of your registration, write to the CSOS offering to make payment (if you want any chance of avoiding the high rate of interest the CSOS Act requires on overdue levy payments, you need to be able to show that the scheme had the money and tried to pay the CSOS to make it clear that the delay in payment is not the scheme’s fault);
  • Invest the CSOS levies at the best short-term interest rate you can get in the meantime, pending payment to the CSOS, so as to mitigate the scheme’s losses if it is obliged to pay interest at 22% p.a.

http://www.bizcommunity.com/Article/196/637/170842.html

AUDITOR-GENERAL FINDS SARS BONUSES ILLEGAL

The South African Revenue Service (Sars) has failed to comply with legislation by unlawfully paying bonuses to staff without the approval of Finance Minister Malusi Gigaba, the auditor-general has found.

The conclusion is contained in the long-delayed Sars annual report, which will be tabled in Parliament on Thursday.

A dispute over the bonus payments held up the tabling of the report.

In the 2016-17 financial year Sars paid R561m in performance bonuses relating to the 2015-16 financial year, of which R3m was paid to members of the executive committee.

DA deputy finance spokesman Alf Lees said that these bonuses were "unreasonable" and he would be asking questions about them.

The auditor-general's finding did not affect the overall audit opinion on Sars, which was not qualified. The auditor-general said the noncompliance represented a significant internal control deficiency that resulted in material noncompliance.

"In line with section 18(3) of the Sars Amendment Act of 2002, [the] management [has] in the prior years obtained the approval for the bonus payment from the minister of finance," the report read. "Performance bonuses relating to the 2015-16 financial year were paid in the 2016-17 financial year and Sars could not provide evidence that an approval was obtained, as specified in the bonus approval framework, from the minister prior to payment being effected to employees who fall within the management structure."

Sars said that to put the legal opinions beyond interpretative doubt, it was seeking a declaratory order from the High Court in Pretoria on the powers of the commissioner to pay performance bonuses.

Meanwhile, Sars said on Wednesday it had received legal advice not to release the reports on the investigation into suspicious and unusual transactions into the account of its secondin-charge, Jonas Makwakwa. The Makwakwa saga has been dragging on for more than a year after it emerged that the Financial Intelligence Centre had flagged R1.2m in suspicious and unusual transactions into Makwakwa's account and that of his girlfriend, Kelly-Anne Elskie.

Sars appointed law firm Hogan Lovells to investigate the matter and earlier in November announced that Makwakwa, who had been on suspension for over a year, had been cleared of all charges and would return to work. Sars had said Hogan Lovells had recommended that disciplinary action be taken against Makwakwa, which had been done. The committee had cleared him of all charges.

Hogan Lovells said it "did not directly" investigate the dodgy transactions because Sars had given it a limited mandate.

Source: Business Day
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CAN CONTRACT TERMS STILL BE UPHELD DESPITE INVALID AGREEMENT?

The Constitutional Court this week handed down judgment in a matter that will be of interest to parties who contract with state-owned companies. On 27 September 2006, the State Information Technology Agency SOC Ltd ("SITA") entered into an agreement with Gijima Holdings (Pty) Ltd ("Gijima") in terms of which Gijima would provide information technology services ("IT services") to the South African Police Services ("SAPS agreement”).

Pursuant to a dispute between the parties in relation to the SAPS agreement, the parties entered into a settlement agreement on 6 February 2012 in terms of which Gijima would render IT services to the Department of Defence (DoD agreement).

Gijima raised its concerns about the validity of the DoD agreement with SITA, but on more than one occasion SITA assured Gijima that the DoD agreement complied with its procurement processes. Gijima accordingly rendered IT services to the Department of Defence in terms of the DoD Agreement.

The DoD agreement was extended several times, but a payment dispute ultimately arose between the parties. This dispute went to arbitration. During the course of the arbitration, SITA pleaded that the DoD agreement was concluded in contravention of Section 217 of the Constitution of the Republic of South Africa. The arbitrator ruled that he did not have jurisdiction to determine this constitutional issue.

A subsequent application to the Pretoria High Court was brought by SITA to, inter alia, declare the DoD agreement constitutionally invalid.

In response, Gijima argued that the decision to award the DoD agreement to it constituted administrative action in terms of the Promotion of Administrative Justice Act, 3 of 2000 ("PAJA") and should SITA have wished to review its own decision in awarding the DoD agreement, it should have done so in strict compliance with PAJA, including Section 7, which affords a party 180 days in which to launch review proceedings.

It was SITA's contention that PAJA did not apply to organs of state wishing to review their own internal decisions.

The High Court dismissed SITA's application agreeing with Gijima.

On appeal to the Supreme Court of Appeal, Gijima's claim was again dismissed on the basis that PAJA applied and SITA had not shown any good cause for launching its application outside of the time period prescribed in section 7 of PAJA with no explanation as to the cause and extent of the delay (some 22 months).

On appeal to the Constitutional Court, it was held that:

  • PAJA does not apply to an organ of state seeking to review its own decision. An organ of state must instead do so under the principle of legality as:
    • an organ of state seeking to review its own decision cannot be a beneficiary of the rights afforded under Section 33 of the Constitution (being the right to administrative action that is lawful, reasonable and procedurally fair) as Section 33 of the Constitution creates the right to just administrative action to be enjoyed by private persons only, and that the State is the bearer of obligations under that section.
  • the DoD agreement is constitutionally invalid as it did not comply with section 217 of the Constitution;
  • SITA's delay of nearly 22 months before approaching the High Court to review the decision to award Gijima with the DoD agreement was inordinate and as a result there was no basis for the Constitutional Court to exercise a discretion to overlook the delay;
  • despite the finding that the DoD agreement was constitutionally invalid, it was in the interests of justice and equity for SITA to not benefit from having given Gijima false assurances regarding the validity of the DoD agreement and from its own undue delay in instituting proceedings. The declaration of constitutional invalidity of the DoD agreement did not have the effect of divesting Gijima of any rights to which, but for the declaration of invalidity, it would have been entitled.

Ultimately, it was the consideration of justice and equity that resulted in the Constitutional Court finding that despite the DoD agreement being constitutionally invalid, Gijima ought not to be divested of its accrued rights under the DoD agreement.

Baker McKenzie Johannesburg acted on behalf of Gijima Holdings.

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'SUSPICIOUS' SARS DEPOSITS NOT PROBED

As South African Revenue Service (SARS) commissioner Tom Moyane braces for an inquiry into the administration of the tax agency, further damaging revelations emerged on the investigation into its second-in-charge, Jonas Makwakwa.

Hogan Lovells has placed on record that it did not directly investigate the R1.3m in suspicious deposits into Makwakwa's account and that of his partner, Kelly-Ann Elskie, who is also a SARS employee.

Despite the company's "limited scope" for the investigation and its failure to directly probe the claims for which Makwakwa was suspended in 2016, he returned to work on 1 November.

SARS said he had been cleared of all charges after facing an internal disciplinary process.

The tax agency is under increasing pressure, with a R50bn deficit in revenue collection, which the Treasury said could be attributed to the "economic cycle", weakening tax morality and also "challenges facing tax administration". Makwakwa is SARS chief director for business and individual taxes, effectively its second in command, and as such should be above reproach.

In a statement on its website Hogan Lovells, which conducted the "independent investigation" announced by Moyane late in 2016, said its scope was "limited" to whether there was misconduct by the pair.

"It [the investigation] did not seek to directly investigate the financial transactions identified by the FIC [Financial Intelligence Centre].

"We understand that all criminal-related allegations arising from the FIC report were referred to the relevant authorities for investigation," said Hogan Lovells in the statement.

This implies that Makwakwa has yet to answer for the suspicious transactions.

It also contradicts information from sources inside SARS that Hogan Lovells had enlisted PwC to assist with the probe into the transactions.

Hogan Lovells also revealed in its statement that it recommended disciplinary action against Makwakwa for "nondisclosure of external interests" and also for "breaching his suspension conditions".

This is understood to be linked to Makwakwa's interference in a taxpayer matter while on suspension.

"A hearing was convened and chaired by an independent senior counsel, advocate Terry Motau SC. The findings ... acquitted Makwakwa of all charges," Hogan Lovells said.

The law firm did not respond to questions on Thursday.

SARS spokesman Sandile Memela said the tax agency did not want to engage on the matter through the media.

"As you are aware, [Parliament's] standing committee on finance has written to SARS with a specific request. SARS will engage [the standing committee on finance] on the matter soon. SARS cannot give comment on this matter but will provide more details when we present to parliamentary structures," Memela said.

Last week the finance committee urged SARS to release the Hogan Lovells report.

"Given the role SARS plays, it not only has to be, but be seen to be, above reproach, and perceptions of irregularities by its senior officials have to be effectively addressed," it said.

Committee chairman Yunus Carrim said on Thursday that if it was true that Hogan Lovells did not investigate the matter for which Makwakwa was suspended, the committee would have to consider this when SARS appeared before it on 28 Novembe.

He said the committee had written to SARS and the finance minister for a copy of the report and awaited their response.

DA MP Alf Lees, who is also on the committee, questioned Hogan Lovells, saying if it did not investigate the suspicious transactions directly, "what exactly did it investigate?". He also expressed concern that SARS and Moyane had not been "forthcoming" to the committee in the past.

Meanwhile, the Presidency said on Thursday that the details of the broader inquiry into SARS would be dealt with by President Jacob Zuma and Finance Minister Malusi Gigaba when the latter returned from an official trip abroad. Gigaba announced the inquiry on Monday, saying Zuma had agreed to it.

Source: Business Day

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LABOUR DEPT GETS TOUGH ON EMPLOYMENT EQUITY COMPLIANCE

In July this year, 72 JSE-listed companies were identified as the subject of employment equity reviews by the Department of Labour Inspection and Enforcement Services (IES). As a result of this process, the IES has announced that 50 JSE-listed companies, including the JSE, have been found to be non-compliant with the Employment Equity Act (EEA). The IES said 41 employers were given 60 days to comply with their recommendations and that nine would be prosecuted for failing to prepare Employment Equity Plans.

The IES noted that areas of non-compliance with the EEA included a lack of properly constituted consultative forums; EE plans that were not properly audited and analysed; assigned senior EE managers who did not have the necessary authority or resources to execute their mandate, and prepared employment equity plans that did not comply with legislation.

Lauren Salt, Senior Associate in the Employment & Compensation Practice at Baker McKenzie in Johannesburg says that where the companies are being prosecuted for their non-compliance, this will relate to past non-compliance which cannot be retrospectively rectified. Where this is the case, there is a high likelihood that a fine, pursuant to the non-compliance, will be issued. These fines can be up to 10% of the companies’ annual turnover depending on the nature and frequency of the contravention.

“To date, there have not been any hefty fines issued for non-compliance with employment equity obligations and so businesses have been fairly lackadaisical in their approach to compliance with the EEA. Putting in place proper employment equity structures and plans is also no simple task and takes time.”

“Clearly, the Department of Labour is seriously clamping down on enforcement and I think in the near future, will see a number of fines imposed on ‘big ticket’ JSE listed companies to ensure compliance going forward,” she adds.

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NEW RULING PREVENTS MUNICIPALITIES RECLAIMING UNDEVELOPED PROPERTY

It has been common practice for municipalities to sell vacant properties for both commercial and residential development, subject to a title deed condition that the property must be improved within a certain period or the properties would revert back to the municipality.

These properties were sold at discounted rates, as part of the municipal development framework for a designated area.

In the past, municipalities achieved this objective by inserting a clause in the Deed of Sale which later manifested as a condition in the Title Deed pertaining to such land, which clause, for example stated that:

"If after the expiration of two (2) years from date of sale the purchaser has failed to complete building to the value of not less than R100 000,00 on the property, ownership of the property shall revert to the seller (Municipality) which shall be entitled to demand re-transfer of the property from the purchaser who shall be obliged to transfer to the seller against payment by the seller to the purchaser of all payments received ... ."

This type of clause is known as a reversionary clause, which compels the purchaser of the property to re-transfer the property if it remains undeveloped upon the expiration of the conditional period contained in the Title Deed. If the property remains undeveloped upon the expiration of the prescribed period, the municipality would merely invoke the reversionary clause and demand the re-transfer of the property, without any recourse on the part of the purchaser and/or any financial institution which may have partially financed the envisaged development.

But due to recent judicial developments, municipalities are warned to err on the side of caution when selling state-owned land, subjected to reversionary rights, as more specifically pronounced by the Supreme Court of Appeal in the case of eThekwini Municipality v Mounthaven Pty Ltd.

In this case, the Court diluted the effect of a reversionary clause by unequivocally and expressly ruling that same does not confer an absolute right and that it is subject to prescription if not exercised within the contractual or the statutorily imposed three year period.

The result is twofold: On the one hand, the municipality, when alerted to non-compliance on the part of the purchaser, is legally obliged to claim re-transfer of the property either within the period stipulated in the Title Deed condition, or for the latest, within the statutorily prescribed period of three years. On the other hand, purchasers that acquired property from the municipality at discounted rates and whether for commercial or residential development, are no longer compelled to re-transfer such property, should same remain undeveloped upon the expiration of the conditional period.

The judgment as its stands, arguably constrains the municipality by closing its back-door means of reclaiming property, when purchasers default on their obligation to develop same within a certain period of time.

Another implication is that financial institutions will, upon the expiration of the conditional period and had the municipality not enforced its rights within the contractual or statutorily prescribed period, be able to lend funds against the property as security -even if the purchaser failed to develop it.

The purchaser will accordingly derive an extended period within which to develop the property, without fear of losing the security due to a re-transfer being claimed by the municipality.

Municipalities will now have to obtain extensive legal advice in order to ensure the adoption and implementation of adequate compliance mechanisms, should they wish to ensure development within a certain period, especially since the rights which stem from reversionary clauses lapse after a period of three years.

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HOW TO DEAL WITH ABSCONDING TENANTS

While many landlords may rely on the rental income on their properties during tough economic times, they may also have to deal with disappearing tenants.

“With an absconding tenant, it can be quite difficult as you have to issue a cancellation letter, terminating the lease and indicating the final date of the lease,” says Natalie Muller, head of rentals at Jawitz Properties in the Western Cape and Gauteng. “If the tenant’s furniture remains in the property, you have to make arrangements to store the furniture, but this can be at the cost of tenant. You do have to advise the tenant that the furniture needs to be removed or it will be sold to defer costs – you are not allowed to sell the items without a court order.”

An absconding tenant is still liable for performing in accordance with the clauses of the lease and needs to note that even though they have left the property, they need to formally cancel the lease as per the provisions in the Consumer Protection Act. The Act is defined as allowing the tenant the right to terminate their lease agreement with 20 business days’ notice for whatever, as well as, no reason at all. “This right, however, is subject to penalties and most leases make provision for a penalty that the tenant can be held liable for rental of two to four months depending on the time it takes to find a replacement.”

Lease must be cancelled before further occupancy

The landlord will have the right to claim the costs involved in finding a replacement tenant, as well as the costs to return the property back to the original state it was when the tenant first moved in. Landlords need to know that unless the lease with the tenant has been cancelled, an inspection carried out and the absconding tenant notified of the penalties and charges, they cannot allow a new occupant to move in. It is also important to note that any viewings done at the property without the absconding tenant being present, need to be done having given the absconding tenant a notice of the intended viewing. “Even though the tenant has left they still have the right to the lease, pending the formal cancellation,” Muller says.

Landlords should consider themselves lucky if the tenant has left occupancy of the property without owing money. If the right processes are followed, the landlord should be able to rent the property within days of finalising the new lease. “Having an insurance policy in place, as well as a managing agent to assist can really help landlords through the process,” Muller concludes.

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WILL THE NEW MINIMUM WAGE BE ENOUGH?

The new National Minimum Wage (NMW) has finally been tabled and it is causing consternation across country and company. Pressing questions remain around the still low amount, and its viability in the current economy, the history of oppression that surrounds the current wage structure, and the hackles of industry rising around the impact of the cost to bottom lines.

Perhaps the most important point to raise before discussing budgets and costs, is that the proposed minimum wage of R3,464 a month for a 40-hour week at R20/hour would still be significantly less than the R5,544 that research shows would be the Minimum Living Level - in 2016. While the proposed increase will positively impact the quality of life for millions of South Africans, it is still not enough.

“The current proposed minimum wage is R20 per hour and many would argue it is enough, but the reality is that South Africans in the unskilled job spectrum can barely make ends meet,” says Nicolette Nicholson, South African Payroll Association, Exco. “Enterprise or business may argue it is enough, but this NMW won’t break the poverty and inequality barriers.”

However, it is a start towards promoting economic growth.

Change is one small step

Currently, the minimum wage is set at the sectoral level and the urban/rural level and is done in consultation with the Employment Conditions Commission. The new NMW will apply across all sectors. The Commission has to consider the ability of the employer to carry on business successfully and examines issues such as: the operation of the small, medium and micro enterprise; the cost of living; conditions of employment; income differentials and equality; and the impact of the increase to the enterprise.

“The National Union of Metal Workers of South Africa remains opposed to NMW in its current form and Cosatu has pointed out that it is far from solving the challenges of inequality, poverty and unemployment,” says Nicholson. “They have, however, said it is a good start.”

Enterprises not regulated under a wage regulating measure, such as the mining industry, are indicating that they will be unable to afford the increase. This view confirms the concerns raised by trade unions and analysts – that the NMW may escalate the unemployment crisis.

“The NMW could have a further negative impact on the decline of job losses in the SME market,” concludes Nicholson. “The mines have already said they can’t afford it and may be retrenching staff. It is approximately a R7 difference from the average of R13 minimum wage if one compares rates across different industries and for most organisations the rise will make a significant impact on the bottom line.”

There is no clear-cut path through the minefield that the NMW has opened up, but one fact does shine out – millions of people could see a necessary shift in their quality of life. The issues must be addressed to ensure that there is engagement on the NMW across all levels of business and that there is proper support for its success. The long-term sustainability of South Africa depends on it.

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FINANCE MINISTER AMENDS MONEY LAUNDERING REGULATIONS

The Minister has also withdrawn exemptions made in terms of the Financial Intelligence Centre Act, 2001 (FIC Act).

The amendments, which became effective on Monday, were previously published in draft form for public consultation, and the comments received were considered.

“These amendments to the MLTFC Regulations and the withdrawal of exemptions coincide with the commencement of a number of amendments to the FIC Act, which the Minister had announced on 13 June 2017.

“This provides the legal basis for a shift in the measures to protect the integrity of the South African financial system to a risk-based approach, which modernises the manner institutions undertake customer due diligence and encourages innovation in the way they deal with their customers,” said Treasury.

When coming to the single transaction threshold and withdrawal of exemptions, Treasury said institutions should determine what constitutes single transactions in the context of their own business, and provide for the application of a single transaction threshold in so far as they accommodate such transactions.

The Financial Intelligence Centre (FIC), in collaboration with National Treasury, the South African Reserve Bank and Financial Services Board, has issued guidance in Guidance Note 7 in this respect, which may be of assistance to institutions.

The link can be found on here.

Treasury said while the withdrawal of exemptions may impact institutions’ compliance approach to the customer due diligence requirements of the FIC Act, institutions may continue to be guided by the content of the withdrawn exemptions in the implementation of their compliance approaches.

This is also addressed further in the guidance issued by the FIC.

“Although a few objections were received on the withdrawal of some exemptions, these were not supported by adequate empirical data; consequently, sufficient information was not provided to retain the exemptions in question.”

Treasury said that further consultations on new exemptions may be considered in sectors where it can be clearly demonstrated that such exemptions are necessary and will not undermine the objectives of the FIC Act.

Meanwhile, certain comments indicated a concern that to prescribe information sets for reporting in accordance with the FIC Act precludes institutions from applying a risk-based approach to customer due diligence.

“To address this concern, the proposed amendments to the MLTFC Regulations concerning the new reporting requirements have been aligned with the introduction of a risk-based approach in the FIC Act.

“Furthermore, to clarify the expectations regarding mandatory reporting, the FIC has issued guidance in Guidance Notes,” said Treasury.

The Guidance Notes namely 4A, 5B and 7 can be accessed on FIC website at : 4A; 5B and 7.

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TLAB:TREASURY'S REVISIONS ON CONVERTING DEBT TO EQUITY

National Treasury's proposed changes in the draft Taxation Laws Amendment Bill, 2017 (TLAB) on converting debt to equity were presented in a workshop on 26 September 2017. These proposed amendments in the draft TLAB are in sections 19, new sections 19A and 19B, and paragraph 12A of the Eighth Schedule in the Income Tax Act 58 of 1962.

It appears that National Treasury is considering the following changes in the final bill on the debt conversion into equity proposals:

  • the removal of the proposed new sections 19A and 19B;
  • the removal of the definition of "reduction amount" in section 19. In its stead, the concept of a "debt benefit" is proposed which aims to better encapsulate different scenarios under which a debt claim can be reduced, either by way of a debt to equity conversion or some other concession. As a consequence of the new "debt benefit" concept, National Treasury has proposed that a supporting - "concession or compromise" - definition would also be included in section 19;
  • the debt to equity conversions between companies that form part of the same group of companies, as defined in section 41, shall be excluded from the application of the debt forgiveness rules, for now;
  • in relation to mining companies, the proposed amendment will be made with reference to the new defined term of "debt benefit" and the exclusions in paragraph 12A will apply to taxpayers engaged in mining operations. The exclusion in respect of debt that is reduced in the course of, or in anticipation of, a liquidation, winding-up or deregistration will not be provided for as this exclusion has been ear-marked for review in the 2018 amendment cycle;
  • in relation to dormant group companies, a company will be regarded as being dormant if it did not trade in the year a debt is forgiven and the immediately preceding year; and
  • the proposed amendment is expected to apply in respect of years of assessment commencing on or after 01 January 2018.

"Generally, National Treasury's revised proposals and clarifications in the workshop were preferred to those contained in the draft TLAB. In particular, the removal of sections 19A and 19B from the draft TLAB is to be welcomed. National Treasury also indicated that further refinements would be made to the proposals.

"National Treasury also indicated that they were working towards introducing the final bills at Parliament on 25 October 2017, which is the date that the Finance Minister, Malusi Gigaba, is expected to present the Medium Term Budget Policy Statement," say Wesley Grimm and Joon Chong from Webber Wentzel.

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TWIN PEAKS REGULATORY FINANCE MODEL MOVES ONE STEP CLOSER

The President has signed the Financial Sector Regulation Act, which was published in the Government Gazette on 22 August 2017. The Act will come into effect on a date to be determined by the Minister of Finance and announced by notice in the Government Gazette.

The Act aims to consolidate the regulation and supervision of the financial sector and its various subsectors - namely banking, insurance, financial products and services and market infrastructure - to ensure that each subsector is subject to both prudential and market conduct supervision and regulation. This approach is commonly referred to as the ‘Twin Peaks’ model.

The Treasury seeks to implement the transition of the South African financial sector regulation to the supervisory model in two phases. The Act provides that different dates may be determined by the Minister of Finance for the coming into effect of different provisions of the Act and/or in respect of the different categories of Financial Institutions where the different provisions will apply.

Phase 1

A ‘Financial Institution’ is defined as a financial product provider, a financial service provider, a market infrastructure, a holding company of a financial conglomerate and includes any person licensed or required to be licensed in terms of a financial sector law.

Phase 1 will entail creating two new regulators - the Prudential Authority and the Financial Sector Conduct Authority (FSCA) - to supervise all participants in the financial sector. They will work in conjunction with the South African Reserve Bank, the Financial Intelligence Centre and the National Credit Regulator.

The Prudential Authority, to be housed within SARB, will be tasked with regulating prudential issues (systemic stability and the safety and soundness of financial institutions) in relation to banks, insurers and the financial markets with a special focus on ‘financial conglomerates’.

The FSCA, which will replace the Financial Services Board, will act as a market-conduct regulator in respect of all financial institutions, in particular regarding business conduct and consumer protection.

Phase 2

Phase 2 will involve consolidating the regulation of, and the standards applied to, the various financial subsectors into over-arching legislation applicable to all Financial Institutions. The Prudential Authority, the FSCA, the Financial Intelligence Centre, the SARB and the National Credit Regulator, each in their functional sphere rather than by designating a regulator per subsector, will administer this. It is likely that existing industry specific licences for financial institutions will be phased out and each financial institution will require a licence from the Prudential Authority and the FSCA.

Effects of regulation

During phase 1, the existing industry specific legislation will remain in force and will be allocated to one of the new regulators (as set out in Schedule 2 of the Act) as the principal regulatory authority. For the most part, the Prudential Authority will be responsible for legislation previously administered by the Banks Supervision Department of the SARB and the FSCA will be responsible for legislation previously administered by the FSB, with the exception of the insurance industry. Both the Prudential Authority and the FSCA have been designated as primary regulatory authority in respect of the insurance industry.

The designated regulator will act as the licensing authority and (primary) supervisory authority for the particular legislation during phase 1. Both regulators, however, will have the power to exercise supervisory powers and to apply and enforce the industry specific legislation on a financial institution - the Prudential Authority in respect of prudential aspects and the FSCA in respect of market-conduct issues. Each of the new regulators will also be able to issue new standards under the industry specific legislation. In this sense, the mandates of the new regulators are broader than the mandates of their predecessors.

The Act gives the new regulators supervisory and enforcement powers in addition to the powers afforded to the relevant regulator under the industry specific legislation. Furthermore, the powers of the Prudential Authority and the FSCA may be exercised in respect of controlling companies of financial institutions and entities that form part of ‘financial conglomerates’, where such entities may not previously have been subject to the financial sector laws.

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PARLIAMENT WANTS INDEPENDENT PROBE OF VODACOM BILLING GLITCH

Parliament has weighed in on the Vodacom billing debacle, calling for the matter to be investigated by an independent body. The mobile operator drew the ire of some of its subscribers last week whose data and airtime disappeared as a result of a technical glitch.

The company has since apologised and begun reimbursing customers who were affected by the problem, but Parliament has called for a further probe into the matter. The billing crisis came amid growing calls around the country for data prices, which remain stubbornly high, to be slashed.

Parliament's portfolio committee on telecommunications and postal services said on Thursday, 24 August, that it strongly condemned the Vodacom incident.

Although the company had apologised to customers and committed not only to refund them, but also to give them an extra 500MB bundle valid for three days, the committee said the matter must be investigated by an independent body.

"SA ranks fourth out of 17 African countries with high costs of data, and to have millions of people robbed of their airtime and data in this manner is a serious concern," said Dikeledi Tsotetsi, the acting chairperson of the committee.

She said having received inputs from individuals and organisations during the cost-to-communicate public hearings held in Parliament last year, the committee had tasked the Independent Communications Authority of SA (Icasa) to investigate high data costs further.

In May, Economic Development Minister Ebrahim Patel announced that SA's high data costs would be investigated by the Competition Commission. This month, the commission published the terms of reference of the inquiry and called for submissions. The inquiry will look into the market structure, the general adequacy and impact of the current regulatory regime, and costs faced and profits earned by fixed and mobile network operators.

Icasa is also reviewing the broadband market and has said the reduction in the cost of data would depend on the outcome of the review. Tsotetsi said while the committee was awaiting reports of the ongoing investigations by Icasa and the Competition Commission, the mobile network operators had a responsibility to conduct business in a manner that was just and lawful.

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SA'S LAWS PROTECTING WOMEN IN THE WORKPLACE

In South Africa, there are several laws ensuring the protection of women in the workplace. The Constitution of the Republic of South Africa confirms, “Everyone is equal before the law and has the right to equal protection and benefit of the law.” Employment legislation has been enacted in order to give effect to the Constitution and to protect all employees, including women in the workplace.


Key laws

  • Protection against dismissal - in terms of the Labour Relations Act, a dismissal is automatically unfair if the employee is dismissed because of her pregnancy, intended pregnancy or a reason related to her pregnancy. A dismissal that is found to be automatically unfair can attract an order of reinstatement or compensation up to 24 months’ salary.
  • Protection against unfair discrimination - the Employment Equity Act (EEA) protects employees from unfair discrimination on listed grounds which include gender, sex, pregnancy, marital status, family responsibility or on any other arbitrary grounds.
  • Equal pay protection – the EEA was recently amended to introduce the equal pay for work of equal value principle (equal pay principle). In terms of the amendment, a difference in terms and conditions of employment between employees of the same employer performing the same or substantially the same work or work of equal value that is based directly or indirectly on any one or more of the listed grounds or on any other arbitrary ground, is unfair discrimination. A Code of Good Practice on equal pay for work of equal value states that the equal pay principle “addresses a specific aspect of workplace discrimination and the undervaluing of work on the basis of a listed or any other arbitrary ground…” As stated above, the listed grounds include gender and sex.
  • Maternity leave protection – in terms of the Basic Conditions of Employment Act (BCEA), an employee has a right to at least four consecutive months’ unpaid maternity leave. The Unemployment Insurance Act provides for payment of maternity benefits.
  • Protection before and after birth - the BCEA also provides protection to employees before and after the birth of a child. In terms of s26(1) of the BCEA, “no employer may require or permit a pregnant employee or an employee who is nursing her child to perform work that is hazardous to her health or the health of her child.” A Code of Good Practice on the protection of employees during pregnancy and after the birth of child has been issued in terms of the BCEA. The Code recognises that many women return to work while breast-feeding and provides guidelines for employers. It guides employers on how to assess and control risks to the health and safety of pregnant and breast-feeding employees and provides a non-exhaustive list of hazards to pregnant and breast-feeding employees recommending steps to control or prevent those risks.
  • Family responsibility leave - subject to certain requirements, s27 of the BCEA grants employees three days paid leave which an employee can take when the employee’s child is born or sick, or on the death of the employee’s child, adopted child, spouse, life partner, parent, sibling or grandchild.

South African legislation has progressed in order ensure the protection and advancement of women in the workplace. Non-compliance with the legislation could lead to severe penalties being imposed or compensation being awarded.

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CREDIT LIFE INSURANCE REGULATIONS NOW IN EFFECT

The final credit life insurance regulations, which prescribe the minimum benefits that must be offered to consumers and the limitations or exclusions that apply to the insurance cover, came into effect on 9 August 2017.

The regulations aim is to limit the cost of credit life insurance. Consumers will now be charged a maximum of R4,50 per R1,000 of the deferred amount for credit facilities, unsecured loans, developmental credit agreements and other types of credit agreements. When it comes to mortgages, consumers can only be charged a maximum of R2 per R1,000 of the deferred amount, says Lesiba Mashapa, company secretary at the National Credit Regulator (NCR).

Consumers who are not employed cannot be sold retrenchment cover. A consumer who dies or becomes permanently disabled will have his or her outstanding debt under a credit agreement settled by the credit life insurance policy. If the consumer loses his or her job, the policy will pay installments due under a credit agreement for up to 12 months.

It is important to note though, that these regulations are not retrospective. Consumers who have a life cover can use this insurance to cover their debts and should not be forced to take out a new insurance as long as the life cover is sufficient to cover the debt in case of a claim, says Mashapa.

These regulations were published in the Government Gazette in February 2017 and were set to come to effect six months after the date of publication.

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NEW LAW STIFLES FOREIGN REMUNERATION TAX BENEFITS

If it is passed by Parliament, the Draft Taxation Laws Amendment Bill proposal to remove foreign remuneration tax exemption will impact the willingness of South Africans to work abroad.

South African tax residents working abroad are currently exempt from income tax if they are abroad for at least 61 days and a total of 184 days in a 12-month period.

“If South Africa has a double taxation agreement with the host country and the individual is physically present for 184 days or more in a calendar or tax year, or the salary was recharged to an entity in the host country, or the costs were borne by a permanent establishment in the host location, the income is only subject to tax in the host country,” says Shohana Mohan, committee member of the South African Institute Chartered Accountant (Saica) employees tax and expatriate tax sub-committee.

Benefits and allowances received in-country such as residential accommodation and the use of motor vehicle are currently also exempt from South African tax. This exemption aims to avoid double taxation. The proposed amendment will have the following consequences:

  • Employers will need to calculate employees’ tax on salaries processed through a South African payroll or resident employer;
  • Employees/employers will be required to pay personal income tax on foreign benefits and allowances (such as assignment related and hardship allowances);
  • Employers may need to change their payroll processes to reflect a mirror approach for home and host country payrolls to ensure that all remuneration elements are taxed;
  • Employees paid partly through a South African and partly through a foreign payroll (split payrolls) will be required to register for provisional tax;
  • Employers’ tax costs will increase if they bear the tax liability of the employee (i.e. a tax equalisation);
  • Employers’ compliance costs will increase as a result of registration for and payment of provisional tax and claiming of foreign tax credits, especially if the host countries’ tax year ends differ from that of South Africa; and
  • Employees opting to give up their South African tax residency status may trigger capital gains tax on “exit”.

Employers will have to reconsider their international assignment and tax policies. This could include defining, and distinguishing between, durations and natures of the assignment/secondment, including:

  • Early career expatriates
  • Short-term expatriates
  • Medium-term expatriates
  • Long-term expatriates
  • Localised career expatriates

Revisiting international assignment and tax policies can assist employers to manage tax jurisdiction specific risk. Factors that employers should consider include:

  • Nature of the assignment or secondment
  • Home and host country tax year ends
  • Home and host country marginal tax rates
  • The payroll regime, i.e. full payroll in South Africa or a split pay arrangement
  • Maximum tax payable in both locations
  • Cash flow impact of the tax payable (prior to a foreign tax credit)

With a split payroll, the impact of the provisional tax registration and the total tax payment should be considered.

Example

If an employee gets a medium- to long-term assignement to a host country, and the host country’s marginal tax rate is 35%, and 50% of the salary is borne by South Africa and 50% by the host country, the tax payment is likely to be:

45% x 50% of the salary processed in South Africa
45% x 50% of the salary processed in host country
Less: 35% of the tax already paid/payable in host country
The effect is that 10% of 50% of the host country salary will be included for provisional tax purposes in South Africa.
“Employers should review their international assignment and tax policies to limit the effect on business as the impact of these proposals will be far reaching,” concluded Mohan.

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AMENDED LEGISLATION COULD SEE LANDLORDS LIABLE FOR VAT ON LEASEHOLD IMPROVEMENTS AFFECTED BY TENANTS

The 2017 Draft Taxation Laws Amendment Bill and Draft Tax Administration Amendment Bill, clarifying the Value Added Tax (VAT) Act treatment of leasehold improvement, were recently released for comment.

“A recent proposed amendment to the VAT Act may result in landlords being liable for VAT on leasehold improvements affected by their tenants,” says Christo Theron, chairman of the SAICA VAT Sub-Committee. “This may result in a nasty surprise for a landlord that is not aware of the potential new dispensation.”

In practice lessees are often required to affect improvements to the leased property, commonly known as leasehold improvements.

“Such improvements are normally for the account of the lessee with no right of recovery from the lessor. Until recently the VAT implications of arrangements of this nature were unclear. New proposed amendments to the VAT Act have clarified the issue in some respect, effectively shifting the VAT liability to the lessor,” added Theron.

Lessee will not be liable

In terms of the proposed new rules the lessee will not be liable for any VAT on leasehold improvements affected, although in law such improvements are effectively supplied to the lessor (the improvements becoming part of the property owned by the lessor).

“The lessor is not so lucky, he says. “The new proposed rules determine that the lessor will be liable for VAT on the value of the improvements. The good news is that the VAT will only be payable to the extent that the property is not used for taxable purposes such as, for example, for VAT exempt residential accommodation. For instance, where a lessee erects a building on land owned by a lessor and erects a building consisting of office space and residential accommodation (e.g. a penthouse), VAT will only be payable by the lessor on the value attributable to the penthouse with which VAT exempt residential accommodation will be supplied.”

“The current proposed wording of the draft legislation is slightly obscure and will need to be tidied up, but the intention is clear. The new rules will only apply with effect from 1 April 2018. In the interim landlords should be aware of the future consequences of entering into such arrangements. You have been warned.”

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ENTREPRENEURS COULD FEEL THE PINCH OF NEW TRUST LAWS

Entrepreneurs advancing interest-free funds to a company, held by a trust of which he/she is a beneficiary, will be affected by the proposed legislation curbing the tax-free transfer of wealth to trusts. “This is a common practice," says Tertius Troost, tax consultant at Mazars.

He explains that Treasury’s proposed amendments to trust legislation, housed in Section 7C of the Income Tax Act intends to stop several inventive methods that taxpayers have found to avoid the additional donations tax payable in terms of Section 7C.

“Section 7C taxes a notional amount, which is the difference between the interest determined with reference to the official rate of interest (currently 7.75% per annum) and the actual interest rate of the loan, as a donation subject to 20% donations tax.”

He adds that Section 7C currently only finds application when a natural person, or a company under certain circumstances, provides a low interest or interest-free loan, advance or credit to a trust to which that person is connected. “One method identified by National Treasury to circumvent the application of Section 7C, would be to shift the investments originally held by the trust to a company of which the trust is a shareholder. The money advanced to the company would thus fall outside the ambit of Section 7C.”

In order to curb this avoidance, Troost explains that Treasury has now proposed that Section 7C should be applicable if a low interest or interest-free loan, advance or credit is made to a company which is a connected person in relation to a trust. This would happen if for example, the trust holds all the shares in the company.

http://www.bizcommunity.com/Article/196/512/165082.html

RIGHTS OF PROPERTY OWNERS AGAINST DRONES

William Merideth from Kentucky achieved notoriety in 2015, when he shot down a drone flying over his property. In defence of his actions, he claimed that the drone was spying on his sunbathing daughter.

After picking up what was left of his machine, David Boggs laid a criminal charge against Merideth, who was arrested for “wanton endangerment and criminal mischief.” The Bullitt County District Court ultimately dismissed the charges. Judge Rebecca Ward found that Merideth was entitled to shoot down the drone, as it infringed upon his (or his daughter’s) right to privacy.

Having lost round one, Boggs initiated proceedings to have the decision overturned seeking clarity on whether his conduct constituted trespassing and further sought an order directing Merideth to pay an amount of $1,500 in compensation for his damaged property.

In March 2017, Federal Judge Thomas Russel dismissed Boggs’ lawsuit due to the Federal Court lacking jurisdiction to hear the matter. The ruling was met with disappointment as the questions of law – regarding the right to privacy, the right to property and trespass in airspace – remained unresolved.

South African legislation

South Africa has already encountered incidents where aggrieved property owners have shot down drones.

In accordance with the South African common law, the owner of immovable property is essentially the owner of the “ground beneath and air above” such property. Therefore, at common law the delict of trespassing into air space above private property would appear, in theory, to be actionable.

However, s8 of the Civil Aviation Act, No 13 of 2009 (Aviation Act) provides a form of indemnification protecting the operators of aircraft flying over private property at a “reasonable” height. While this provision was introduced prior to the emergence of drones into South African culture, it is clear that insofar as an aircraft is flying in contravention of the provisions of the Aviation Act (or flying at an unreasonable height), the pilot may very well attract liability for trespassing. That is the theory at least.

The Eighth Amendment to the Civil Aviation Regulations was introduced in 2015 and governs, in Part 101, the operation of Remotely Piloted Aircraft Systems (including drones). There is, however, no reference to any form of indemnification against a claim of trespass (as is found in s8 of the Aviation Act).

While restrictions are placed on the operation of drones (such as the restriction not to fly a drone within lateral distance of 50m of any structure or building without permission of the owner), this does not address the question of trespassing. It is conceivable that a drone can fly in excess of 50m from any structure or building but still be trespassing on another’s property (if flying without permission).

Assuming that flying a drone over a private property may constitute trespassing; can the owner of the property use a firearm to protect his rights? The simple answer is no. In terms of s120(7) of the Firearms Control Act, No 60 of 2000, the discharge of a firearm in any built-up place or public area is a criminal offence. The discharge of a firearm on private property in a manner, which endangers the life, safety, or property of another is also an offence and insofar as a drone is damaged by the use of firearm, civil liability may follow.

CAA complaints

What can property owners do, if they feel that their rights are infringed by the operation of a drone? Well, they may resort to the courts in an attempt to enforce a civil claim against the pilot, based in delict for trespassing or alternatively an invasion of privacy (insofar as the requirements are made). Civil litigation is, however, expensive and time consuming. Advice that is more practical may be to lay a complaint with the South African Civil Aviation Authority, based on a breach of the Aviation Act or Regulations.

The Civil Aviation Authority appears to be taking matters rather seriously and has initiated a number of investigations against drone operators in recent months. Sanctions include fines of up to R50,000 per incident or imprisonment not exceeding 10 years, or both.

However, what if you have no idea who the operator of the drone is? In this case, your legal remedies are extremely limited, insofar as they exist at all.

In an effort to address this problem, we suggest that the regulations be amended in accordance with developments in other jurisdictions, which oblige every drone operator to display a unique identification number on the underside of a drone, which is to be visible from the ground. This will promote further accountability and will provide any aggrieved person with a mechanism to trace the offending owner.

Until this happens, the moment the familiar buzz of a drone is heard one should either cover up or go indoors.

http://www.bizcommunity.com/Article/196/637/164725.html

DEALS ABOVE BOARD, COROBRIK PROTESTS

Corobrik has hit back hard over charges by the Competition Commission that it has engaged in price fixing and division of markets with five other brick makers - Era Bricks, De Hoop Brickfields, Kopano Brickworks, Clay Industry and Eston Brick and Tile.

The commission referred the six companies to the Competition Tribunal following an investigation launched in April 2017.

It accuses them of contravening the Competition Act, saying that agreements between the five companies and Corobrik resulted in price fixing and the division of markets in the manufacturing and supply of bricks, pavers and blocks of clay and concrete.

"We regard the allegations in the commission's referral very seriously. I was most surprised to learn that the commission believes the agreements generate competition law concerns," said Corobrik MD Dirk Meyer. "Corobrik is of the view that its agreements with the abovementioned firms are both legitimate and defensible in terms of the Competition Act and that the commission's concerns are attributable to a misunderstanding of the commercial arrangements in question and the market generally," he said.

The referral did not constitute a finding against Corobrik, he said, but was a reflection of the commission's views based on its understanding of the agreements. "The question of whether or not the conduct actually amounts to a contravention of the Competition Act remains to be adjudicated by the tribunal."

Sipho Ngwema, head of communications at the Competition Commission, said on Thursday, 6 July, the companies would first have to file their replies within 20 days from the day the commission served them. "The tribunal will then set an appropriate date for a hearing once the technical legal processes have been exhausted. We have all the evidence we need for the case - we didn't have to raid them."

Source: Business Day
http://www.bizcommunity.com/Article/196/493/164389.html

CONSTITUTIONAL COURT TO REVIEW WHOSE DUTY IS IT TO DISCLOSE HISTORICAL MUNICIPAL DEBT

The Constitutional Court is reviewing whose duty it is to disclose historical municipal debt and whether municipalities have the right of recourse on new purchasers.

Several municipalities (Tshwane, Ethekwini and Ekurhuleni) have argued in the Constitutional Court in the ‘New Ventures’ matter that it is lawfully permissible for a municipality to attach and sell a purchaser’s property in order to satisfy debt owed to the municipality by prior owners of that property. The municipalities argued that this right was given to them in terms of section 118 (3) of the Local Government: Municipal Systems Act 2.

To support this argument, the municipalities claimed that it was lawful to hold the purchaser liable for the historical municipal debts of prior owners, partly because the purchasers should have been aware of the debts before they took transfer of the property.

It was argued that a purchaser who did not want to be liable for these debts could just stop the transfer or sue the seller for damages. In this context, the question arose as to whether any party was under an obligation to make the purchaser aware of the historical municipal debt.

Different duties alleged

  • Ethekwini argued that conveyancers are under a duty to notify a purchaser of any historical municipal debt that they are aware will not be paid by the seller at transfer.
  • Tshwane Municipality argued that the municipality itself has a duty to notify the purchasers of land if there is any historical municipal debt that the seller will not be settling at the date of transfer.
  • Tshwane and Ekurhuleni both argued (in addition) that there is a duty on the seller of the land in question to disclose the existence of any historical municipal debt that will not be settled at transfer, and that the purchaser can sue the seller who does not do so for damages.

The applicants in the Constitutional Court consisted of a number of municipal consumers, who were aggrieved by the view of the Tshwane and Ekurhuleni municipalities. They contended that (properly understood) the right of the municipality to attach and sell the property in order to satisfy historical municipal debt did not survive transfer, and that once transfer has passed to the purchaser, he could not be held liable for the debt of prior owners of the property. They argued further that (if the court found that the municipalities’ rights to attach the property for the debt of prior owners did in fact survive transfer) that this was unconstitutional because it violated the right of the purchaser to property in terms of section 25 of the Constitution.

In relation to the issue of whether there is a duty on a conveyancer, the applicants argued firstly that it makes little sense to compel a conveyancer to disclose the historical debt to the purchaser, because the purchaser has already purchased the property and there is not much that can be done by the purchaser at this point to escape the liability.

The applicants argued secondly that if section 118(3) was interpreted in the manner that the applications contended for (which was that section 118(3) creates an ex lege or automatic right in favour of the municipality to be paid by the seller for all outstanding historical debt before transfer) that the conveyancer is accordingly legally obliged to take amounts paid into the conveyancer’s trust account from the proceeds of the sale of the seller’s property and use that to settle the historical debt before transfer, thus ensuring that transfer passes without any historical debt being attached to the property.

Other parties before the Court

The Banking Association of South Africa (‘BASA’) was admitted by the Court as an Amicus (‘friend of the court’) to make submissions to the Court about how the law in question affected bondholders. BASA submitted that the ability of a municipality to hold the purchaser liable for the historical municipal debt of prior owners was an unconstitutional infringement of the Constitutional property rights of the bondholder concerned. BASA did not enter the fray relating to duties on parties to disclose.

TUHF was also admitted by the Court as an Amicus to make submissions in relation to how the law affected bondholders. The nub of TUHF’s submissions was that interpreted and applied as contended for by TUHF, section 118(3) was capable of a lawful construction that did not offend any rights of any party.

If a municipality is required to perfect its hypothec by approaching the court to obtain an attachment order, and only thereafter can it register the attachment against the title deeds of the property at the Deeds Office (which will prevent transfer from the seller of the property to the purchaser until such time the municipal debt has been paid in full) the purchaser is protected. The municipality’s failure to perfect its hypothec before transfer would mean that the property would pass to the purchaser free of the burden of any historical debt.

Although TUHF refrained from dealing directly with the issue of whether there is a duty upon any party to disclose the historical debt to the purchaser, it can be inferred from TUHF’s argument that there is no such duty, because the purchaser is not affected by the historical municipal debt if section 118(3) is interpreted and applied as contended for.

Johannesburg Attorneys Association’s submissions

The Johannesburg Attorneys Association (JAA) made an application to the Court after the hearing of the matter to be admitted as an Amicus and to make submissions to Court in relation only to the issue of whether there is a duty on conveyancers to disclose the existence of historical municipal debt attached to a property to the purchaser thereof.

The JAA’s submissions related only to the situation where the Constitutional Court found that a purchaser could be held liable in some or other manner for the historical municipal debts of others, because this is the only situation in which such a duty could conceivably arise.

Its submissions can be summarised as follows:

  1. The conveyancer is under a duty of confidentiality to the seller, and any breach of his duty would be actionable (in a form of a claim for damages) by the seller. Applied to the situation at hand this would mean that if a conveyancer knew that there was historical municipal debt that the seller was not planning to settle at the date of transfer, the conveyancer would not be permitted to share this information with the purchaser unless the seller gave his or her consent for same.

  2. In addition to the duty of confidentiality to the seller, there is also a duty on a conveyancer to act in the best interest of both parties. When a conveyancer is unable to comply with this duty because he or she comes into possession of knowledge that places him or her in a conflict situation in which he or she could not continue to act for both parties in good faith simultaneously, the rules of the relevant law societies dictate that the conveyancer must withdraw as a legal representative of one of the parties, but can continue to act for the other in the transaction.

    This would mean that, applied to the present situation, when a conveyancer becomes aware of historical municipal debt that will not be paid at the date of transfer, unless the seller of the property gives the conveyancer consent to bring this to the purchaser’s attention, the conveyancer is conflicted because he or she owes a duty of confidentiality to the seller, but also owes a duty to the purchaser to act in that purchaser’s best interest (and the conveyancer cannot in both parties’ best interests simultaneously).

    As a result, in such a situation the conveyancer would be conflicted and would need to withdraw for one of the parties (which is inevitably the purchaser). The purchaser would then be referred to another attorney and the conveyancer would ordinarily continue to represent the seller and to conclude the transfer process.

  3. There are other parties that may be under a duty to disclose the existence of historical debt to a purchaser (such as the municipality, seller, or even estate agents). All of these parties are better suited to comply with this duty than the conveyancer, and lumping the conveyancer with this duty would unreasonably affect the interests of the conveyancer.

  4. It was further submitted that a conveyancer is the agent of the seller only in relation to the instruction given to the conveyancer to transfer the property to the purchaser and to do all that is necessary in order to achieve this goal. The conveyancer does not ‘step into the shoes of the seller’ entirely, and as such the conveyancer cannot be held liable or burdened with a duty where the seller should be held liable or burdened with the duty (i.e. in the case at hand this would apply to the seller’s failure to disclose the historical debt to the purchaser before the offer to purchase is signed).

    As support for this contention, the JAA pointed out that a conveyancer who finds out that there is another type of problem with the property (like damp or a leaking roof) is not duly obliged to share this information with the purchaser but must act as if he or she were conflicted as described above. The situation with historical municipal debt attaching to the property is no different and conveyancers should not be treated any differently in relation to this issue.

  5. Further support for this argument can be found in the fact that conveyancers only appear after the sale agreement has already been signed, and are not responsible for making any disclosures or warranties or representation to the purchaser in relation to the property whatsoever. That is done by the seller before the conclusion of the contract. If the Courts were to find that there is a duty on someone to make this disclosure, realistically the duty must be to disclose before the offer to purchase is singed and not afterwards (as the remedies that the municipalities say are available to the purchasers – which are explained above – are actually not effective remedies for a purchaser who finds him of herself in such a situation).

Conclusion

The judgement of the Constitutional Court in this matter is expected to be handed down in a mere matter of months. If the Constitutional Court finds that purchasers cannot be held liable in any way for seller’s historical debt, it is unlikely that the Constitutional Court will consider the issue of where such a duty lies (if indeed it lies anywhere at all). If, however, the Constitutional Court finds that there is a way in which purchasers can be held liable for historical municipal debt attached to the property, then it is likely that we will see the Constitutional Court consider the issue of on whom such a duty lies, as the extent of that duty.

http://www.bizcommunity.com/Article/196/637/164091.html

PUBLIC HEARINGS ON PROPERTY SECTOR BILLS TO BE HELD

Officials from the Department of Human Settlements will this week visit the Eastern Cape, KwaZulu-Natal and the Western Cape for public hearings on the Property Practitioners Bill and the Home Loan and Mortgage Disclosure Amendment Bill.

The two Bills are aimed at transforming the property and real estate sector.

“The sector is currently valued at about R7 trillion and its subsidised component is approximately R1.5 trillion. Historically disadvantaged people only account for less than five percent ownership and this new law will help ensure a more inclusive and representative sector and protect the consumer,” the department said on Sunday.

The department said the published envisaged laws are public documents and allow for South Africans and practitioners in the property sector to comment and give further inputs.

“The public comments are a necessary requisite to complete the work of the Department of Human Settlements that drafted the amendments following a review of the impact of current legislations and inputs from stakeholders on challenges related to fair lending practices and transformation in the property sector.

“They will further broaden the sector’s operations and reach to historically black communities such as townships where the real estate sector and estate agents’ work has still not stretched to its maximum potential in terms of access, ownership and even the training of new real estate agents in poor communities,” the department said.

The proposed laws encourage professionalisation, accountability and transformation of the sector.

Public hearings will be held in all nine provinces. Last week, the public participation sessions were held in Northern Cape and Free State and North West.

“Communities in these provinces took the opportunity provided by the public hearings to robustly engage and comment to ensure an inclusive outcome that will give the country better laws,” the department said.

Among other issues raised and discussed during the engagements included the promotion of meaningful participation by small businesses, stringent penalties to ensure financial institutions compliance, unfair landing practises by institutions, to assistance given to mortgage defaulters.

http://www.bizcommunity.com/Article/196/717/163822.html

ENERGY FOR AFRICA MUST INCLUDE RENEWABLE OPTIONS

The role of renewable energy in generating Africa's power was the topic of discussion in a panel at the TXF Africa Trade Finance Conference in Nairobi, Kenya, chaired by Frances Okosi, partner in the banking & finance practice group at Baker McKenzie. The event brought together senior participants in trade finance including development finance institution, electrical contractors associations, commercial banks, state-owned enterprises, corporate borrowers and developers.

The extent of the power deficit across Africa is well documented and increasing electricity generation across the continent is the focus of a number of initiatives at both national and supra-national level.

The African Development Bank's (AfDB) ‘New Deal on Energy for Africa’ has set as its target universal access to electricity across Africa by 2025. To achieve this target, the AfDB believes 160 GW of new on-grid generation and some 75 million new off-grid connections will be needed, through a mix of conventional and renewable energy sources.

“Our panel discussion focused on how much renewable energy can contribute towards meeting those goals,” explains Okosi. “We considered why renewable energy offers such promise across Africa. The abundance of renewables resources across Africa presents the most obvious and compelling answer. Africa boasts a wealth of opportunities across solar, wind, hydro and geothermal technologies. The continent has well over 10 TW of solar potential, 350 GW of hydroelectric potential, 110 GW of wind potential and an additional 15 GW of geothermal potential.

“In addition, renewable energy can play a big part in reducing the cost of power across Africa. Compared with the cost of small-scale and domestic kerosene or diesel-generated power, used widely across the continent, renewable energy can offer a cheaper alternative.”

The AfDB’s paper ‘The New Deal on Energy for Africa’ notes that a woman living in a village in northern Nigeria spends around 60 to 80 times per unit more for her energy than a resident of New York City or London. Even at scale, with the advances in renewable energy technologies, renewables are starting to compete with conventional energy sources from a pricing perspective.

“The speed and flexibility of off-grid renewable energy solutions was also noted as a major advantage. As an example, we discussed the development of ‘pay as you go’ renewable energy generation for domestic use and SMEs across the continent: small solar powered units can ‘leased’, even with top-ups paid for using a mobile phone. The entry-level units generate enough power to charge mobile phones and provide basic lighting.

“It is acknowledged that in many instances renewable energy may not currently be able to fully meet base load requirements. However, significant advancements are being made in technologies, particularly around increasing renewables storage capacity, and in ‘smart grids’ capable of adjusting generation capacity from multiple sources as the need arises.

“Despite these challenges, our conclusion was that renewable energy will have a major role to play in meeting Africa’s power deficit,” concludes Okosi.

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BODY CORPORATES NEED TO PROTECT FUNDS

All sectional title schemes are obliged to have two separate funds: a day-to-day administrative fund and a reserve fund and these funds need to be protected and invested wisely to guard the viability of the property.

“It is of utmost importance to assess whether all the money accumulated is protected as well as it should be,”
says Mandi Hanekom, operations manager of sectional title finance company Propell.

All money received by the body corporate must be deposited into an account with a registered commercial bank, in the name of the body corporate. Section 3(1)(g) of the Sectional Titles Schemes Management Act (STSMA) states that the body corporate has the function ‘to open and operate an account or accounts with any registered bank or any other financial institution’. This should be, according to Prescribed Management Rule (PMR) 21(4), an interest-bearing account in the body corporate’s name or a trust account.

Investing funds

Sometimes, however, the owners in a scheme decide that excess money from funds should be invested instead, which can be done only if there is a written trustee resolution to this effect. PMR 21(3)(d) provides that moneys in the reserve fund may be invested, but it should be a secure investment with an institution referred to in the definition of ‘financial institution’ in section 1 of the Financial Services Board Act. ‘Financial institutions’, as defined, includes collective investment schemes, authorised financial services providers and banks.

“The investment of any body corporate funds should be done through an experienced financial adviser,”
adds Hanekom.

Fidelity insurance

In addition, the body corporate must take out insurance ‘for an amount determined by members in a general meeting to cover the risk of loss of funds belonging to the body corporate or for which it is responsible, sustained as a result of any act of fraud or dishonesty committed by a trustee, managing agent, employee or other agent of the body corporate (as stated in PMR 23 (7))’. This is also mentioned in Regulation 15(1) in the Community Schemes Ombud Service Act (CSOSA), which states, ‘every community scheme must insure against the risk of loss of money belonging to the community scheme or for which it is responsible, sustained as a result of any act of fraud or dishonesty committed by any insurable person’.

In terms of CSOSA, the minimum amount of insurance cover must be the total value of that scheme’s investments and reserves as at the end of the previous financial year, plus 25% of the scheme’s operational (administrative) budget for the current financial year. The required fidelity insurance cover must pay for any loss, after reasonable satisfactory proof of the loss is presented, and must not require that criminal or civil proceedings be taken or completed against the insured person (as in the case with some insurance cover).

Fidelity insurance cover is not necessary if the person handling the funds (the managing agent) has his own cover and has provided written proof of the required cover.

“The administrative and reserve funds are the lifeblood of any sectional title scheme and the trustees should do all they can to ensure the protection of the money accumulated therein,”
concludes Hanekom.

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CAN EMPLOYERS EMBARK ON REDEPLOYMENT BEFORE RETRENCHMENT PROCESSES COMMENCE?

The recent case of ArcelorMittal South Africa Limited v NUMSA, unpacked what is meant by avoiding job losses indicating a possible change in section 189 requirements.

Judge Van Niekerk held that s189 of the Labour Relations Act, “Specifically contemplates that prior to a formal invitation to consult being issued, measures to avoid job losses are to be considered and, where necessary, implemented. Indeed, a failure to do so undermines the notion of retrenchment, as a measure of last resort and amounts to breach of this section.”

What does this mean for employers?

The employer sought to restructure its operations in order to avoid retrenchments. It had not issued any s189(3) notices. The National Union of Metalworkers of South Africa sought to halt the redeployments to consult further with ArcelorMittal.

Their application was dismissed. The Court held that an employer must embark on measures to avoid job losses even before a s189(3) notice is issued. Such measures include the redeployment of employees from one job to another.

In light of this recent decision, could an employer offer voluntary severance packages to employees in order to avoid job losses prior to issuing s189(3) notices. Current case authority seems to suggest otherwise.

http://www.bizcommunity.com/Article/196/548/162355.html

DOES POPI OFFER ADEQUATE LEGISLATION IN THE DIGITAL AGE?

Technology is advancing much more quickly than most people anticipated even a decade ago. This begs the question as to whether or not our social, economic and political institutions and structures are equipped, or have developed sufficiently, to deal with the ethical and legal challenges that these advancements have brought, and are ever more rapidly bringing.

My view is that the law is not, at present, up to the task. It is true that South Africa started recognising electronic communications as legally valid early in the 21st century, but there have been few developments since then. In this context, the most important piece of legislation passed since the Electronic Communications and Transactions Act came into effect is the Protection of Personal Information Act. This prescribes, in essence, the conditions under which 'personal information' can be collected, processed, stored and reused and ascribes responsibility for the protection of personal information between the parties that come into contact with such information.

But there is an argument that even PoPI (as it is known) is somewhat lacking in the nuance and sophistication needed to tackle the type of issues that might arise in the digital world.

Personal information, which is the key ingredient needed to trigger the application of PoPI, is defined as information relating to an identifiable, living person, including (but not limited to) information about such a person's age, race and sex; his/her biometric information; information about his/her educational or medical history; information about his/her personal opinions, views and preferences; and information that is routinely collected by apps and websites, like online identifiers and location information. It is not clear, for example, that this definition captures images or video of a person when there is no other identifier present (other than the person's face and physical features).

Furthermore, 'big data' is not necessarily concerned with identifying individual users; it routinely aggregates information to give insights into the collective desires, motivations and preferences (both explicit and implicit) of various groups, thereby allowing companies to tailor their products and services and, importantly, their marketing efforts to these groups accordingly.

The recent American elections featured some discussion about the way in which the Democrats and Republicans targeted campaign messaging to sections of the populace using aggregated big data. There was a general unease about the extent to which this sort of practice was socially acceptable.

PoPI is potentially too narrowly framed to deal with either of the examples given above. Recognition of the insights which aggregated data provides, and the uses to which those insights can be put, is fundamental to ensuring that law and policymakers are better equipped to make decisions about the extent to which the legal framework does require amendment or extension.

My intention is not to make some normative claim about the value of technological advances and developments, but rather to draw attention to the fact that our current legal infrastructure has shortcomings in this regard that have not necessarily been appreciated until now. We need a robust debate about these issues, so that we can, if necessary, enact policy to deal with whatever is deemed socially undesirable.

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SARS TO CLAMP DOWN ON PROFIT SHIFTING BY MULTINATIONALS

The South African Revenue Service (Sars) has beefed up its transfer fund division to stop multinational companies shifting their profits out of the country to more tax-friendly jurisdictions.

Base erosion and profit shifting

So now medium and large businesses with multinational ties will have to supply the revenue service with more detailed reports of their relationships and transactions with entities residing in other countries. This is part of an the international initiative to stop base erosion and profit shifting by multinational companies.

“Not only does SARS want to stop this from happening in South Africa, it also wants to stop South African companies from doing the same in other countries," says Di Seccombe, Mazars SA head of national tax training.

“A very common way that multinational companies are doing this, is by having their subsidiaries pay them a substantial 'management fee'. The subsidiary can of course deduct this fee from its own income tax, and that money is effectively taken out of the country before there is a chance to tax that profit,” she says.

New requirements for SA companies

The Davis Tax Committee has stated that this is one of the main issues of lost tax revenue in South Africa, and has estimated that the amount of money being bled out of the country totals billions of rand each year. Seccombe points out that South African companies will need to take note of a number of new requirements this year, if their tax returns are to remain compliant.

Firstly, the South African Tax Administration Act requires that a master file, which contains high level information of the entire multinational groups operations in a single document available to all tax authorities where the multinational group has operations, and a local file, which contains information regarding the jurisdictional activities of the multinational entities available to local tax authorities within the jurisdiction, is submitted with corporate tax returns.

Transfer pricing audit

Secondly, in the event of a Sars transfer pricing audit additional mandatory transfer pricing documentation has to be kept in terms of the record keeping provisions as set out in the Act and the regulations issued on 28 October 2016. The regulation requires that specific information is kept where the cross-border related party transactions are in excess of R100m or reasonably expected to exceed the R100m for a transfer pricing audit. “Other transaction specific information should also be kept for cross-border transactions in excess of R5m that are included in the R100m,” Seccombe adds.

Multinational companies, trusts and individuals in South Africa should consider all transactions whether transacted at arm’s length or not, she says.

Seccombe adds that companies that are part of a multinational group may have their transactions within the group scrutinised by Sars.

Country by country reporting

Another thing to take note of is that the South African regulation for CbCR (country by country reporting) requires multinational groups with a consolidated revenue in excess of R10bn to submit a report as set out in the regulation to Sars on an annual basis for years of assessment 1 January 2016 going forward Seccombe says. “The parent entity usually files the report in the parent country, but South African subsidiaries with parent companies in other jurisdictions are still obligated to notify Sars in writing which entity would be filing the CbCR and in which jurisdiction.”

“South African companies that form part of a multinational group will need to make sure to understand its group structure and its CbCR reporting obligations and get the new paperwork in order by 31 December 2017,” concludes Seccombe.

http://www.bizcommunity.com/Article/196/512/161900.html

HOW SERVITUDE IMPACTS PROPERTY VALUES

What is a servitude and how can it impact the value of a property? According to property legislation, a servitude is a registered right that someone has over the immovable property owned by another person. The servitude affords the holder the right to do something with the property, even if it may infringe upon the rights of the person who owns it.

If a servitude is held on a property, the owner of the property will be unable to exercise their entitlement to the property in the full capacity. The servitude implies that the property does not just serve the owner, but also another property or person. Because of this, the owner’s rights are somewhat diminished. An example of a servitude would be someone having the right to travel over a portion of another person’s property to get to their property. While not commonplace in metropolitan areas, servitudes are common in rural areas with farms and smallholdings.

  • Cause minimal inconvenience
  • In principle, the holder of the servitude has priority. Essentially this means that the owner of the property may exercise all their usual rights of ownership, provided it does not impede the rights of the servitude holder. The owner cannot exercise any rights that are contrary to the servitude, or grant another servitude which infringes the existing one. While the holder of the servitude has the right to perform all acts necessary to utilise the servitude, they must do so in a manner that causes minimal inconvenience to the owner of the property. It is also vital that the burden on the property is not increased beyond the express or implied terms of the servitude.

    While it may not be an issue for some, many buyers are turned off by the fact that a servitude is held on a property. As a result, servitude can reduce the demand for a property which in turn can have a negative impact on its perceived value in the market.

  • Praedial and personal servitudes
  • Servitudes are divided into two main categories, praedial and personal. How a servitude is classified depends on whether it benefits successive owners in their personal capacity or if it favours the land itself. Praedial servitudes are vested in the successive owners of a piece of land, known as a dominant tenement. The piece of land derives a benefit from another piece of land on which the servitude is held. If the land is sold, the servitude will be passed over to the new owner of the land. If the owner of the property on which the servitude is held decides to sell, they are not required to get permission from the servitude holder, however, the new owner of the property will be required to honour the servitude agreement.

    A personal servitude differs in that it is in favour of one specific person and not successive owners. Once the specified individual passes away or moves on – the servitude falls away. A personal servitude cannot exist past the holder’s lifespan or be transferred to someone else.

    Buyers who would like to find out whether there is a servitude registered over a property can do so by examining the title deed. Otherwise, they will be able to request that information from the estate agent who is marketing the property.

    http://www.bizcommunity.com/Article/196/568/161344.html

NEW JUDGMENT AFFECTS INTERNAL REMEDIES IN MUNICIPAL DISPUTES

There are internal remedies that might apply in relation to a consumer's dispute with the municipality about municipal debt and should be exercised before approaching a court for assistance in resolving a dispute, following a recent judgment.

What are internal remedies?

In most municipal jurisdictions, the municipality has created bylaws and/or policies pertaining to the manner in which it collects debt and manages its debtors. In these policy documents you will ordinarily find a section (or sometimes several sections) setting out how disputes arising between a municipality and a consumer need to be handled.

The idea is to provide mechanisms for the resolution of the dispute/query in an amicable manner, so that the courts are not flooded with litigation.

Typical internal remedies

The typical dispute resolution process prescribed by a municipality will start with the consumer lodging some sort of query or dispute and giving the municipality a limited period to investigate and resolve this dispute. If that fails, a consumer is normally permitted to appeal the municipality’s decision during the query/dispute process. In many cases, a consumer is also permitted to appeal the municipality’s failure to have investigated or resolved the dispute/complaint. After an appeal process has been finalised, there is normally provision for the consumer to approach a court or the Ombud (where there is an Ombud for that particular municipality).

Appeal process

Apart from anything prescribed in any municipal bylaws or policies in relation to the resolution of disputes, there is a section in the Local Government: Municipal System Act, Section (62)(1), which provides that a consumer can appeal a municipality’s decision, or a municipality’s failure to have taken any decision, to the municipal manager, who will then be responsible for providing the consumer with an outcome in relation to the appeal filed.

This means is that even where a municipality’s policies or bylaws themselves do not contain any internal remedies, a consumer who is unhappy with the decision of the municipality (or the failure of the municipality to take a decision) in relation to any query/dispute must first file an appeal with the municipal manager in terms of section 62 and let this appeal run its course before approaching court to resolve the dispute.

The effect of PAJA

The Promotion of Administrative Justice Act 3 of 2000 (PAJA) is enacted to create a framework for parties affected by decisions taken by government (and certain limited private organisations or individuals) to review the decisions in court.

One of the requirements of this act is that a consumer must have exhausted any prescribed internal remedies before approaching a court for assistance in reviewing the decision. This means for the consumer in relation to municipal debt, is that where a municipality has prescribed dispute resolution mechanisms, these (and the appeal procedure provided for in section 62 of the Local Government: Municipal Systems Act) must be followed before a court will be permitted to grant the consumer any relief.

However, section 7(2)(c) of PAJA provides a mechanism for a consumer who has not followed a prescribed dispute resolution mechanism to apply to the court for condonation of its failure to have done so. The court has a wide discretion to grant this kind of condonation but will not normally do so unless the consumer has good reason for having failed to exhaust internal remedies.

Is it mandatory to use internal remedies?

The answer to this depends on what the consumer is trying to achieve. If the consumer wants to ensure that ultimately he/she/it will be entitled to approach a court for assistance and to obtain relief from that court in relation to the dispute, then the answer is yes – it is mandatory for a consumer to first make use of the internal remedies to attempt to resolve the dispute before approaching court for assistance.

However, if the consumer merely wants to liaise with the municipality in relation to the dispute (and does not intend to take the matter to court or to the Ombud) then although it is recommended that a consumer follow the prescribed dispute resolution procedures in order to ensure that the dispute is formally recognised and attended to by the municipality, it is not absolutely mandatory to follow the prescribed process.

For instance, a consumer who a billing dispute might not want to log a query and then wait 21 days for the City to investigate and resolve the query, and then file an appeal 21 days thereafter if nothing has happened. That consumer might chose to rather set up a meeting with the appropriate person at the municipality’s offices, or send emails to the municipality’s customer service address, or speak to the ward councillor about the issue.

Although one would expect all municipal staff members to know the prescribed procedures for dispute resolution and stick to them, and to advise consumers who are acting outside of those procedures of the ‘proper channels’, none of these ‘outside attempts’ to resolve the billing issue are ‘wrong’ or irrelevant – every attempt may result in a resolution of the dispute. It is just that one cannot rely on them in court if one has not also followed the prescribed dispute resolution process (ie if one has not exhausted internal remedies).

The Ferox Case

In an unreported judgment of the Johannesburg High Court (Gauteng Local Division) the court decided that a consumer was not entitled to the relief sought (which in this particular case happened to be a reconciliation of the municipal account) because the consumer had not followed the prescribed dispute resolution mechanisms (internal remedies) set out by that particular municipality.

This is a particularly interesting decision because the court was not asked to review the decision of the municipality in terms of PAJA, but was rather asked to order the municipality to reconcile the municipal account based on the common law remedy of statement and debatement. Statement and debatement is a process in terms of which the creditor and debtor sit down and go through the invoice in question and ‘debate’ their issues in relation to it. Up to now, this remedy has often been used to compel municipalities to investigate and resolve problems with municipal billing.

Because there is no requirement in terms of our common law for internal remedies to be exhausted before statement and debatement can be ordered by the court, the court appears to have set a precedent to the affect that the common law remedy to statement and debatement is only available after the consumer has exhausted internal remedies.

There is room, however, for an alternative interpretation of the judgment. The court explained that the application before it was for statement and debatement in terms of the common law but that in this case, the relationship between the consumer and the municipality was governed not only by common law but also by specific legislation. Part of that legislation (ie the bylaws/policies providing for dispute resolution and section 62 of the Local Government: Municipal Systems Act) specifically provided for mechanisms to be used by a consumer when raising and resolving a dispute with the municipality.

It is thus also possible to interpret the judgment as holding that where a consumer in relation to municipal debts specifically applies to the court based on the prevailing legislation for a reconciliation of the account (i.e. statement and debatement), that the consumer must first have exhausted all applicable internal remedies before approaching the court for relief. The later interpretation is the more favourable one, seeing that it does not make inroads into the rights of the common law remedy of statement and debatement.

The authors would like to thank Bertus Boshoff of Vining & Camerer Inc. for bringing this judgment to their attention and for his contributions in developing the law in this case.

Conclusion

However this judgment is interpreted, its impact is essentially the same – a consumer needs to follow the prescribed dispute resolution mechanisms before approaching a court for assistance in relation to disputes pertaining to municipal debt, or must apply to the court for condonation for not having done so. Failure to follow internal remedies or ask for condonation for not having done so may result in the case being dismissed.

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PRAISE FOR PROBE INTO CELLPHONE INDUSTRY

Analysts have welcomed the Competition Commission's call for a wider investigation into competition in the cellphone data and voice market, saying this could further stimulate competition and level the playing field for small operators.

The commission's comments come after it decided not to proceed with a complaint, filed by Cell C against MTN and Vodacom, that the price differentials applied by Vodacom and MTN for calls made to the same network compared with those to different networks prevented competition.

The cellphone services industry is dominated by MTN and Vodacom and there has been speculation of possible collusion in pricing practices.

"As the companies are now competing for subscribers based on the services they offer, there have been instances where strategies adopted have been similar to price wars, which have negative knock-on effects for smaller, more agile and innovative players in the market, thereby limiting their growth trajectories," said Anesu Charamba, programme manager of digital transformation practice at Frost & Sullivan.

Charamba said that in the long run, "the risk of an oligopoly determining the trajectory of the sector will need to be addressed, to which this investigation could be relevant".

BMI-TechKnowledge MD Denis Smit said a proper study into the competitiveness of the cellphone industry would be valuable for all the interested parties in the industry as well as the consumer.

Recently, the biggest complaints from cellphone subscribers have been about higher data prices.

The Independent Communications Authority of SA is conducting a study into internet data services and pricing, which when completed will guide it on how it should proceed in regulating the market.

Smit said that although Cell C's complaint was dismissed, the fact that the commission recommended a study into the competitiveness of the sector, showed that the application was worth pursuing further.

"In a way, this is a Pyrrhic victory for Cell C," he said.

Source: Business Day
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POSTING, SHARING AND LIKING COULD GET YOU INTO LEGAL HOT WATER

Social media users often share or like funny memes, embarrassing videos and stinging remarks about people without considering the consequences. Even seemingly innocent reposts and comments could increase a social media user's risk of being held liable for defamation.

Good name and reputation

“In law, every person has the right to a good name and reputation, which is the respect and status he or she enjoys in society. Any action that has the effect of injuring a person’s status in the community is defamatory, and the doer may therefore be held liable,” Johannes du Plessis, legal advisor at RBS says.

He explains that this liability includes defamation committed by way of sharing videos, pictures, jokes, remarks or general information about a person via social media. “According to case law, it is irrelevant whether the defamatory allegation is true or false. It also does not matter whether the defamatory material originated from you, or whether you simply repeat, confirm, share, or even draw attention to it. You are still at risk of being held liable,” he adds.

Case law

According to case law, whether the good name of the person involved has in fact been infringed is irrelevant when determining wrongfulness. “The only relevant question is whether, in the opinion of a reasonable person, the reputation of the person concerned has been injured. It is thus an objective approach. In a civil case, a person may be liable for intentionally or negligently injuring defamed persons’ good name, reputation and dignity. In a criminal case, a person may be criminally liable for intentionally injuring defamed persons’ good name, reputation and dignity,”

Wide application

Du Plessis says that this wide application of defamation, makes it very easy for social media users to be held liable.

There are also many examples in South African case law that demonstrate the risks of careless social media behaviour. “All persons who shared a defamatory item may be jointly and severally liable in solidum for the same damage, according to the Apportionment of Damages Act. An employer may also be held liable for the defamatory actions of an employee,” he says.

“This is not a hypothetical discussion, and South African courts have already seen cases where people’s social media activity had cost them. The courts have ordered individuals, whom the court held to have defamed another person on social media, to pay tens of thousands in compensation for the damage.

Jointly and severally liable

The courts have also held persons who were tagged in the defamatory comment, to be jointly and severally liable therefore, because such persons failed to take steps to actively distance themselves therefrom,” Du Plessis states. The courts have further held persons, who have intentionally defamed other persons, to be criminally liable for injuring defamed persons’ dignity.

The implication of this is clear. “Always remember that it is very easy for you to be held liable for defamation by means of social media. So do not put yourself at risk by posting, sharing or even calling attention to defamatory material on social media. Finally, to guard against the risk of liability for defamation, a social media user should ensure that he or she is sufficiently covered by defamation insurance,” Du Plessis concludes.

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BOGUS COLLEGES STILL A HUGE HEADACHE IN SA

After five years of clamping down on unregistered colleges, the Department of Higher Education and Training is battling to shut down these bogus institutions.

Since 2012 the department has laid 21 criminal charges with the police against the owners of the bogus colleges across the country.

Out of the 21 cases, one owner fled the country stalling the case, three have no case numbers and the rest are still under investigation. The colleges are accused of making false claims about the qualifications they offer and operating without registration.

The Times could not reach any of the investigating officers.

The department admitted it was aware that several bogus colleges had resurfaced under different names in different locations. In 2013 the International Institute for Tax Finance, a bogus college based in Fourways, Johannesburg, was shut down and later reopened as The Thomas Jefferson School of Law.

Education spokesman Madikwe Mabotha said an awareness campaign was ongoing to alert the public of bogus colleges.

"This is the most effective way to ensure that the owners are arrested, charged and convicted and to also ensure that these colleges do not reproduce themselves."

Caroline Long of the faculty of education at the University of Johannesburg said the department needed a multifaceted approach to monitor college standards.

"There is a bigger problem here. We need to have a larger vision for our country and its people."

Long said students were desperate to get into tertiary institutions which should be working on a larger vision to address the demand.

Source: The Times http://www.bizcommunity.com/Article/196/499/160260.html

DO EMPLOYERS HAVE THE RIGHT TO HAVE EMPLOYEES MEDICALLY TESTED?

Employers often rely on clauses within contracts of employment as being a watertight basis for taking what it perceives to be lawful action against employees. This may not always be the case.

In the case of EWN v Pharmaco Distribution in the Labour Court, the employee suffering from bipolar disorder refused to undergo medical testing despite her contract of employment containing a clause that provided that she had to undergo medical testing whenever the employer deemed it to be necessary. The employer ultimately dismissed the employee for disobeying this instruction and the court found that her dismissal was automatically unfair.

In this case, senior management of the employer became aware of the employee’s bipolar condition after she disclosed her bipolar status to the employer during disciplinary proceedings. The employer then required her to undergo medical testing to determine whether she was fit to perform her tasks because of her bipolar status.

Refusal to undergo medical testing

The employee refused to undergo medical testing and was later charged for a ‘particularly serious and/or repeated wilful refusal to carry out lawful instructions or perform duties’. The instruction she failed to perform, and which ultimately led to her dismissal, was to present herself to a psychiatrist, for a medical examination. The employee claimed that the instruction was unlawful, while the employer contended that the instruction was reasonable and lawful in terms of her contract of employment.

A clause in the employee’s contract provided, ‘The employee will, whenever the company deems necessary, undergo a specialist medical examination at the expense of the company, by a medical practitioner nominated and appointed by the company. The employee gives his/her irrevocable consent to any such medical practitioner making the results and record of any medical examination available to the company and to discuss same with such medical practitioner. The above shall include and apply to psychological evaluations.’

EE Act prohibits medical testing

The main issues the court had to decide on were whether the provision was enforceable; and whether her dismissal for failing to submit to a medical examination was automatically unfair in terms of s187(1)(f) of the Labour Relations Act.

In its decision, the court found that the clause in the employee’s contract of employment was in breach of the provisions of s7 of the Employment Equity Act (EEA) and found that the clause was of no legal force or effect.

Section 7(1) of the EEA prohibits the medical testing of an employee and aims to prevent unfair discrimination on the grounds of an employee’s medical condition. Subsection (a) and (b) however provides that medical testing will be permitted when legislation permits or requires medical testing or when the testing of an employee can be justified in the light of medical facts, employment conditions, social policy, the fair distribution of employee benefits or the inherent requirements of the job.

Unfair discrimination

The court held that the section provides no exception based on the consent of the employee in an employment contract and that medical testing will only be permitted in the circumstances set out in paragraphs (a) and (b) which ultimately did not find application in this case. The court also found that the instruction to undergo psychiatric testing because of the employee’s bipolar condition amounted to unfair discrimination in terms of s6 of the EEA. The dismissal of the employee for refusing to undergo a psychiatric evaluation to determine her fitness to work was found to be an automatically unfair dismissal in terms of s187(1)(f) of the LRA.

Employers are advised to note that where an employee’s contract of employment contains clauses pertaining to the consent by the employee to undergo medical testing, that those clauses will not necessarily protect the employer. It is important for employers to bear in mind that medical testing will only be permitted in the circumstances as set out in subparagraphs (a) and (b) of s7 of the EEA as exceptions.

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WHAT HAPPENS TO A HOME WHEN THE OWNER PASSES AWAY?

“Finalising the estate of a deceased relative is a fairly complex process, one which is made infinitely more costly and time consuming if said family member died intestate (without a valid will), especially if a significant asset such as a property is involved,” says Swain.

Not all wills are created equal

“Even if a homeowner has written a will, it may not be valid. In order to ensure that their final testament is legally binding, it needs to meet the requirements outlined in Wills Act 7 of 1953,” explains Swain.

    According to the Wills Act 7 of 1953 three conditions need to be met for a will to be valid:
  • The writer of said will has to be over the age of sixteen.
  • The will must be in writing.
  • Each page, including the last has to be signed by the testator. The final page also needs to be signed by two competent witnesses (who have to be fourteen years of age or older). All witnesses need to be present at the same time at the signing of the will and cannot be beneficiaries of the will.

What happens to a deceased’s property?

“I strongly recommend that home owners ask an expert attorney to draft their will, stipulating who is to inherit, appointing an executor, and to advise the home owner as to possible estate duties, capital gains tax and the cost of finalising the estate so that they can prepare properly – ensuring that their will is valid, their dependents are provided for and the costs determined, and limited where possible,” advises Swain. “Each estate is unique but there are situations where no capital gains tax or even estate duty will apply and it’s best to consult with an attorney to do proper estate planning – sooner rather than later. Remember, if this wasn’t done properly the owner will no longer be able to make amends, hence the importance of sorting this out in time – for the sake of the people left behind.”

Who inherits

If the owner has indicated who will inherit, then the matter is simple (if the will is not contested). However, if no valid will was in existence and the estate is solvent, the assets will be disposed of as per the Intestate Succession Act no 81 of 1987. If no provision has been made for taxes (and limiting them where possible) the burden on the inheritors could be significant.

Selling property from a deceased estate

It might be that assets need to be sold to finalise the outstanding debt in the estate, or that the heirs want to sell it.

Law firm Smith Tabata Buchanan Boyes (STBB) explains that should a home owner have drafted a valid will and appointed an executor of their estate, “the nominated executor must first establish his or her authority to act on behalf of the estate by applying for and obtaining Letters of Executorship from the Master of the High Court”.

“Establishing an executor’s authority can take some time, depending on the case load at the High Court, but not having nominated one means that the heirs will need to wait for the court to appoint an executor which can well cause significant further delays,” believes Swain.

It is important to note that a deceased’s property cannot be sold before the executor has been formally appointed by the Master of the High Court. STBB indicates that, “No matter how great the opportunity, a purported sale will not be valid if the executor signing off has not been appointed, nor will a later signature ratify the sale.” Swain also points out that the written consent of all heirs has to be obtained when selling property belonging to the deceased’s estate - upon the consent of the Master of the High Court.

Normally an executor will first determine what, if any outstanding debt the deceased had upon the time of their passing – that debt has to be settled first, which may well necessitate the sale of the family home. “I would strongly advise home owners to share all the relevant documentation (from the will to bank statements and the like) with a trusted family member / executor so that they know where everything is, and how to proceed. Should the home need to be sold, this will speed up the process considerably,” advises Swain. “However, even with everything in place, heirs need to know that concluding an estate can be a lengthy process and that it will be some time before the executor will be able to proceed on a property sale, if needed.”

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A CONTRACT IS A CONTRACT, LIKE IT OR NOT - SASSA RULING

In our analysis on the hearing of the matter of Black Sash Trust v Minister of Social Development and Others, we cautioned that private entities would be well-advised to seek guidance and advice regarding the obligations they intend to undertake in terms of public sector tenders.

On Friday, 17 March 2017 the Constitutional Court (Court) delivered judgment in the case and illustrated how far a private company’s obligations may reach when acting as an organ of state and performing constitutional obligations.

The Court was asked to make an order to ensure that the South African Social Assistance Agency (SASSA) complies with its constitutional obligation to provide social assistance to the beneficiaries of social grants. In its judgment, the Court found that the constitutional obligations on SASSA and Cash Paymaster Services (CPS) do not terminate together with the current contract for the payment of social grants to beneficiaries on 31 March 2017.

The threatened breach of the right to social security of the beneficiaries engages the Court’s remedial power to make a just and equitable order under s172(1)(b) of the Constitution. In exercising this power to protect the right, the Court extended the validity of the extant contract between SASSA and CPS for a further 12 months on the same commercial terms.

The extension of the contract is a significant finding for private sector companies tendering for public sector work. It shows that where a company assumes constitutional powers and obligations, the Court may step into the commercial arrangement and order fulfilment of those obligations, notwithstanding the company’s commercial interests. More specifically, the company will be liable for costs for which it may not have budgeted and, as is the case here, there may be no certainty regarding price escalation.

In its order, the Court made provision for CPS to approach Treasury to renegotiate the financial terms of the contract. In retaining its supervisory jurisdiction, Treasury must report its recommendations to the Court for approval. Ultimately though, the price escalation lies in the hands of the Court. This is not an ideal commercial arrangement for private companies in this position.

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JUDGES FORGO SALARY INCREASES

Judges in South Africa are sacrificing their salary increases for the 2016-17 financial year, a move that was welcomed and commended yesterday, 9 March 2017, by MPs in the portfolio committee on justice and correctional services…

Committee chairman Dr Mathole Motshekga said: "The committee commends the judiciary for this decision.

"It shows not only responsibility but also sensitivity. The judiciary is leading the way in belt-tightening to save resources in favour of the masses and the poorest of the poor."

Judges' salaries range from R1.7-million a year up to R2.7-million for the chief justice, according to pay scales published in March last year.

Constitutional Court judges earned R2.1-million.

Source: TMG Digital/Herald
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GORDHAN SET TO AMEND TAX LAWS OVER COLLECTION

Finance Minister Pravin Gordhan plans to amend tax laws to compel South African Revenue Service commissioner Tom Moyane to improve his tax collection accountability and provide National Treasury with the information it requires for planning, Treasury deputy director-general Ismail Momoniat said on Wednesday.

An amendment broadening and strengthening existing sections of the Income Tax Act and the Value-Added Tax (VAT) Act is included in the draft Rates and Monetary Amounts Amendment Bill, which incorporates the tax changes announced in the 2017/18 budget tabled in Parliament by Gordhan last week.

Momoniat said in a briefing to Parliament's two finance committees, the amendments were necessary because of tax collection challenges.

Gordhan has expressed concern over tax collection by SARS and told journalists ahead of his budget speech in Parliament last week that some of the R30.4bn shortfall in tax revenue in 2016/17 was due to SARS not fulfilling its duties. He said he had had several engagements with SARS senior management to discuss the issue.

Moyane has strongly rejected these statements.

Currently, Section 107 of the Income Tax Act and Section 74 of the VAT Act only apply to certain taxes.

The proposed amendments would expand this to cover most taxes, Momoniat told MPs. Treasury chief director of legal tax design Yanga Mputa said these sections allowed the minister to prescribe regulations regarding the duties of people employed to administer the Income Tax Act in order to ensure better tax collection.

These sections would be amended to make the information the minister may require more explicit. Mputa said the aim was to improve tax collection and transparency.

In the past, Gordhan has complained about the lack of accountability by SARS on matters of general administration and about not being informed by Moyane about important developments within the tax authority. More recently, there have been concerns over whether SARS has withheld VAT refunds in order to boost its tax revenue collection.

Momoniat said that both legal provisions explicitly pointed out that the minister of finance could make regulations in relation to information he or she deemed necessary from the commissioner in order to ensure transparency and reporting on tax collection.

Source: Business Day http://www.bizcommunity.com/Article/196/710/158523.html

BUURTWAG FAMLIE DAG IN MALIBU VILLAGE, BLUE DOWNS - 25 FEBRUARY 2017

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TELKOM-CELL C MERGER TO GROW CONNECTIVITY IN SA

The potential tie-up of Cell C and Telkom could boost the government's plans to increase connectivity to all citizens, analysts said on Wednesday.

It emerged this week that Telkom might make another bid for Cell C, which was downgraded in January by ratings agency Standard & Poor's for missing payments to creditors. Cell C is already in discussions with Blue Label, which wants to buy 45% of the business.

The government, which owns 39% of Telkom, wants every citizen to have access to broadband coverage and services in the coming years.

Anesu Charamba, team leader for information and communication technologies (ICT) at Frost & Sullivan Africa, said the government would gain a significant presence in the mobile market, which could be used to increase connectivity to all citizens, especially in rural areas.

He said he believed the Independent Communications Authority of SA would not have a problem approving of this deal, as this would ensure that all three operators were on the same level of competition in terms of subscriber base, capital and spectrum.

Naila Govan-Vassen, senior ICT analyst at Frost & Sullivan Africa, said the transaction would boost Telkom's footprint in the mobile market.

Telkom already owns a mobile network business, Telkom Mobile, but it is smaller than Cell C.

The deal would push the combined unit's market share to about 30%, and offer competitive mobile services to enterprises and consumers, said Govan-Vassen.

"Offering services beyond fixed-line services would lay the foundation for Telkom to provide quad-play services in the long term, which many of the global players are already exploring,"

she said.

Source: Business Day
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FOUR BASIC ACCOUNTING MISCONCEPTIONS THAT COULD BE HOLDING YOU AND YOUR BUSINESS BACK

If you don't want to be tripped up in meetings or have the wool pulled over your eyes by your employees when it comes to money matters you need to make sure you understand the basics of accounting.

There are many misconceptions around basic accounting that cause trouble for businesses and keep non-financial managers from spotting potential areas of risk in their business operations.

“Basic accounting can be really, well, basic,” says Associate Professor Mark Graham from the UCT Graduate School of Business. “You don’t need a degree in finance to understand it. The trick is knowing what you need to know, and parking the rest. You can’t be a senior manager or an entrepreneur without having a good grasp of the fundamentals.”

He explains that some of the common misconceptions around accountancy are:

  1. Misconception #1: You need to understand debits and credits to understand accounting

    No, you do not. Accounting can be understood by thinking and talking in terms of specific accounts increasing or decreasing. “Nevertheless, it is true that accountants talk in terms of debits and credits, so it can be helpful to speak in their language,” Professor Graham says.

  2. Misconception #2: A debit is a bad thing

    A debit –which is merely an accounting term for one side of an entry, is neither good nor bad. If you buy a car (i.e. an asset), the resulting debit would presumably be a good thing, while if you got a speeding fine (i.e. an expense), the resulting debit would more likely be a bad thing.

  3. Misconception #3: There is a standard set of terminology in accounting

    While there is a movement towards some standardisation of the language of accounting, many variations exist, says Professor Graham. For example, the following terms generally have the same meaning: profit and earnings; inventory and stock; accounts receivable, trade receivables and debtors; accounts payable, trade payables and creditors; bank and cash; retained earnings, retained income and accumulated profit. This means not being confused by the jargon, of which there can be a lot of in accounting.

    “Accounting is the language of business and financial statements are the scorecard,” says chartered accountant Michael Harber’, a lecturer at UCT’s College of Accounting. “There can be no question that to be successful in business, it is necessary to be able to speak the language and know how to tell the score.”

  4. Misconception #4: There is a “perfect” debt ratio

    A debt ratio is defined as the ratio of total (long-term and short-term) debt to total assets, expressed as a decimal or percentage. To determine whether a ratio is good or bad, one must consider the particular business, says Harber. Businesses that are not cyclical and which have stable profits may be able to absorb more debt as they do not face the risk of being unable to pay their interest because of a downturn in profits. Another consideration is the stage of the economic cycle in which the business finds itself. If a business anticipates high profits when interest rates are low, the business could avail itself of more debt to take advantage of the positive effects of leverage. However, when interest rates rise and or when lower profits are expected, the same business should perhaps reduce debt levels to lower the risk of not being able to meet interest payments.

    Professor Graham says that debunking these and other basic accounting myths is part of the four-day Finance for Non-Financial Managers Programme, which he runs at the GSB. Basic accounting takes up one of the four days, during which the Big Five are covered. “The Big Five of accounting are assets, liabilities, equity, income and expenses. Each of these relates differently to each company, corporation or partnership.

    “A lot of what is considered basic accounting is really straight-forward and common sense, but it is shrouded in complicated language. This often confuses and intimidates newcomers to the world of finance. So we help people to see what is important to them in terms of basic accounting and how it relates to their business interests.”
  5. http://www.bizcommunity.com/Article/196/499/157974.html

GAUTENG HEALTH HOD SUSPENDED

Gauteng Premier David Makhura has placed the Head of the Department of Health, Dr Tiego Selebano, on precautionary suspension in line with the recommendation of the Heath Ombudsman, Professor Malegapuru Makgoba.

The Gauteng Provincial Government on Wednesday said the Director of Mental Health in the department, Dr Makgabo Manamela, has also been served with a notice of intention to suspend her.

In line with the public service regulations, the Director has 48 hours to respond and give reasons why she should not be suspended.

“The suspension and notice of intention to suspend have been effected in line with recommendations of the report released last week by Makgoba following the investigation into the circumstances surrounding the deaths of mentally ill patients in Gauteng,” said the provincial government.

The report revealed that 94 mentally ill patients died after being removed from the Life Healthcare Esidimeni to 27 non-governmental organisations.

Makgoba investigated the matter at the request of Health Minister Aaron Motsoaledi late last year. He was also requested to advise on a way forward.

Upon the release of the report, it was announced that Qedani Mahlangu had tendered her resignation as the Gauteng MEC of Health and a member of the Gauteng Provincial Legislature. Dr Gwen Ramokgopa was sworn in as a Member of the Gauteng Provincial Legislature and appointed as MEC for Health on Monday.

The Premier has appointed Dr Ernest Kenoshi as the Acting Head of Department of Health.

Dr Kenoshi is currently the CEO of Steve Biko Academic Hospital.

“His long track record in public healthcare sector will assist in stabilising the department, strengthen its leadership and ensure the achievement of better health outcomes in the province,” said the provincial government.

Meanwhile, the task team consisting of senior officials; specialists in the area of mental health: doctors, psychiatrists, psychologists, nurses, occupational therapists; civil society organisations and family representatives, are continuing with their work to inspect the various NGOs that have patients who were transferred from Life Esidimeni.

“Twenty NGOs have been visited so far and this process will be concluded by Friday. The team is also working towards identifying institutions that are well-equipped to care for the mental health patients in compliance with the Mental Health Care Act (2002).

“During the inspection, the members of the task team are also checking and examining some of the patients. Family members are constantly engaged on these developments and have representatives in the advisory teams.”

Premier Makhura has reiterated that he will continue to urgently implement the Health Ombudsman’s recommendations without any reservation or delay.

http://www.bizcommunity.com/Article/196/610/157463.html

THE NEW APPROACH TO MATERNITY LEAVE

2017 looks set to bring about unprecedented change in South Africa when it comes to leave relating to the birth or adoption of a child.

A fresh approach to maternity leave has already been sanctioned by the Labour Court, one that goes beyond the traditional notion that maternity leave should apply to biological mothers only. This groundbreaking development, which is already part of South African law, is discussed below. Part 2 of this ENSight looks at an even more dramatic legislative shift, which could soon see fundamental changes to the country’s employment law.

This widening scope of leave could have significant cost implications for employers. To mitigate this, and to ensure that businesses are well prepared to deal with this new leave environment, employers will invariably be required to review and, in most instances, amend and update their policies, to keep pace with these developments in the law.

The MIA case

Section 25 of the Basic Conditions of Employment Act, 1997 (the “BCEA”) states that “[a]n employee is entitled to at least four consecutive months’ maternity leave.” Historically, such leave has only been afforded to biological mothers. However, more recent developments in South African law suggest that a broader and more gender-neutral approach should be adopted by employers to give effect to the constitutional right to equality.

In the judgment of MIA v State Information Technology Agency (Pty) Ltd, the Labour Court was required to determine whether the employer unfairly discriminated against one of its male employees by denying him maternity leave. The employee was a homosexual man who was a legally recognised parent of a child under a surrogacy agreement entered into in terms of the Children’s Act, 2005. He was to take on the role of primary caregiver of the child. His employer rejected his application for maternity leave, arguing that maternity leave was available to female employees only.

The Labour Court acknowledged that maternity leave is meant to give biological mothers an opportunity to recover from the physiological effects of childbirth; but it went further in emphasising that maternity leave for primary caregivers must also take into consideration what is in the best interests of the child. The Labour Court thus ordered that the employee be granted maternity leave and pronounced that employees in a similar position (whether male or female) should be granted maternity leave on the same terms as biological mothers.

    From this judgment, various principles can be gleaned (which point to the direction in which the law is evolving) in order to give effect to the right to equality when considering parental leave:

  • employers should adopt a gender-neutral approach to granting maternity leave to employees;
  • regardless of whether the employee gives birth to the child, an employee (of any sex or gender) should be entitled to maternity leave if that employee is to be the primary caregiver of the child and is either the child’s biological parent or parent by law;
  • however, the statutory entitlement to maternity leave in these circumstances will arguably expire once the child is four months old. So, a primary caregiver of an adopted child who is older than four months might not be entitled to demand maternity leave in terms of section 25 of the BCEA; and
  • no other parent must be taking maternity leave or playing the role of primary caregiver of the child during the period of maternity leave.

As the Labour Court stated that one of the objectives of maternity leave is the promotion of the best interests of the child, it is possible that, in the future, the law may develop even further to allow maternity leave to a non-parent primary caregiver of a child. If, for example, the biological mother dies during childbirth, a surviving grandparent might well argue that he/she has a legal duty to take care of his/her grandchild and that it would be in the child’s best interest for that grandparent to be granted maternity leave in those circumstances.

What the MIA judgment means for employers

In light of the Labour Court’s pronouncements in the MIA case, employers should begin reviewing and revising their maternity leave policies to conform with the above four principles, given that most of these policies were formulated before the MIA case and only envisage biological mothers as being entitled to maternity leave.

Existing maternity leave policies should be re-drafted in a more gender-neutral manner, without assuming that every applicant will be a biological mother. Biological mothers will, however, continue to constitute the vast majority of applicants and certain aspects of maternity and pregnancy will, of course, only apply to biological mothers.

Human resources managers should be alive to these developments in the law. This will enable them to deal appropriately with applications for maternity leave going forward, given that the law will increasingly give recognition to different types of family structures beyond the traditional family.

The need to amend the law was recognised by the Labour Court in the MIA case, in which the judge stated that “in order to properly deal with matters such as this, it is necessary to amend the legislation and in particular the Basic Conditions of Employment Act”. As set out in part 2 of this ENSight, this is already happening.

This article was first published by ENSafrica on 24 January 2017

MARKET CONDUCT LAW WILL STREAMLINE FINANCIAL SECTOR

This year will bring with it market conduct legislation for all South African financial institutions, which is arguably the single most significant regulatory reform for the sector that the country has ever experienced.

The Financial Sector Regulation Bill, which is currently before parliament, is expected to be enacted during the first quarter of 2017. Once enacted, the Bill will establish and give effect to the two new regulatory authorities. As it pertains to market conduct, the Financial Services Board (FSB) will be dissolved and replaced by the Financial Sector Conduct Authority (FSCA) which will assume its new market conduct regulatory mandate.

Need for stronger regulatory oversight

To give perspective, market conduct is not new in South Africa and our regulators have been grappling with how to ensure the fair treatment of customers for years through existing financial sector specific legislation. While there has been some progress in this regard, persistent and pervasive market conduct challenges and practices, unfair treatment of customers, and poor customer outcomes in South Africa’s financial sector have highlighted the need for stronger regulatory oversight of how institutions conduct their business and treat their customers.

The current legislative framework is considered to be fragmented, inconsistent, and incomplete across the financial sector and too institutionally focused (as opposed to functionally focused), which in turn compromises the effective supervision of market conduct by the regulators.

As such, it was identified that the need for a holistic and coordinated market conduct regulatory framework that applies consistently across the financial sector can best be achieved through structural change to the regulatory framework and through the creation of a dedicated market conduct regulator – the FSCA.

Market conduct will introduce a distinct shift in the manner and approach to the regulation and supervision of the financial services industry by the FSCA, and a change in what institutions will need to do to ensure compliance.

Principle-based approach

The FSCA will move away from a rules based, reactive, tick-box compliance approach, to a principle based, forward looking, pre-emptive, outcomes focused and risk-based approach. The FSCA is going to want to see and understand institutions’ governance structures, risk controls, corporate culture and their business practices - institutions will need to objectively demonstrate to the FSCA how they are ensuring the fair treatment of customers.

Institutions should, as a first step in their market conduct journey, perform an assessment of their business model and strategy with the aim of identifying and assessing those conduct risks prevalent in their business. To be able to manage, monitor and measure conduct risks, those conduct risks must first be identified and assessed.

Then of course, institutions should implement the necessary governance structures, policies, processes and procedures to be able to manage, monitor and control conduct risks. A market conduct risk framework should be established, within which the governance structures and policies will operate.

Organisational culture at the root of market conduct

But it is not sufficient that institutions have the governance structures and risk controls in place to manage market conduct. It is not enough that management and staff are trained on these risk controls. To properly implement market conduct, all management and staff must understand and appreciate what market conduct is, the basis or rationale for it, and support the need for its introduction into the business. This is referred to as the organisation's culture.

Regulators around the world are identifying that risk controls and compliance management systems are not enough to resolve misconduct issues. Culture is being seen as a root cause for continued market conduct failings. Improved market conduct requires improved corporate culture. Institutions must be able to reflect that it is being taken seriously and addressed. The FSCA will want to see commitment from institutions to improving their corporate culture and that the fair treatment of customers is central to it.

http://www.bizcommunity.com/Article/196/518/156698.html

BASIC EDUCATION TO APPEAL COURT RULING

The Department of Basic Education (DBE) says it is launching an appeal with immediate effect following the judgment handed down by the Thohoyandou High Court in Limpopo on Saturday, 14 January 2017.

Umalusi instructed the department to withhold the matric results of learners at New Era College pending an investigation by the Hawks and the department's own internal processes.

New Era is an independent school owned by Tinyiko Elphas Khosa, the accused in the matter involving the leaking of Maths Paper 2 in Giyani.

Learners at this privately owned school took the department and Umalusi to court demanding the release of their results.

The department on Sunday expressed disappointment over the judgment and said it is launching an appeal in the interest of protecting quality education and the integrity of its examination system.

It said the effects of the judgment are that the DBE and the Limpopo Education Department are forced to release the results of the implicated learners from New Era College in Malamulele.

“We are gravely concerned about court decisions which undermine our efforts to provide quality education to learners.

“The public can be assured that we will do everything in our power and within the ambit of our Constitution and laws to protect quality education and the integrity of our examination system.

“We are extremely disappointed because there's evidence indicating that there was wrongdoing and a person was arrested on the matter.

“There's also evidence that shows learners had access to the examination question paper before it was written.

“This judgment is compromising our examinations and as a result, we will advise the province and Umalusi to appeal.”

The department said the judgement has the potential of sending the wrong message that pupils can cheat in the exams and then go to court to force the department to hand over their results, even though they might be guilty.

“We appreciate the work done by the Hawks thus far and we are confident that their investigation will help us root out the corruption that has the risk of tarnishing the credibility of the examination.

“It must be clear that those who cheat in examinations will be dealt with harshly.”

The department said it will explore all possibilities to protect the integrity, image and profile of the National Senior Certificate (NSC).

The department and its stakeholders will also review the policies and regulations that govern the management of irregularities in order to strengthen the examination system.

http://www.bizcommunity.com/Article/196/549/156245.html

5 WAYS OF IMPLEMENTING THE COMPANIES ACT IN TODAY'S DIGITAL WORLD

What the legislation has to say about the use of electronic documents, signatures and communication

The way in which business is conducted globally has undergone radical change. One of the main reasons is the telecommunication revolution, particularly within the area of electronic communication. The new Companies Act 71 of 2008 ("Companies Act") has modernised South African company law by addressing various aspects not adequately dealt with in the previous act, including the use of information in electronic form, electronic communications and technology.

The Companies Act now enables companies to use technology and electronic form of documents and communications to save businesses time and money in the following 5 ways :

1. Original documents – Where the Companies Act requires an original document, an unaltered electronically generated copy of a document may be substituted for the original. However, this does not apply to share certificates.

2. Notices – Notices in terms of the Companies Act, such as a notice of a shareholders meeting, may be given by electronic transmission, but only if the notice is transmitted directly to that person, and it is possible for the recipient to conveniently print such notice at a reasonable cost. It is therefore possible to give shareholders notice of a meeting by e-mail.

3. Meetings – Directors and shareholders can now participate in meetings through electronic communication such as Skype or video conferencing. This could save businessmen much time and effort in today’s fast paced lifestyle.

4. Document retention and access – The Companies Act requires companies to retain certain documents, records or statements such as a copy of its Memorandum of Incorporation and accounting records. It is sufficient if an electronic original or copy of the document is retained, as provided for in the Electronic Communications and Transactions Act 25 of 2002 (“ECTA”).

According to the ECTA, a company will meet the requirement of the Act to retain information if the information is accessible "so as to be usable of subsequent reference"; it is in the format in which it was generated, sent or received, or in a format which can be demonstrated to represent accurately the information generated, sent or received; and the origin and destination of that data and the date and time it was sent or received can be determined.

It is furthermore possible to inspect a document filed under the Companies Act which is open for inspection, or a certificate from the Commission as to the contents of such a document filed and open for inspection, through an electronic medium approved by the Companies and Intellectual Property Commission. You are therefore able to view documents such as the company’s Memorandum of Incorporation, any rules made by the company, or a register of directors online through a portal on the internet or by receiving it on e-mail.

5. Electronic signatures – Where the Companies Act requires a document to be signed or initialed, such as a resolution or financial statements, the signatory may sign or initial by using an electronic signature as provided for in the ECTA. It will be sufficient to merely use an electronic signature and not an advanced electronic signature, as the Companies Act provides that you may use an electronic signature "in any manner provided for in the ECTA".

http://www.smesouthafrica.co.za/16760/5-ways-of-implementing-the-Companies-Act-in-todays-digital-era/

APPLE APPEALS LANDMARK EU TAX RULING

BRUSSELS, BELGIUM: Apple on Monday, 19 December 2016, launched a legal challenge against a landmark EU decision that the tech giant pay billions in back-taxes to Ireland, claiming the EU has ignored the law.

The European Commission, the EU executive arm, in August ordered iPhone maker Apple to reimburse a record 13 billion euros ($14 billion) in unpaid taxes in Ireland.

The EU, led by its competition chief Margrethe Vestager, accused Ireland of handing Apple a secret tax deal that allowed the iPhone maker to enjoy almost zero tax on all its sales worldwide for more than a decade.

The deal was in breach of the EU's state aid rules, argued Vestager, a former Danish finance minister, who has made clamping down on tax deals a priority.

"It's been clear since the start of this case there was a pre-determined outcome," a spokeswoman for Apple told AFP, confirming the appeal.

"The Commission took unilateral action and retroactively changed the rules, disregarding decades of Irish tax law, US tax law, as well as global consensus on tax policy, that everyone has relied on," she added.

The appeal, lodged at an EU court in Luxembourg, came after the bloc's anti-trust teams released its full 130-page argumentation in the case. "The Commission will efend its decision in court," the Commission said in a short statement.

"The Commission has no competence, under state aid rules, unilaterally to substitute its own view of the geographic scope and extent of the member state's tax jurisdiction for those of the member state itself," the ministry added.

It also raised tensions with Washington, which accused Brussels of "disproportionately" focusing on US corporations. Google, Starbucks and Amazon are also in the EU's crosshairs.

By the Commission's calculations, Dublin allowed Apple to pay a tax rate of 1% of its European profits in 2003 which then dropped to 0.005% by 2014.

Ireland formally lodged its appeal in November after winning the backing of the Irish parliament, with MPs willing to forgo the decision's potential windfall from the case in order to preserve Dublin's pro-business reputation.

Once a corporate backwater, Ireland found economic success by building a low tax entryway to Europe for multinationals seeking access to the EU, the world biggest market. Dublin's official corporate tax rate is 12%, one of the world lowest.

Dublin also claimed procedural errors in the Commission's investigation, which was launched in 2014, arguing Ireland was not contacted to comment on findings contained in the ruling.

"The Commission breached the duty of good administration by failing to act impartially and in accordance with its duty of care," said the submission.

Apple is a valued employer in Ireland, with 6,000 staff in its Cork city campus.

http://www.bizcommunity.com/Article/196/710/155438.html

HOWEVER YOU WORD IT, UBER IS A TAXI COMPANY... UK JUDGEMENT SAYS

New technology has been disrupting traditional models of doing business for many years and legislation has struggled to keep up. It often falls to the courts to develop the law in this regard. Uber may have disrupted the taxi industry with their self-employment scheme, but they failed to have any effect on the UK Employment Tribunal.

In the landmark judgment of Aslam & Farrar vs Uber, the UK Employment Tribunal ruled that Uber runs a transportation business and employs driver to that end.

Partnership agreement dismissed

The tribunal “pierced the contract veil” in a sense and submitted that Uber had gone through great lengths aided by the use of “twisted” legalese in their contracts and “fictions” in their documentation to uphold their incorrect assertion that they were only a technology company.

The claim was made against Uber by some of their drivers, who alleged a failure to pay minimum wages, failure to provide paid leave and detrimental treatment on whistleblowing grounds. It was brought in terms of the UK Employment Rights and Minimum Wage Acts. Their case was that in a number of different ways Uber instructs, controls and manages their drivers.

Uber denied that the claimants were at any material times “workers” entitled to the protection of these legislations. Uber had in place a “partner” agreement with its drivers which provided that the agreement was governed by the laws of the Netherlands. In the event of a dispute, the agreement provided that these should be referred to arbitration to the International Chamber of Commerce Arbitration.

In October 2015, Uber revised the terms of the “partner” agreement without consulting or discussing it with drivers. Drivers were informed when logging into the app and had to accept the new terms and conditions before they could receive new customers.

The new terms stipulated that the Uber driver agree that a contract existed between the Uber driver and the passenger (whoever that may be). The tribunal disregarded these contracts on the basis that they were signed based on the unequal bargaining position between the parties.

Some of the behaviours of which the tribunal were scathing include:
  • Most of the drivers were not English speaking and the tribunal found that the contracts contained “dense language couched in impenetrable prose”. Uber contract documentation was designed to reflect that the passenger had contracted directly with the driver and yet the Uber driver was never allowed to know the identity of the passenger or the destination of the passenger, or even the fee to be paid by the passenger.

    The driver never collects any fee from the passenger and the fee is paid to Uber. The tribunal held that the essential elements needed for a valid contract were not in place and the supposed contract between Uber driver and passenger were pure fiction, which bore no relationship to the real dealings and relationship between the parties; and


  • The contract stated that Uber works for the drivers and yet this was far from true, the fact was that Uber recruited the drivers to operate is transportation business.

    The drivers did not market themselves to the world in general. Uber then submitted that if there was an employment agreement, the drivers do not have it with Uber London, but with the company with whom they contracted, which was Uber BV which was a Dutch company. The tribunal lifted the veil on the operations and found that for all purposes the Uber London company was the point of contact for the Uber drivers. It was found that Uber London recruits, instructs, controls, disciplines and if it deems appropriate dismisses drivers.

Working hours determination

The tribunal also looked at working hours and concluded that the period the Uber drivers travel from home to their agreed operating area, are not to be regarded as working hours.

The calculation of working hours will start when the Uber driver arrives for work to his area and switches on his application waiting for instruction, until the end of the day when he switches off the application. In terms of the way Uber operated, they required the drivers to be on standby “waiting time” to be available to service any bookings made. This was regarded as the start of working hours by the tribunal.

Will Uber appeal?

We will find out in due course whether Uber will appeal this decision. Whatever happens, Uber will have to accept that they are a taxi company which uses technology and not just a technology company that provides transport.

Their competitive edge was obtained in part from circumventing laws to which their competitors had to comply with. They will have to respect the labour laws of the country in which they operate. That is until they can get their driverless taxi model properly off the ground.

http://www.bizcommunity.com/Article/196/357/155011.html

LIQUOR BILL COMMENT PERIOD EXTENDED

The Department of Trade and Industry (dti) has again extended the deadline for submission of written public comments on the National Liquor Amendment Bill to later this month.

In a statement on Sunday, dti Minister Rob Davies said the extension to 15 December 2016 is the result of constructive consultative sessions that the department had with the Portfolio Committee on Trade and Industry and the South African Liquor Brandowners Association.

"The department also hosted a National Liquor Indaba in Gauteng last month where it was apparent that affected stakeholders and associations need more time in order to provide valuable inputs on the Bill. We are happy that the extension will afford all of the stakeholders and members of the public at large more time to share their ideas and proposals with us on the Bill", said Minister Davies.

The Bill was published on 30 September 2016 for broader public consultation where interested parties are required to submit written comments within 30 calendar days from the date of publication.

The closing date for the submission of comments was extended to 15 November 2016 and again to 30 November 2016.

In September, Cabinet announced that it has approved the publication of the bill which seeks to address the socio economic impact of liquor, the slow pace of transformation, standardisation of key aspects of regulation and improved regulatory collaboration.

The bill also addresses the eradication of manufacturing and trading of illegal and illicit alcohol, as well as challenges regarding regulatory capacity within the National Liquor Authority.

The DTI has been hosting consultative sessions for oral public submissions and comments throughout the country since October as part of the national roadshow aimed at soliciting inputs on the Bill from members of the public.

The roadshows will now move to the Lephalale, Moletjie, Mokopane and Musina areas in the Limpopo province.

The Select Committee on Trade and International Relations last week unanimously supported the Liquor Policy. Chairperson Eddie Makue said there was unanimity across all political party lines that indeed the policy is important and will contribute towards responsible drinking.

"We need to look at the detrimental impact alcohol has on our society and give consideration to raising the sin tax such that it becomes a deterrent to the abuse of alcohol, especially by young people", said Makue.
http://www.bizcommunity.com/Article/196/717/154823.html

EMPLOYEES GET A LITTLE MORE FESTIVE CHEER ON THEIR LEAVE CALENDARS

Many South Africans spend a large part of December and January on leave celebrating the holidays with friends and family.

Four public holidays fall during December and January each year: 16 December is the day of Reconciliation, 25 December is Christmas Day, 26 December is the day of Goodwill and 1 January is New Year’s Day. These are four out of 12 public holidays provided for by the Public Holidays Act, No 36 of 1994 (Act).

The Act provides that “whenever any public holiday falls on a Sunday, the following Monday shall be a public holiday”. The court has confirmed that where a public holiday falls on a Sunday, it does not cease to be a public holiday on the Sunday, the Monday following the public holiday is an additional public holiday.

This year 25 December 2016 falls on a Sunday. This means that the following Monday, 26 December 2016 shall also be a public holiday. However, 26 December 2016 is already a public holiday in terms of the Act.

The 2016 calendar gives rises to a situation where the “additional public holiday” on the Monday falls on a day already scheduled as a public holiday. President Zuma has, however, declared an additional day a public holiday in 2016, that being Tuesday, 27 December 2016. Questions arise as to whether an employer is obliged to pay an employee for the Sunday and Monday or only one of these days.

The legal position in this regard is as follows:

If an employee works on a public holiday, the employer must consider the provisions of the Basic Conditions of Employment Act, No 75 of 1997 (BCEA) when determining the amount to pay the employee. In particular, the employer must consider whether the public holiday falls on a day on which the employee would ordinarily work. If the public holiday falls on a day on which the employee would ordinarily work and the employee works on that public holiday, the employee is entitled to double his/her ordinary wage for the day or, if greater, the employee’s ordinary wage for the day “plus the amount earned by the employee for the time worked on that day”. However, if the employee does not work on the public holiday which falls on a day the employee would ordinarily work, the employee is entitled to his/her ordinary wage for the day.

If the public holiday falls on a day on which the employee would not ordinarily work and the employee works on that public holiday, the employee is entitled to his/her ordinary wage for the day and “the amount earned by the employee for the work performed that day, whether calculated by reference to time worked or any other method”. Importantly, the Labour Appeal Court has held that based on an interpretation of the Act, if the public holiday falls on a Sunday, the Sunday remains a public holiday in addition to the following Monday.

In other words, an employer is required to treat both days as a public holiday and to remunerate an employee accordingly with reference to the abovementioned provisions of the BCEA depending on whether the employee works on such public holidays. It follows that in those instances where the public holiday falls on a Sunday, employees shall enjoy an additional public holiday for the year in question. The same applies in respect of Sunday, 1 January 2017 where both that day together with the following Monday are deemed to be public holidays.

http://www.bizcommunity.com/Article/196/548/154528.html

PARLIAMENT APPROVES LEGISLATION TO IMPROVE UNEMPLOYMENT BENEFITS

The long and tortuous process of getting Parliament to pass the Unemployment Insurance Amendment Bill came to an end with its adoption by the National Council of Provinces on Tuesday, 22 November 2016.

The legislation improves benefits for jobless workers and will put to some use the R120bn surplus sitting in the Unemployment Insurance Fund.

The period for which UIF benefits can be claimed has been increased from eight to 12 months. And public servants are included under the UIF for the first time.

Maternity benefits are improved and maternity benefits and claims are treated separately from other UIF benefits and claims.

The draft bill was first discussed in the National Economic Development and Labour Council in 2013 and tabled in Parliament in March 2014. It fell off the table because of the general election and had to be retabled in October last year.

The National Assembly adopted the bill in May and then there was another long delay as Parliament went into recess for the local government elections.

Cosatu parliamentary liaison officer Matthew Parks said on Wednesday the union federation supported the bill as "a major victory that will benefit millions of workers. The federation has fought long and hard for this victory."

The federation called on President Jacob Zuma to sign the bill into law urgently - before the end of next month - to help impoverished and retrenched workers, mothers on maternity leave and their families.

Parks said Cosatu wanted UIF benefits to be extended to workers who resign from jobs and informal sector and self-employed workers (such as taxi drivers) and also to cover paternity, parental and adoption leave.

"Government has agreed to Cosatu's demand to further negotiations with Cosatu at Nedlac on how to expand access to the UIF to cover these missing areas," Parks said.

Parliament's labour portfolio committee is considering the Labour Laws Amendment Bill to provide paternity and adoption leave benefits.

http://www.bizcommunity.com/Article/196/717/154330.html

ADVERTISING STANDARDS AUTHORITY PLACED INTO BUSINESS RESCUE

At a meeting on 18 October 2016, the Board of the ASA resolved that the organisation voluntarily commence Business Rescue proceedings. It will be placed under supervision in accordance with the provisions of Section 129(1) of the Companies Act. The ASA board took this decision to allow time for the process of restructuring the organisation, while reviewing and rebuilding its funding model.

The ASA is a self-regulatory independent body, established by the marketing, communications and media industries and is mandated by those members to regulate against unfair and misleading advertising which could compromise consumers and impact unfairly on competitors. The ASA has been safeguarding consumers’ interests and protecting freedom of commercial speech since 1968. It continues to enforce, adopt and uphold its Code of Advertising Practice in an impartial and objective manner.

“The ASA performs a fundamental public service by self-regulating advertising in South Africa. The implementation of a Business Rescue plan ensures that the public will continue enjoying protection from untrustworthy advertising material while we work on implementing a new funding model,” says Nkwenkwe Nkomo, chair of the ASA.

Continues Nkomo: “The organisation is supported by government and the marketing, advertising and media industries as a relevant organisation. The ASA has applied for recognition as an Ombudsman under the National Consumer Protection Act. The Business Rescue process is therefore an ideal opportunity to overhaul the operations of the ASA toward its imminent Ombud status. Once accredited, the ASA will be recognised in both law and jurisdiction. This will allow it make findings/rulings on all deceptive and misleading advertising claims thereby protecting consumers and raising standards of good conduct within the industry.

“All stakeholders would like to see the continued existence of the ASA as a self-regulatory body for the industry. The decision taken by the Board provides the time and space to make the necessary changes required to safeguard its sustainability and to ensure that we deliver a fit-for-purpose ASA to the industry at large in 2017,” concludes Nkomo.

The Business Rescue practitioner will be engaging with all relevant affected parties and will also inform the process of restructuring the organisation. The ASA looks forward to continuing to discharge its mandate under the purview of its Code of Practice, and will defend the rights of all stakeholders in accordance with this mandate.

http://www.bizcommunity.com/Article/196/12/153827.html

BUSINESS RESCUE CAN DIG MINING COMPANIES OUT OF A HOLE

Driven by low commodity prices and increasing costs, the mining industry is under severe pressure during the past year. Statistics South Africa (SSA) pegs the decline in production at 6,9% between the beginning of this year and the end of August.

“The effects of the low commodity price environment are compounded by the continued rise in operating cost. These include above inflation increases in labour and electricity costs,” says Annabel Bishop, economist at Investec. She says in an effort to remain profitable many mining companies have been forced to reduce both their capital expenditure and head counts.

New technologies putting pressure on coal and iron ore

“The gold price is looking better so gold mining is doing well, but the real pressure is on coal and iron ore. Coal could face a terminal decline as the word switches to new technology to make increasing use of gas and renewable energy sources. Smaller minerals like manganese and chrome are also struggling,” says Mike Schüssler, economist and director at Economists.co.za..

SSA figures show that the production of manganese ore was 13,7% lower in August compared to a year ago, while the production of nickel was 20,6% lower.

In denial

Gareth Cremen, partner specialising in business rescue at law firm, Hogan Lovells, says struggling companies often remain in denial about their financial position until it is too late. “They keep telling themselves things like ‘we just need this one big contract’ or ‘prices will pick up soon’. This means they fail to seek much needed help and by the time reality sets in it’s far too late.”

He says many directors are still not aware of how business rescue can be used to save struggling mining companies – if they act soon enough. This could mean the difference between failing during a difficult period and surviving to take advantage of an improvement in conditions.

Any stakeholder can initiate business rescue

Business rescue was introduced in the Companies Act as a legal process aimed at restructuring companies which are in financial distress in order to save them. The first goal of effective business rescue is to rescue a company from financial distress and avoid liquidation. If this is not possible, the goal becomes to implement a business rescue plan that should result in a better return for the creditors or shareholders of the company than immediate liquidation would. “Ultimately business rescue is a win-win situation in comparison to flat out liquidation. It was developed with the aim of saving jobs, while with liquidation all employees usually lose their jobs,” says Cremen.

The Companies Act makes it quite easy for ordinary people, professionals, directors and even employees to put a company into rescue. “The procedure to begin business rescue was created with ordinary man on the street in mind and it’s not just for attorneys.”

The board of a company can make the decision to go into business rescue of its own accord or any affected person – this includes shareholders, creditors, employees and trade unions representing them – may also apply for a court order to place a company into business rescue. “This means that creditors can also use business rescue as a way of collecting debts owed to them. Placing a company into business rescue ensures that you, as the creditor, can appoint a business rescue practitioner that is truly independent and will look after the interests of all stakeholders. Business rescue in the right hands should yield a higher return to creditors than if that company were to be liquidated.”

Appointing a BRP

To qualify for business rescue a company must be “financially distressed”. That is it most seem reasonably unlikely that it will be able to pay its debts as they become due over the next six months or if it seems likely that the company will become insolvent within six months. Once placed under business rescue the affected person or company then nominates a business rescue practitioner (BRP) to oversee the company whilst it is under business rescue.

Cremen says the BRP plays a significant role in the rescue process. “All BRP's are licensed by the CIPC (Companies and Intellectual Property Commission). Appoint a practitioner who possess the necessary skills and knowledge to revive your business. An experienced attorney in business rescue can be of great help in assisting companies through this process.”

General moratorium

During business rescue the BRP, has full management control of the company and effectively replaces the board and previous management. The BRP is expected to publish a business rescue plan which must be adopted by the affected persons before it can be implemented. “This is the plan to be implemented in order to restructure the distressed company and ultimately bring it back from the brink of extinction.”

Cremen says an important advantage of business rescue is that it places a general moratorium on legal proceedings against a company in business rescue, including any enforcement action against the company its property. Legal proceedings instituted before the business rescue proceedings are also frozen. “This moratorium gives companies some breathing space to restructure its affairs and repay its debts – it must not be abused though. During business rescue, the BRP can also end or renegotiate burdensome contracts, for example a lease on a building that has become unaffordable. Under normal circumstances the company would not be able to do this.”

Schüssler says although the South African economy is not growing, we are still faring better than our BRICS partners, Russia and Brazil. “Zero growth means we are getting poorer as our population is still growing. So it’s not easy out there, but it gives us time to turn things around.”

http://www.bizcommunity.com/Article/196/608/153412.html

DONATIONS TAX CONSEQUENCES OF TRANSACTION TO INTRODUCE BEE SHAREHOLDER

On 19 October 2016, the South African Revenue Services (SARS) issued a binding private ruling (BPR 253) which deals with the donations tax consequences in respect of a transaction which has the effect of introducing a Black Economic Empowerment (BEE) shareholder into a group of companies in order to benefit all the entities within the group in respect of their BEE scorecard ratings and increase the profitability of the Applicant (X), a South African resident company.

The other parties to the proposed transaction are the Seller (Y), a South African resident trust that holds all of X’s shares, Company A (A) a South African resident non-profit company and the Acquirer (Acquirer), a South African resident company whose shares are wholly-owned by A.

SARS had to decide whether the disposal of Y’s shares in X at a discounted price and the subsequent acquisition of the shares by Y in the Acquirer at a nominal subscription price, in order to introduce the acquiring company into Y’s existing group structure for BEE purposes, constitutes a donation in terms of the Income Tax Act, No 58 of 1962 (the Act).

The proposed transaction can be described as follows: Prior to the transaction the Acquirer possesses no assets or liabilities. Y and the Acquirer propose to enter into the following transactions as an indivisible transaction:

  • While the Acquirer is still a wholly-owned subsidiary of A, Y will dispose of 26% of the issued equity shares in X to the Acquirer for a purchase price which is the lower of:
  • the market value of the shares at the date of disposal less a 10% discount; or
  • a capital sum of 40% of X’s future dividends that will either be received by or accrue to the Acquirer over the eight year period following the disposal.

Furthermore, Y’s outstanding claim for the capital amount of the purchase price shall be payable in interest free instalments over the eight year period. In addition, immediately after Y’s disposal of 26% of the issued equity shares held in X to the Acquirer as part of the same indivisible transaction, Y will subscribe for 49% of the issued equity shares in the Acquirer at a nominal subscription price.

Having considered the facts of the proposed transaction and the wording of the relevant sections of the Act, SARS ruled that:

  • Firstly, neither the disposal by Y of 26% of X’s issued equity shares to the Acquirer at a discounted price (as contemplated above) nor the subsequent acquisition by Y of 49% of the equity shares in the Acquirer at a nominal subscription price will constitute a “donation” as defined in s55(1) of the Act.
  • Furthermore, neither of these transactions will be deemed to be a donation as envisaged in s58(1) and s57 of the Act will not be applicable to the proposed transaction.

SARS ruled that the ruling is subject to the additional condition and assumption that Y and the Acquirer are independent parties dealing at arm’s length.

Section 55 of the Act defines a donation as any gratuitous disposal of property including any gratuitous waiver or renunciation of a right. As a brief comment to BPR 253, it should be noted that in Welch’s Estate v C: SARS 2005 (4) SA 173, the Supreme Court of Appeal held that the legislature did not eliminate from the statutory definition of “donation” the common law requirement that the disposition be motivated by pure liberality or disinterested benevolence, and not by self-interest or the expectation of a quid pro quo of some kind from whatever source it may come. As the disposal of X’s equity shares to the Acquirer will take place to improve the BEE scorecard ratings of the group, amongst other things, the donation is not motivated by pure liberality or disinterested benevolence and it is done for self-interest and with the expectation of a quid pro quo. It is most likely for this reason that SARS ruled that the transactions did not constitute a “donation” as defined in the Act.

http://www.bizcommunity.com/Article/196/710/153052.html

SARS GOES TO COURT TO TERMINATE LTC CONTRACT

The South African Revenue Service (SARS) has instituted court action to terminate a contract with a service provider due to the company's failure to disclose its familial relationship between its shareholder and Commissioner Tom Moyane.

In a statement on Thursday, 20 October 2016, the revenue service said the urgent proceedings at the High Court were instituted due to Lekgotla Trifecta Consortium’s (LTC) failure to disclose the family ties between its director Nhlamulo Ndlhela and SARS Commissioner Moyane.

“SARS wishes to announce that it has instituted urgent proceedings at the High Court to immediately terminate the contract between SARS and LTC. This is to properly comply with the obligation the law imposes on organs of state to pro-actively raise and resolve procurement irregularities,” said SARS spokesperson Sandile Memela.

SARS had previously announced that it intends to approach the High Court with the aim to declare the contract between SARS and LTC invalid should the parties fail to do so amicably.

“This follows LTC’s failure to declare the potential conflict of interest between its director Mr Ndlhela and SARS Commissioner, Mr Moyane, as this constitutes material irregularity and breach in the award of the tender,” said Memela.

The court proceedings are intended to interdict LTC from any further steps to implement the master service agreement and any and all service request agreements concluded between SARS and LTC.

“It is SARS’ position that TLC’s failure to disclose the familial relationship between its shareholder Mr Ndlhela and the Commissioner constitutes material breach and irregularity in the award of the tender.

“This action must be seen and understood from SARS uncompromising and beyond reproach manner in keeping with its Constitutional and statutory duty to maintain a high standard of professional ethics, accountability and transparency in its administration as well as the prevention of possible irregular expenditure and prejudice to the financial interest of the state.”

As the matter is now the subject of legal proceedings, and out of respect to the pending judicial process, SARS said it does not intend making any further comment on the merits or demerits of the matter, said the revenue service.

http://www.bizcommunity.com/Article/196/547/152696.html

NEIGHBOURS AND BUILDING PLANS

This article considers the legal standing of neighbours to object to, and prevent, the approval of building plans. It is important to understand that often an application for the approval of building plans is made in conjunction with an application to rezone the property, or to relax building lines, or to remove a restrictive condition or covenant in a title deed. All three of these applications are completely different to the application for approval of building plans itself. This article deals only with the application for approval of building plans.

The law

The process of applying for and obtaining approval for building plans is set out in the National Building Regulations and Building Standards Act 103 of 1997 (“the NBA”). Very basically, the process is that the proposed plans must be submitted for approval to the local authority’s building department – which then considers them – and if they are happy with them, they are approved.

Is it necessary to notify neighbours?

There is no legal requirement in the NBA requiring an applicant to inform neighbours of an application to approve building plans. However, there might be such a requirement imposed by the by-laws or a policy of the local municipality. If there are simultaneous applications for rezoning, relaxation of the building lines, or the removal of a restrictive condition or covenant, then the neighbours will be given notice – not because of the building plan application, but because it is a requirement that the neighbours be given notice for these other three types of applications. It often happens that the first time an owner finds out about an application for the approval of building plans is after the application has already been submitted by his neighbour, approval for same has been given, and the building works are starting.

Do neighbours have a right of objection?

In terms of the NBA, neighbours do not have a right to object, unless they are given this right in another law, or the municipality has done something to create an expectation on the part of the neighbours that they have a right to object – such as telling them that they have this right, or inviting them to object, or a practice exists and has existed for some time in terms of which neighbours are given the opportunity to object. This has been confirmed by our courts in the Walele v City of Cape Town and Others.

If an objection is submitted, will this prevent approval?

Not necessarily. The municipality is bound to consider the objection, but must still make up its own mind as to whether the plans should be approved or not.

Does this mean that the rights of neighbours are not taken into account at all?

No. The municipality is obliged to take into account the rights of neighbours (and how the proposed building will affect the rights of the neighbours) in terms of section 7 of the NBA. It is precisely because the law provides that the municipality must, as a default position, take into account the rights of neighbours, that no provision for neighbours to object is provided for in the NBA. In addition, if a neighbour ‘catches wind’ of a pending application and is unhappy with it, the neighbour can submit objections or comments to the local municipality, which is then bound to consider those submissions when making its decision as to whether or not to approve the plans.

Is there any right of appeal for unhappy neighbours?

Not in terms of the NBA. Some legal practitioners are of the view that it is possible for an aggrieved neighbour to appeal the decision to the municipal manager in terms of section 62 of the Local Government: Municipal Systems Act 32 of 2000. The court held in Municipality of the City of Cape Town v Reader and Others, however, that it is not open to aggrieved neighbours to appeal to the municipal manager in this fashion. The only recourse an aggrieved neighbour has is to bring an application to court in terms of the Promotion of Administrative Justice Act 3 of 2000 (“PAJA”) for the court to review (and possibly set aside or amend) the decision to approve the plans. They will succeed in this application only if they can convince the court that there was a procedural flaw in the approval process, or that the approval should not have been granted because the proposed plans would impact adversely on the neighbour’s property as contemplated in section 7 of the NBA.

Conclusion

The municipality is obliged, as a matter of course, and regardless of whether any objections/comments are submitted, to take into account the rights of neighbours and how the proposed building plans will affect the neighbours when assessing an application for the approval of building plans. As neighbours are already protected in this fashion, the law generally does not provide them with an opportunity to object/comment before the plans are approved. Although there are exceptions to this rule, they are few and far between. It is thus generally not necessary for a neighbour to inform you about his building plan approval application, nor is it necessary for him to acquire your consent before he can obtain approval and consequently start building.

It may, however, be a requirement of other applications submitted for approval (for example for relaxation of a building line) that your neighbour gives you notice and/or obtains your consent, but this is not applicable to building plan approval applications specifically.

http://www.bizcommunity.com/Article/196/494/152420.html

APPLE WINS APPEAL, US$120M AWARD FROM SAMSUNG RESTORED

WASHINGTON, USA: A US appeals court on Friday, 7 October 2016, handed Apple a victory in one of its battles with rival Samsung, reinstating a $119.6 million verdict for the iPhone maker for patent infringement.

In the latest twist in a series of patent cases between the smartphone giants, the Federal Circuit Appeals judges ruled 8-3 in a rehearing of the case, reversing a panel of the same court in February.

Apple's lawsuit contends that Samsung infringed on patents for "slide to unlock" and autocorrection, among others.

Friday's ruling said Samsung failed to prove that some of the Apple innovations were "obvious" and thus not able to be patented.

The opinion also said the court must defer to the decision of the jury when in doubt.

"Even in cases in which a court concludes that a reasonable jury could have found some facts differently, the verdict must be sustained if it is supported by substantial evidence on the record that was before the jury," Judge Kimberly Moore wrote for the majority.

Apple asked for an "en banc" rehearing of the case - before all the appeals court judges - following February's decision to toss out the award.

Apple had sought some $2.2 billion at trial, only to have a jury award the California-based company $119.6 million.

In February, the panel of judges ruled that Samsung did not infringe on one of the Apple patents and that the remaining two, which involved auto-correct and slide-to-unlock features, were not valid.

Neither company responded to requests for comment.

The case is separate from another suit in which Samsung was ordered to pay $548 million for patent infringement to Apple and whose appeal is set for a hearing next week in the US Supreme Court.

Samsung and Apple decided in 2014 to drop all patent disputes outside the United States, marking a partial ceasefire in a seemingly relentless legal war between the world's two largest smartphone makers.

The companies have battled in close to a dozen countries, with each accusing the other of infringing on various patents related to their flagship smartphone and tablet products.

http://www.bizcommunity.com/Article/196/739/152043.html

EVICTIONS: BALANCING LANDLORD AND TENANT RIGHTS

Many tenants think that the law prevents landlords from evicting them once a lease has ended, if they can't find accommodation, but this may not be the case.

The individual facts of each case will be given careful consideration before a decision is made on whether or not to evict.

The recent case of Pierre Coetzee vs Pipet Place Eiendomme CC provides some insight into what the courts will take into consideration.

Court finds in favour of landlord

This is a matter that went on appeal from the Empangeni Magistrate's Court, where in essence, the magistrate found against the tenant and evicted him after his lease had ended.

Coetzee had signed a lease for a property belonging to Pipet Place Eiendomme. The lease ran for 17 months and there was no provision for renewal. However, the tenant refused to move out of the property once the lease had ended, despite the owner giving the required one calendar month's notice.

The tenant initially cited three reasons for not vacating the home: there was a dispute between the parties pending before the KwaZulu-Natal Rental Housing Tribunal; the owner had failed to comply with his duties as landlord in respect of maintaining the property and the tenant also noted he had a lien over the property insofar as improvements were concerned; and finally, he claimed that he didn't have access to alternate accommodation.

On appeal the tenant abandoned the first two reasons for staying in the property and relied only on the fact that he couldn't find alternate accommodation. The important factors here are that the tenant lived alone, there were no elderly people or children involved and he wasn't destitute.

The tenant's personal circumstances

The tenant argued that the magistrate had failed to take all his personal circumstances into account as required by PIE. However, the appeal court disagreed and found that "the learned magistrate was acutely aware" of the tenant's personal circumstances and financial position. The fact that it was difficult, but not impossible, to find alternative accommodation counted against the tenant.

The appeal court held that there was no merit to the complaints raised by the tenant.

Interestingly, it appears that the reason the tenant was so reluctant to move was that he couldn't find a similar property to lease for the relatively low sum of R3,000 per month. And although he was employed, he believed that PIE would force the landlord to renew the lease.

What the judge said

However, the appeal judge found: "The evidence established that after the monthly tenancy was validly cancelled, the appellant managed to remain in unlawful occupation and rent-free for a period of about nine months. I further consider that the appellant cannot be said to be disadvantaged in any way, nor is he poverty-stricken. Far from it. He is self-employed and capable of generating an income for himself. I see no reason why he cannot find suitable alternative accommodation. It is time that he did. It follows that the appeal cannot succeed and must be dismissed."

TAX CLEARANCE AT YOUR LEISURE

SARS has recently gone live with a new Tax Clearance System (TCS) which stands to replace the traditional Tax Clearance Certificate (TCC) procedures. This TCS system offers taxpayers the flexibility of viewing their own tax compliance status through their e-filing profile whilst also allowing other authorised users to view the taxpayer’s tax clearance for verification purposes.

Personal Tax Compliance

This TCS function sheds more light on the taxpayer’s personal affairs by segmenting compliance into various categories, namely registration, submission of returns, debt and relevant supporting documents. Each category is marked either green or red with a brief description as to compliance or non-compliance. It goes without saying that the taxpayer must be registered for e-filing and have an income tax reference number in order to make use of this function.

The system has gone further in allowing the taxpayer to receive a detailed indication of which period their non-compliance arises and allows the taxpayer to rectify any shortcomings efficiently before making their status available to others. This function proves to assist taxpayers who are unaware of outstanding returns or penalties which have become difficult to monitor of late.

South African taxpayers abroad will also enjoy the functionality of the system and will no longer need to complete power of attorneys to have their tax clearance certificates collected from a SARS branch.

Third Party Verification

The TCS system will in due course replace clearance certificates as a whole by allowing third parties to view the taxpayer’s compliance status when the authorisation pin and tax reference number are made available. The pin is entered on the third parties e-filing profile, which in turn confirms or denies compliance within the various SARS categories. This ensures the taxpayers compliance can be monitored by the authorised third party on a real time basis whilst ensuring that the taxpayer’s security is maintained.

Additional security functions have been added to ensure the taxpayer is able to monitor which third parties have viewed their profile. Any suspicious third party viewings can be avoided by the taxpayer simply changing its pin and redistributing the updated pin to trusted third parties.

The TCS is a welcome fixture to third parties who no longer need to concern themselves with the clearance certificates expiring, and will be enjoyed by taxpayers who will avoid frequent visits to their nearest SARS branch to collect documents which will inevitably expire. The new and improved system is also guaranteed to streamline commercial transactions and credit applications by eliminating the notorious delays in obtaining tax clearance certificates.

http://www.golegal.co.za/tax-clearance-leisure/

Keller Williams / FPS Attorneys

Fun Challenge Action Netball

On 21 September 2016 after Keller Williams Extreme accepted the fun challenge from FPS Attorneys the battle began at 18h00 in the Brackenfell Action Arena.

After 30 minutes of ‘blood, sweat and tears’ and even more laughter and also a few ‘grass burns’ the battle ended in a tie with 4 point to each team.

Four awards were handed out:

  • The Champagne Award went to Jenet Botha for having the most sparkling team-spirit;
  • The No 1 Award went to Elmien Nothnagel for being the best player;
  • The Clumsy Award went to Phillip Doman for the player making the most mistakes (we must admit, after he played the correct position, there was no stopping)
  • The Tell you Award went to Eben Benade, for giving the most advice.

As the challenge ended in a tie, the floating trophy was taken by Albert Gerber to Keller Williams Extreme, Durbanville.

We all had a wonderful time and are looking forward to the next challenge.

PROFESSIONAL BODY VOICES SOME CONCERNS ON NEW TAX LAWS

The proposed 2016 Tax Administration Laws Amendment Bill will bring welcome change, but there are still concerns about the autonomy of the tax ombud, with regard to taxpayers' rights.

To clarify, section 16 speaks of the mandate of the office of the tax ombud to review and investigate any systemic issues related to a service matter; including the application of the provisions of the Act; or procedural or administrative provisions of a Tax Act, as defined in the above Act, only at the request of the minister. It is one of the areas being discussed with the ministry to ensure that the office of the ombud has true power to bring on substantial change and oversight.

We want to see that this arbitrator is being given the ability to investigate complaints about infringements of taxpayers’ rights by South African Revenue Services (SARS). This includes recent allegations that SARS delays paying refunds, especially around its financial year end. These have never been investigated, so if the ombud can achieve this kind of power, then it would be of inordinate value to taxpayers. It means that SARS will be called to question when their actions are not in line with taxpayers’ constitutional rights, or fair and reasonable administrative actions.

It must be noted that the above is not something new, other jurisdictions like Canada, India and Australia have been given a similar mandate.

Rise of the tax ombud

This position was originally created in 2013 to engage with the rising concerns of taxpayers when dealing with SARS, as well as to take a vital seat at the taxation table.

There was a need to have an intermediary to deal with the complaints laid before SARS. Under the leadership of Judge Bernard Ngoepe, this office has seen considerable success and played a pivotal role in resolving a significant number of cases.

To date, 88% of the cases referred to it have been resolved with SARS taking its recommendations into consideration.It has, perhaps surprisingly, found joy on behalf of taxpayers and practitioners in spite of having limited authority and weight. These successes have played no small part in the proposed changes ahead.

More time for mandate

Also included within the draft bill are crucial proposed changes to the office of the ombud that could potentially give both taxpayers and ombud greater control and independence when it comes to dealing with SARS and provide taxpayers with a reliable, neutral space in which to address challenging situations or issues.

With the current legislation, the office of the ombud has only three years to achieve its mandate. The new draft legislation proposes to extend this duration to five years, a very welcome and applauded step, as it can be difficult to instigate real change in only three years. This is particularly true of an office that is so new.

By extending the length of time for the office to run, the draft legislation will allow the office potentially save even more taxpayers’ frustration and concern. Should the legislation be signed off, the office will run for five years effective from 2017, but how it will be managed and when its start date finalised has yet to be determined.

Other welcome changes

In addition to the time extension, the office of the ombud has been given more power. Previously, when the office wanted to appoint staff, they could only do so in accordance with the SARS Act and after consultation with the SARS commissioner. With the current draft legislation, the office now has the autonomy to independently appoint staff and this will support them in attracting talent. It shows that they are increasingly independent of SARS.

Finally, the proposed amendments also place control of the budget into the hands of the ombud. While the organisation will still be funded by SARS under the proposed legislation, there are at least some steps being taken to shift the boundaries of control.

Currently, the recommendations the office of the ombud makes are not binding to SARS and taxpayers. They may choose to follow them or not, however if not accepted by a taxpayer or SARS, reasons for such decision must be provided to the office. SARS has accepted all of these recommendations so far and it is clear that they take the office of the ombud seriously. Hopefully this will only bode well for the growth of the office going forward.

http://www.bizcommunity.com/Article/196/512/149971.html

5 SIGNIFICANT LEGAL DEVELOPMENTS EVERY ENTREPRENEUR SHOULD BE AWARE OF

Advice on POPI, BBBEE and more from legal expert and entrepreneur Andrew Taylor

BY LEBOGANG TSELE

The legal sector has in recent years had to play catch-up to the current fast-changing business environment.

The sector has had to find ways to regulate new industries such as the new shared economy and disruptive innovations such asUber and AirBnB.

Other recent changes to the legal landscape was the introduction of new legislations such as the recently amended BBBEE codes as well as the Protection of Personal Information Act.

We sit with legal expert and entrepreneur, Andrew Taylor of LexNove, an online legal platform. He shares the legal developments that are likely to impact SMEs in the coming year and new legislation that may translate to more opportunities for entrepreneurs.

  1. A move towards value-based and on-demand flexibility for legal services
  2. There will be a gradual movement away from time-based, bill-by-the-hour legal services, to a more value-based, fixed price approach to rendering legal services.

    Clients are beginning to demand certainty as to their cost exposure, and hourly rates simply do not provide such certainty.

    A big movement being seen worldwide is toward freelance, on-demand, legal services, through disintermediating internet platforms such as LexNove.

    DLA Piper, in this regard, one of the biggest law firms on the globe, has recently announced that it will be launching its own freelance, on-demand, lawyer program, to be rolled out in the UK during the course of 2016. See also: Significant legal developments in the SME sector from the past year.

    There will also be a movement toward more legal process outsourcing. This entails the more mundane legal work, such as the ordering of court documents and basic research, being outsourced by law firms to lower cost jurisdictions or companies that specialize in these more mundane tasks. This will entail a significant cost saving, as high priced lawyers will not be dealing with such grunt work, where 25 years of legal experience is really not necessary.

    There will also be significant increases in the adoption of technology to speed up and increase the efficiency of legal services. A good example of this are the early in-roads being made in e-discovery for the purposes of litigation. This is not a novel concept in overseas jurisdictions but is at an early adoption stage in South Africa.

  3. POPI gets its teeth
  4. With the promulgation of the Protection of Personal Information Act 2013, it's likely that the enforcement arm of the Act, the Information Regulator, will be appointed during 2016.

    The Information Regulator will, in theory, enforce strict compliance with what personal information is collected from clients and 3rd parties by companies, and how such information is processed and utilized by the company. Companies will be required to specify exactly what personal information they collect, who they share such information with, and what that information will be used for.

  5. Legal compliance requirement an additional burden for startups looking scale
  6. As startups reach a point of inflection and begin to scale, there are still significant burdens and regulatory challenges for entrepreneurs.

    The new BBBEE codes, for example, impose regulatory compliance burdens on all businesses above certain thresholds while issues such as VAT compliance as revenue related thresholds are met will continue to be pertinent for businesses in South Africa.

    The particular legal nuances of each entrepreneur’s situation need to be considered, but, a firm grasp of the Protection of Personal Information Act will be helpful. In the event that the information regulator is appointed, the necessary changes to a company’s policy regarding the manner in which personal information is processed will need to be effected. This may also entail the amendment of client contracts, terms of service, privacy policies and the like, so as to ensure compliance with the Act.

  7. Affordable and accessible legal services
  8. The movement toward on-demand, freelance, lawyers charging a more affordable rate, will allow entrepreneurs and start-ups, which have been unable to afford legal services until now, the ability to obtain quality legal services at a fraction of the cost.

    This will enable the entrepreneur to concentrate on his/her core business, instead of attempting to hash together their own legal contracts and documents for example, and allow for an experienced on-demand lawyer to take care of such needs.

  9. Opportunities for disruptive technologies
  10. The first stage of implementation of the Competition Amendment Act is expected in 2016 and this could provide some significant opportunities for disruptive technologies and start-ups with a new angle of approach to existing markets, as the amendments manifest themselves in the market. Quite how this will happen, is a matter of some speculation.

    http://www.smesouthafrica.co.za/16334/Legal-challenges-and-opportunities-business-owners-are-likely-to-face-in-2016

THE HANGOVER - WHAT THE ELECTION RESULTS REALLY MEAN

In their unpacking of the recent local elections three experts believe that Zuma will be with us till 2019, that the African National Congress (ANC) might split or it might not, and the rise of leaders such as Mmusi Maimane and Julius Malema are giving South Africans different choices. Lumkile Mondi, senior lecturer the University of the Witwatersrand, Justice Malala, political commentator and newspaper columnist, and Peter Bruce, editor in chief, BDFM Publishers, presented their interpretations of what the recent local elections really mean now and in the future, at an event sponsored by Nandos, moderated by Jeremy Maggs and hosted at the Wits Business School.

The President

While the discussion was about the local elections, it was not long before the President was mentioned. While it is time for President Zuma to go, I don’t think he is going anywhere states Malala, who believes that his influence on our politics will be felt till 2019 and even beyond that. “That narrative has already started, with the blame for the ANC’s performance in Gauteng being no-one’s - not Zuma’s or anyone else’s, but everyone’s’. On Monday the ANC will tell us that they have reflected and need to go back to the masses and reflect more.”

Bruce believes that President Zuma has a very hard job between now and the ANC elective conference next year, as he does not want to end up being the victim of negotiations between parties that are far from him that could weaken him in the elections. “This is not because he can be elected but because he wants to control the elections so that he is protected by whoever gets elected and so that his networks are protected.

They both agree that the President’s position is entrenched and who replaces President Zuma will be like President Zuma because his networks need to be maintained, but now people are showing an impatience with this so there is the risk that that person may be protested against as well. “The problem is that this distracts from running the country so until this is gone our country is not running properly. It eats at you legitimately,” says Bruce.

A positive of the elections has been the rise of leaders such as Julius Malema and Mmusi Maimane coming through as they come from a different background and represent different options for the country, where you can make clear choices and not choices based on legacy and liberation, he adds.

In pain

These elections are a reflection of what is going on in the ANC and it is an organisation that is in pain; a pain that is probably the deepest it has ever felt in its 104 years of existence. “It is under such strain, that it might not splinter, but instead split down the middle. It is so factionalised that it is impossible for it to function, but it will continue to maintain and preserve the current status quo until it is clear who will succeed Zuma,” says Malala.

The trend is a rejection of the ANC. Essentially the ANC has killed itself off, he states, and the people showed their dissatisfaction by staying at home. “Over three million (3.3) people stayed home and did not vote. The ANC has the opportunity to get them back by changing their narrative, but the EFF and the Democratic Alliance (DA) will also work hard to capture these votes. Who these 3.3 million will vote for in 2019 will be interesting.”

The trend of the ANC losing votes in urban areas has continued, with it even losing some support in the urban Gauteng townships, but more than that, it has also happened to some degree in the rural areas. Bruce adds that he is not sure about the ANC splitting into a rural and urban party. “I would think they would try very hard to avoid this.” Mondi felt that interesting dynamics are taking shape within the ANC and so it has to split, with those reluctant to see President Zuma go, and those who want to see him go.

Turning point or tree in the distance?

While this election marks a big change, it is not yet a turning point for Bruce. He described it as driving through the Karoo and coming up a hill and seeing a tree in the distance. “That tree is 2019, and that is what everyone is positioning themselves for. This is step, a big step on the way to 2019.”

The prize here is the country - not Tshwane or City of Johannesburg or Ekurhuleni, and that is where we are heading he adds. “I want to get to the tree on the hill and that is 2019. So we need to get up every morning and do what we do. Time will reveal itself. Events happen. We don't know what is going to happen this afternoon and regardless of whether coalitions are formed or not, we will survive. We are resilient and tough.”

Malala felt that the elections are a turning point in the country, “Society is changing and there are consequences. The future is beyond the ANC now, but it is about how we get there,” says Justice.

CONCOURT CLARIFIES EMPLOYMENT EQUITY MEASURES

On 15 July 2016, the Constitutional Court in Solidarity and Others v Department of Correctional Services and Others(CCT 78/15) [2016] ZACC 18 handed down its judgment on disputes surrounding the Department of Correctional Services' (Department) refusal to promote or employ individuals based on the demographic targets set out in the Department's Employment Equity Plan (EEP). ConCourt clarifies employment equity measures.

In terms of s21(1) of the Employment Equity Act, No 55 of 1998 (EEA), certain employers are required to, among other things, “prepare and implement an employment equity plan which will achieve reasonable progress towards employment equity in that employer’s workforce”. The Department’s EEP for the period 2010 – 2014 contained numerical targets to be achieved by the Department within a five year period based on national demographics. The Department assessed its level of racial and gender group representation exclusively on national demographics.

In 2011, the Department advertised vacant posts in the Western Cape. The 10 individual applicants in this case (five coloured women, four coloured men and one white male) applied for these posts. Nine out of the 10 applicants were recommended for appointment. However, eight of the applicants were denied appointment to the respective positions due to race and gender considerations which were “over represented”, according to the Department.

The Labour Court ruled in favour of Solidarity, the trade union representing the applicants, stating that the EEP was non-compliant with s42 of the EEA in that it failed to take into account both regional and national demographics. However, the Labour Court desisted from granting any relief to the applicants or declaring the EEP invalid. Instead, the Labour Court deemed it most appropriate to order that the Department take immediate steps to ensure that in the future both national and regional demographics are taken into account when the setting equity targets for its workforce.

The applicants appealed to the Labour Appeal Court (LAC) against the Labour Court’s decision not to grant the individual applicants any relief and/or declare the EEP invalid due to its non-compliance with s42. The LAC dismissed the applicants’ appeal, ruling that the EEP passed the test required in terms of the EEA, read together with the Constitution of the Republic of South Africa, 1996.

In the Constitutional Court, the court addressed the Barnard principle set out in South African Police Service v Solidarity obo Barnard [2014] ZACC 23 which states that an employer may refuse to appoint a candidate who falls within a category of persons that is already adequately represented at a certain occupational level. In this case, the court was required to consider whether the Barnard principle’s application is limited to white people only and whether this principle may also be applied in respect of gender. The court ruled that the Barnard principle is not only limited to white people but rather to candidates from all racial groups as well as both men and women.

The applicants’ submission that the Department’s EEP be declared null and void due to its non-compliance with s42(a) was dismissed by the court, ruling that that the EEP had already run its course and there was no need for an order declaring its invalidity.

The court also rejected Solidarity’s contention that the numerical targets constituted ‘quotas’, which are outlawed under the EEA. One of the distinctions, as set out in Barnard, is that a quota is ‘rigid’ as opposed to numerical targets, which are flexible. The court ruled that because the EEP made provision for deviations from the set targets, the targets could not be said to be rigid and did not constitute quotas.

Most importantly, the court held that the Department acted unlawfully and in breach of its obligations under s42 of the EEA in failing to consider regional demographics in assessing the levels of representation and subsequently setting targets for its EEP. The Department thus made use of a benchmark which was not authorised under the EEA and as such had no justification for using race and gender as a means to refuse the appointment/promotion of the individual applicants. Therefore, the decision not to appoint most of the individual applicants constituted unfair discrimination.

The Department also argued that because it is a national department, it is excluded from the requirement to consider both national and regional demographics. The court similarly rejected this argument on the basis that s42(a) does not exclude national departments from its application.

Finally, the court ordered the coloured applicants, who were recommended for appointment, be appointed to the relevant posts, to the extent that those posts were vacant and be paid the remuneration attached to those posts with retrospective effect. Regarding the applicants whose posts were currently occupied, the court ordered that the Department pay the applicants the remuneration attached to those posts with retrospective effect.

The court’s ruling serves as a reminder of the delicate position of employers who fall within the requirements of s42(a) of the EEA and goes a long way to clarify what is required, procedurally, to achieve a ‘transformed’ workplace which is compliant with the EEA.

SOCIAL MEDIA AND OUR LAW

Social media platforms such as Twitter, You Tube, Instagram and Facebook, have become an integral part of our everyday lives and have an important role to play in our social environment and help us keep in touch with others and stay informed of events around the world. Yet despite many of the benefits of social media platforms, these platforms also create opportunity for abuse and often bring out the worst in people, often without thought as to the consequences of their action.

Many people lose sight of the fact that the moment something is posted on social media sites, it is considered “published” and is therefore subject to the laws applicable to traditional media, such as newspapers. Accordingly, claims for defamation and hate speech as well as dismissal or disciplinary action for social media misconduct become very real possibilities.

Defamation

Defamation can be defined as the wrongful, intentional publication of words or behaviour in relation to another person which has the effect of injuring his status, good name or reputation.Our courts have recently set a new legal precedent after it granted a Facebook user an interdict preventing a friend from posting about his personal life on the platform after she defamed him thereon. In another case a woman was awarded R40,000 in damages after claiming that her former husband and his new wife were bad-mouthing her on Facebook. The judge found that although the former husband was not the author of the postings, he was tagged in and knew about them and allowed his name to be coupled with that of his new wife thus creating liability jointly with the author of the postings.

Hate speech

Hate speech is any speech, gesture or conduct, writing, or display which is prohibited because it may incite violence or prejudicial action against a protected individual or group, or because it disparages or intimidates a protected individual or group. The law may identify a protected individual or a protected group by disability, ethnicity, gender, nationality, religion, race, sexual orientation, or other characteristic.Although freedom of expression is a constitutional right, it is not an absolute right. If what you say, or publish via social media platforms, has a negative impact on the rights of another, then your right to freedom of expression may be limited.

Dismissal

Disciplinary action, including dismissal for social media conduct have increased drastically over the past few years often following on the heel of comments made or posted on social media sites by employees. The Commission for Conciliation, Mediation and Arbitration (CCMA) have dealt with several of these cases where the dismissal was found to be fair based on the evidence garnered from the social media sites.Some of the grounds for dismissals have included derogatory Facebook status updates, an employee criticising management, criticising the employer, employees using social media to convey internal matters of the business to former employees, etc.

Take Note

What should you take note of when using social media to avoid legal or disciplinary action arising from your conduct on these social platforms? The most common defence against defamation is that the publication was true and in the public interest. Make sure about your facts before posting anything and ensure that you can back your comments with substantiating evidence and factual information. Accordingly, making a comment about a friend on a matter that is not in public interest could be defamatory even if it is true.

Regularly check your social media profiles to ensure that your name is not being linked to defamatory statements of others. Do not post anything which could be regarded as incitement to cause harm based on race, religion, ethnic background, gender, sexual preference etc. Adhere to the social media strategy and policies of your workplace. Find out what these are, and if these are not in place, keep the following guidelines in mind:

  • Keep posts legal, ethical and respectful.
  • Do not engage in online activities which could harm the reputation of the company.
  • Do not disclose any confidential or business information of the company.
  • Do not discuss colleagues, managers or information pertaining to the company.

A good rule of thumb is to ask yourself whether you would be willing to say something out loud in a room full of people or colleagues. If the answer is no, then you shouldn’t consider posting it on social media.(Author and extract from www.dupwest.com)

For further Advise on Social Media policies please contact our offices.

FPS Attorneys Freddie Steyn / Louis Lourens

IS PURCHASER OR SELLER RESPONSIBLE FOR SPECIAL LEVIES?

The legal issue of whether the purchaser or seller of an immovable property is responsible for the payment of special levies raised by the body corporate or the homeowners association concerned before transfer occurs is one that can be ratified by a tripartite agreement. Is purchaser or seller responsible for special levies?When a property is located within a sectional title scheme or within an estate governed by a home owners association, there are levies payable to either the body corporate (if it is a sectional title scheme) or home owners association (if it is an estate, also known as a home owners association area). These levies are utilised by the entity concerned to pay for expenses common to all of the owners in the scheme or estate concerned. These levies are in addition to amounts payable to the municipality each month for rates and taxes.

Special levy

A special levy is a levy raised by the governing body when there are no funds available from the ordinary levies raised according to the annual budget, which is determined in advance for each coming year. Special levies are raised only to cover extraordinary or unusual expenses that are not budgeted for in the ordinary course. Common examples would include covering emergency maintenance events, such as repairing collapsed or damaged walls or security features, or for paying large, unanticipated and unbudgeted for municipal bills. These might occur where a municipality levies a huge amount of money against a sectional title scheme or homeowners association in one month, which includes billing for the prior three-year period.

Tripartite agreement

The best way to ensure that a dispute does not arise in relation to whom is liable for special levies, is to ensure that a tripartite agreement is signed by the purchaser, seller and managing agent or, if there is no managing agent, directly by the trustees of the body corporate concerned.

This tripartite agreement usually stipulates that the seller is liable for any special levy billed to the levy account before transfer and that the purchaser will be liable for any special levy billed to the levy account after transfer. This very clearly sets out the rights and obligation of all the parties concerned and usually with such an agreement in place there is very little scope for a dispute to arise in relation to special levies.

Disclosure of future special levies

If a seller is aware that future special levies will be billed to the levy account after transfer, and the seller does not advise the purchaser of this before the signature of the offer to purchase, the existence of the special levy raised after transfer may constitute what is commonly known as a ‘latent defect’, in terms of law. Generally, the seller will be liable to the purchaser for latent defects discovered after transfer unless seller has disclaimed liability in respect thereof offer to purchase itself, usually by way of a voetstoots clause.

A voetstoots clause is a clause that states that the item sold is sold in its current condition and that the purchaser accepts the state of that item in that condition and that the seller will accept no responsibility for any faults or defects that are subsequently found to exist in relation to that item.

However, a voetstoots sale will still result in liability to the seller in respect of the latent defect if the seller fraudulently misrepresented to the purchaser the state of affairs in respect of the item sold.

The courts have looked at this issue several times and have set a relatively high bar in relation to what constitutes fraudulent misrepresentation in this context. If a seller knew about the existence of the latent defect but did not disclose this to the purchaser, this alone will not constitute fraudulent misrepresentation. The seller would need to have actively taken measures to hide the existence of the default from the purchaser (upon the purchaser investigating same) or would have had to have taken active measures or specifically had remained silent in the face of questions about the issue, in order for this to constitute fraudulent misrepresentation and negate the effect of a voetstoots clause.

Returning to the issue of special levies, this means that if a seller does not disclose the existence of future special levies that it is known will be raised in relation to the property, that seller has failed to disclose the existence of latent defects in relation to the property. However, this does not render the seller liable to the purchaser in respect of same, unless the actions of the seller in the situation constituted a fraudulent misrepresentation in relation to those special levies. For example if the purchaser had inquired whether there were any future special levies that were to be passed and the seller had responded in the negative or had not responded at all, this would arguably constitute fraudulent misrepresentation.

However if the purchaser had not made this enquiry and the seller had not volunteered the information, this would not constitute fraudulent misrepresentation and the seller would not be liable to the purchaser in respect to same, as there is no legal obligation on a seller to disclose this to a purchaser.

Conclusion

Accordingly, it is imperative for a purchaser of any property in a sectional title scheme or an estate to investigate actively whether there are any future special levies planned in respect of the property, which the purchaser may become liable for after transfer – this must be done before signature of the offer to purchase. It is imperative when buying or selling immovable property that you get the right advice from a knowledgeable and experienced attorney. Do not get caught out by an issue as important as special levies, regardless of which side of the fence you are on.

Source: http://www.bizcommunity.com/Article/196/637/143517.html

AM I REALLY RESPONSIBLE FOR THE MUNICIPAL DEBTS OF A PREVIOUS OWNER?

“I bought a house a few months ago. The municipality issued a rates clearance certificate to the seller and the property was transferred in my name. When I recently queried a high water account with my municipality, the municipality responded by saying that there is still quite a large arrear debt against the property and that unless I pay they will take steps against me to collect and even sell my property if necessary. Surely this can’t be lawful?”

Section 118 of the Municipal Systems Act (“MSA”) has been the cause of a lot of concern for home owners as this section and in particular Section 118(3) is viewed as enabling a municipality to hold a new home owner responsible for the arrear municipal debts of a previous owner.

According to Section 118(1) of the MSA, a property may not be transferred unless a rates clearance certificate has been issued by the municipality where the property is situated. The certificate must certify that all amounts due to the municipality for municipal service fees, surcharges on fees, property rates and other municipal taxes, levies and duties (“municipal fees”) during the two years preceding the date of application for the certificate have been fully paid. This subsection says nothing about historical arrears which may be older than two years.

According to Section 118(3) an amount due for municipal fees is a charge upon the property and enjoys preference over any mortgage bond registered against the property, thereby creating a security provision in favour of the municipality for the payment of the outstanding debts. No time limit is attached to this provision and it does not matter when the secured debt became due. It can include debts up to 30 years old (for rates, refuse and sewer charges) and 3 years old (for electricity and water), including debts of more than one previous owner, all of which are secured through Section 118(3) in favour of the municipality.

The issue that is the cause of the consternation is where a new (innocent) owner is now held responsible for municipal debts older than two years incurred by previous owners, without any prior knowledge that there is arrear debt and that municipalities may, as in your case, hold the new owner responsible for the arrear debt of someone else. The new owner is caught by surprise, particularly as a rates clearance certificate was issued creating the impression (even if not legally correct) that all debts with the municipality have been settled by the seller.

Our Supreme Court of Appeal has recently confirmed that a rates clearance certificate does not mean that there is no further municipal debt tied to a property. Our courts also confirmed that if the seller or previous seller is unable to pay or cannot be located, the purchaser or new owner will be held liable for these debts, in extreme cases even potentially allowing the municipality to sell the property itself to settle the arrear debts. This right (or hypothec) of the municipality over the property established by Section 118(3) thus survives any form of property transfer without exception.

Based on this court decision, it potentially leaves a new owner vulnerable to the municipality enforcing its rights over the property, even resorting to disconnecting water and electricity to force a new owner to settle arrear municipal debts.

Our courts have not however had occasion to test the constitutionality of Section 118 of the MSA, and in our view there could be constitutional grounds for testing the fairness of the current interpretation of Section 118(3) and the application thereof by municipalities. We accordingly recommend that should the municipality persist in your case to require settlement of a previous owner’s arrear municipal debts or face disconnection of municipal services, you should approach a legal advisor for assistance.

Extract from DupWestInc

WHY USE FPS PROPERTIES AS YOUR AGENT?

Real Estate transactions usually involve the biggest financial investment most people ever have in their life. Transactions today usually exceed R 1 000 000. If you were being sued for R 1 000 000 would you attempt to deal with it without the help of a lawyer? Considering the amount of risk, it would be foolish to consider a deal in real estate without professional assistance. Below we have compiled a dozen more reasons to consider using FPS Properties.

  1. We can help you determine how much you can afford. We ask and obtain the correct information about your available savings, income and current debt, and then we have the top qualified working support team best to help you. Take note that most financial institutions (banks and mortgage companies) offer limited advice and choices.
  2. We have many resources to assist you. Sometimes the property you are seeking is available but not actively advertised in the market, and it will take some investigation by your agent to find all available properties.
  3. FPS Properties can assist you in the selection process by providing objective information about each property. Agents who at FPS Properties have access to a variety of informational resources. We can provide local community information on utilities, zoning, schools, etc. There are two things you'll want to know. First, will the property provide the environment I want for a home or investment? Second, will the property have resale value when I am ready to sell?
  4. Our agents can help you negotiate. There are countless negotiating factors, including but not limited to price, financing, terms, date of possession and often the inclusion or exclusion of repairs and furnishings or equipment. The purchase agreement should provide a period of time for you to complete appropriate inspections and investigations of the property before you are bound to complete the purchase. Your agent can advise you as to which investigations and inspections are recommended or required.
  5. FPS Propertiesoffers due diligence during the evaluation of the property. Depending on the area and property, this could include inspections for termites, dry rot, asbestos, faulty structure, roof condition, septic tank and well tests, just to name a few. FPS Propertiescan assist you in finding qualified responsible professionals to do most of these investigations and provide you with written reports. You will also want to see a preliminary report on the title of the property. Title indicates ownership of property and can be mired in confusing status of past owners or rights of access.
  6. FPS Properties can help you in understanding of different financing options and in identifying qualified lenders.
  7. FPS Properties can guide you through the closing process and make sure everything flows together smoothly.
  8. When selling your home, FPS Properties gives you up-to-date information on what is happening in the marketplace; including the price, financing, terms, and condition of competing properties. These are key factors in getting your property sold at the best price, quickly and with minimum hassle.
  9. FPS Properties markets your property to other real estate agents and the public. Often, we recommend repairs or cosmetic work that will significantly enhance the saleability of your property. FPS Properties markets your property to other real estate agents and the public. In many markets across the country, over 50% of real estate sales are cooperative sales; that is, a real estate agent other than yours brings in the buyer. Our agents at FPS Properties acts as the marketing coordinator, disbursing information about your property to other real estate agents through a Multiple Listing Service or other cooperative marketing networks, open houses for agents, etc.
  10. FPS Propertieswill know when, where, and how to advertise your property. There is a misconception that advertising sells real estate. Our studies and research show that 82% of real estate sales are the result of agent contacts through previous clients, referrals, friends, family and personal contacts. When a property is marketed with the help of FPS Properties, you do not have to allow strangers into your home. Our agents will generally pre-screen and accompany qualified prospects through your property.
  11. FPS Properties can help you objectively evaluate every buyer's proposal without compromising your marketing position. This initial agreement is only the beginning of a process of appraisals, inspections and financing and to side step a lot of possible pitfalls. FPS Properties can help you write a legally binding, win-win agreement that will be more likely to make it through the process.
  12. FPS Properties can help close the sale of your home. Between the initial sales agreement and closing, questions may arise. For example, unexpected repairs are required to obtain financing or a cloud in the title is discovered. The required paperwork alone is overwhelming for most sellers. FPS Properties is the best person to objectively help you resolve these issues and move the transaction to closing.
    So if you are in the thinking of:
  • Selling
  • Buying
  • Wanting a valuation

Or just want to meet the team

Please give us a call at (021) 9820965
Email: admin.@fpsprop.co.za
www.fpsprop.co.za

CAN YOU USE YOUR NANNY CAM TO MONITOR YOUR DOMESTIC WORKER OR NANNY?

After media recently reported events of violence against toddlers, many parents may be considering installing Nanny Cam Monitors in their homes. A child’s safety is a priority for any parent and this seems a logical step to help identify or provide proof for a concerned parent of possible abuse or mistreatment. As an employer, you want to trust your domestic worker or nanny, and your concern could possibly even extend to the security of your property. But can you just install a Nanny Cam to provide evidence for your suspicions, and if you did, and it does, can you use this information?

In this article, we will shed some light on the legal position from an employer / employee relationship perspective, address the right to privacy to be considered as well as establish the steps that need to be followed before a Nanny Cam can be used to monitor a domestic worker or nanny and any recording be used for criminal prosecution and/or disciplinary proceedings.

Parents must be aware of the legal implications of installing and making use of a Nanny Cam in their households before doing so. In South Africa the use of electronic devices and the recording thereof is regulated and governed by legislation. The relevant Act is known as the Regulation of Interception of Communications and Provision of Communication-Related Information Act 70 of 2002 (“RICA”).

RICA requires that you obtain the written consent of the person in your employment that might be captured and or recorded on a Nanny Cam Monitor before you install such a Nanny Cam Monitor. The issue of consent has been debated in our courts to establish the admissibility of recordings being introduced as evidence which display misconduct by employees.

In Satawu obo Assagai v Autopax 2002, 2 BALR 17 the CCMA Commissioner ignored the provisions of RICA’s predecessor, the Interception and Monitoring Act 127 of 1992 (“IMA”) dealing with consent, where an employee was captured on video being involved in a dishonest transaction. The employee claimed that the videotape must be disallowed because he was unaware that he was being taped. The arbitrator dismissed the argument, and found that the provisions of IMA did not strongly apply in civil cases. It is yet to be determined how our Courts and arbitrators will deal with the provisions of RICA, which are stricter than that of IMA.

The reasoning behind obtaining your domestic worker’s or nanny’s consent is to be found in the right to privacy. The right to privacy includes the right to privacy of your communication, which in terms of RICA, includes a prohibition on the monitoring or recording of actions/movements by an electronic device without prior written consent.

The element of consent is however a cause for concern for an employer/parent, in that firstly it is the employer/parent’s premises that are being monitored and the need for consent in respect of your own property seems superfluous, and secondly most employers/parents install Nanny Cam Monitors only when they either suspect that their children are being abused by the domestic worker or nanny or that the domestic worker or nanny is guilty of some form of misconduct in respect of which they want to obtain evidence. Informing the employee of the existence of a Nanny Cam Monitor may thus defeat the purpose of having such in the first instance.

Many authors on the topic are however of the view that in order for an employer to install the Nanny Cam Monitors and for that employer/parent to use such footage in subsequent criminal or disciplinary proceedings, it is advisable that the employee’s written consent be obtained in accordance with RICA.

It is further important to note that any person who intercepts communication of another without that person’s written consent is guilty of an offence in terms of RICA, and upon conviction a fine or imprisonment may be imposed. In terms of RICA evidence of video recordings may only be used in criminal and civil proceedings if it is obtained in accordance with its provisions.

To be safe, it is therefore advisable that you obtain your domestic worker’s or nanny’s prior written consent before you install a Nanny Cam Monitor. The most effective way of obtaining such consent is to make provision therefore in a written employment contract. If you have already concluded such a contract, you may elect to conclude a further addendum to specifically include this aspect or provide a separate consent form.

Further considerations to bear in mind when installing Nanny Cam Monitors:

  • It’s illegal to record in a room where a person may hold the expectancy of privacy e.g. bathrooms or an employee bedroom.
  • Only cover the most important areas of the house.
  • Specify the areas where the Nanny Cam Monitors will be installed.
  • If footage is to be used in either civil or criminal proceedings the footage must be clear with the audio sharp where available.
  • The footage must be authenticated, and not be tampered with in any way.
  • It must be proven that the visuals and audio accurately reflect the incident in question.

The most important aspect when installing Nanny Cam Monitors remains the right to privacy which should be respected and necessitates that your employees’ written consent is obtained beforehand. If necessary, consult with our attorneys or labour specialist to help prepare an appropriate agreement or consent form for your domestic worker or nanny to provide their consent to being monitored by a Nanny Cam Monitor.
References: Article is an extract from of the PhatshoaneHenneyGroupby Lucian Companie

BOUKONTRAK KANSELLASIE: PASOP VIR DIE SLAGGATE

Die bouprojek is tot niet en so ook die verhouding tussen die kliënt en die boukontrakteur. Beide partye is haaks met mekaar sedert die begin van die projek en die verhouding het nou tot so `n punt versleg dat beide partye nie hul kontraktuele verpligtinge in terme van die boukontrak nakom nie. Maar wat nou? Kan een van hulle bloot halt roep en die kontrak kanselleer?

Wanneer die verhouding tussen 'n kliënt en 'n kontrakteur in gedrang gebring word op grond van die kontrakbreuk deur een van die partye is dit gewoonlik die natuurlike instink van die onskuldige party om die kontrak te kanselleer. Dit is egter nie altyd so maklik nie en die party wat kies om die kontrak te kanselleer kan homself in 'n nog swakker posisie bevind as die skuldige party indien die korrekte prosedure nie gevolg word nie.

Ten einde 'n kontrak op grond van kontrakbreuk te kanselleer, moet die kontrakbreuk na die die essensie van die kontrak gaan d.w.s. dit moet ‘n wesenlike verbreking van ‘n essensiële term wees. Klein of nie-wesenlike oortredinge ingevolge die kontrak stel nie noodwendig gronde vir kansellasie daar nie, hoewel die feite van elke saak sal bepaal of daar voldoende redes vir kansellasie teenwoordig is.

  1. `n Beskrywing van die wesenlike oortreding begaan deur die skuldige party. Dit moet voldoende besonderhede bevat sodat die skuldige party kan verstaan wat hy moet doen om die kontrakbreuk te herstel.
  2. Die tydperk waarbinne sodanige oortreding reggestel moet word.
  3. 'n Aanduiding dat die kontrak gekanselleer sal word indien die skuldige party versuim om die oortreding reg te stel binne die genoemde tydsraam.

Indien so 'n kennisgewing nalaat om die skuldige party in kennis te stel dat die ooreenkoms gekanselleer sal word indien die skuldige party sou versuim om die oortreding reg te stel binne die tydperk toegeken, sal die onskuldige party verplig wees om 'n verdere kennisgewing aan die skuldige party uit te reik om die skuldige party kennis te gee van die voorneme om te kanselleer. Verder moet die party wat die kennisgewing uitreik ook aan al die kontraktuele formaliteite met betrekking tot die lewering van so 'n kennisgewing aan die skuldige party voldoen. In hierdie verband bevat standaard boukontrakte gewoonlik duidelike en presiese riglyne vir die lewering van kennisgewings tussen die partye. Indien gebruik gemaak word van unieke boukontrakte, moet sorg geneem word om duidelike prosedures vir die uitreiking van kennisgewings tussen die partye in te sluit.

Indien 'n party die kontrak wil kanselleer op grond van die wesenlike kontrakbreuk deur die ander party, is dit belangrik dat dit met ‘skoon hande’ gedoen moet word om te verseker dat die kansellasie nie ook op versuim in terme van die kontrak neerkom nie. 'n Kliënt wat 'n kontrak wil kanselleer op grond van byvoorbeeld, die gebrekkige vakmanskap deur die kontrakteur, moet seker maak dat hy sy verpligtinge in terme van die kontrak nagekom het, insluitend die betaling van al die betalingsertifikate sodra en wanneer dit betaalbaar geword het. Die kliënt mag nie betaling aan die kontrakteur weerhou as gevolg van die lewering van foutiewe werk en dan, wanneer die kontrakteur nie die foutiewe werk regstel nie, die kontrak kanselleer nie. Netso mag die kontrakteur ook nie die kontrak kanselleer omdat hy nie betaling van die kliënt ontvang het nie, sy werk staak en dan, wanneer betaling uitstaande bly, voortgaan om die kontrak te kanselleer nie.

Indien 'n party 'n kontrak kanselleer sonder om die korrekte prosedures te volg of terwyl hy self in versuim is met 'n wesenlike verpligting in terme van die kontrak, kan die kansellasie gesien word as 'n repudiëring van die kontrak, wat daarop dui dat die party nie meer van voorneme is om gebonde te wees aan die bepalings van die kontrak nie en gee aan die ander party die reg om óf die repudiëring te aanvaar en die kontrak te kanselleer óf selfs die reg om die repudiëring te weier, in welke geval die kontrak van krag sal bly en beide partye sal moet voldoen aan al hul regte en verpligtinge in terme van die kontrak. Ongeag watter opsie die ander party kies, sal hy ook die reg hê om 'n eis om skadevergoeding teen die repudiërende party in te stel, sou hy in staat wees om sy reg op skadevergoeding weens die repudiëring te bewys. Dit is dus noodsaaklik dat 'n party wat 'n ooreenkoms wil kanselleer, eers seker maak dat hy nie self in enige versuim in terme van die kontrak is nie.

Vandag se standaard boukontrakte voorsien riglyne aan beide partye rakende die tipe versuim wat tot die kansellasie van 'n kontrak kan lei, en belangrik, die riglyne lei ook die hele proses van kansellasie. Kontrakterende partye moet dus seker maak dat wanneer hulle 'n kontrak wil kanselleer, die bepaalde prosedures bestudeer word en die kontraktuele riglyne met die grootste sorg gevolg word. As jy twyfel oor jou reg om 'n ooreenkoms te kanselleer of die korrekte prosedures wat gevolg moet word om te kanselleer, is dit raadsaam om regsadvies te verkry om te verseker dat geen misstappe geneem word wat jou regsposisie kan verswak nie – verkry van Du Plessis van De Westhuizen (Februarie 2014)

THE LEGAL NATURE OF EXCLUSIVE USE AREAS IN A SECTIONAL TITLE SCHEME

In order to understand the legal nature of an exclusive use area it is important to know how it was historically developed, what exactly constitutes an exclusive use area and how it is established. In this article we will focus briefly on the historical development of exclusive use areas in South Africa, what an exclusive use area is, the two types of exclusive use areas that can be established and the legal nature of these two types of exclusive use areas.

Introduction

A person obtaining sectional title ownership (“an owner”) obtains ownership of a unit in the sectional title scheme. A unit consists of a section together with an undivided share in the common property. The size of the share in the common property is calculated by a formula known as the participation quota. A unit will for all purposes be deemed to be land, and as a result of this it is possible for a unit to be mortgaged. A section and the undivided share in the common property shall always be deemed to fall together and accordingly cannot be alienated separately.

Therefore the common property of the scheme is owned by all the owners jointly in undivided shares and they must share it with each other. The use and enjoyment of the common property by the owners can be restricted by the allocation of exclusive use areas on parts of the common property. It is therefore important for owners to know how exclusive use areas are dealt with. To do this, it is necessary to understand a bit more about the historical development of exclusive use areas.

Historical development of the exclusive use area

The Sectional Titles Act 66 of 1971 did not make provision for the creation of exclusive use areas. Owners were not allowed to appropriate any part of the common property for their exclusive use. Subsequently, however, it became clear that owners had a need to reserve certain parts of the common property for their own exclusive use.

The Sectional Titles Act 95 of 1986 now expressly provides for the procedure of creating exclusive use areas. Section 27 of this Act created a number of problems regarding the regulation of exclusive use areas and accordingly section 27A was introduced.

What is an exclusive use area?

Exclusive use areas in a sectional title scheme are defined in the Sectional Titles Act as ‘a part or parts of the common property for the exclusive use by the owner or owners of one or more sections.’ Examples of what can be the subject of the exclusive use right includes gardens, parking bays, courtyards, storerooms, patios and so forth.

The common property comprises of “the land included in the sectional title scheme together with such parts of the building or buildings that are not included in a section and land referred to in section 26.” Certain parts of the common property can be reserved, either by the developer or the body corporate, for exclusive use by a specific owner. Accordingly, such exclusive use areas forms part of the common property and do not form part of a section.

The owner holding the right to exclusive use may use that area exclusively of all the other owners, but it still remains part of the common property. There is a clear difference between an owner’s undivided share in the common property and his right to the exclusive use of a part of the common property. An owner automatically has an undivided share in the common property if he is the owner of a section, but an owner does not necessarily have the same right to an exclusive use area.

Creation of exclusive use areas in terms of section 27 and 27A

The Sectional Titles Act makes provision for the creation of exclusive use areas in one of two ways. Firstly, exclusive use areas can be created in terms of section 27 (registered/genuine exclusive use areas). Secondly, exclusive use areas can be created in terms of section 27A (rule-based/non-genuine exclusive use areas).

Registered (genuine) exclusive use areas

Registered exclusive use areas in terms of section 27 can be created either by the developer at the opening of the sectional title register or by the body corporate at a later stage:

  • By the developer

If the delineation of a part or parts of the common property is indicated on the sectional plan, the developer must, when making application for the opening of a sectional title register and the registration of the sectional plan, reserve such a part or parts of the common property for use as exclusive use areas by a specific section by way of a certificate of real right of exclusive use, and when the specific section is sold this right will be ceded to the owner of the section by registration of a unilateral notarial deed.

If no such reservation was made by the developer, then the Sectional Titles Act grants the developer a second chance to reserve exclusive use areas. The developer may, after the opening of the sectional title register, but before the establishment of the body corporate apply for a certificate of real right of exclusive use at the Registrar of Deeds. This right to exclusive use is then notarially ceded to an owner.

  • By the body corporate

The body corporate may, when it is duly authorized thereto by a unanimous resolution of its members, request an architect or land surveyor to apply to the Surveyor-General for the delineation of the exclusive use areas on a sectional plan for the exclusive use by the owner or owners of one or more sections. In this instance the right to exclusive use will then be notarially ceded from the body corporate to an owner.

Rule-based (non-genuine) exclusive use areas

Since 1997 exclusive use areas can be created in terms of section 27A. This section provides for a cheaper and less cumbersome method of creating exclusive use areas in the rules of the sectional title scheme. The developer may, at the opening of the sectional title register, add a special rule that will provide for exclusive use areas. On the other hand the body corporate may also amend the management or conduct rules, by unanimous or special resolution (depending on the rule that is amended) to create exclusive use areas.

The requirements for this method of creation are that the rules must:

  • Not create rights contemplated in section 27(6), (see below for discussion of rights).
  • Include a layout plan to scale, indicating the location of the distinctively numbered exclusive use and enjoyment parts and the purpose for which these parts are to be used.
  • Include a schedule indicating to which member each such part is allocated.

If the exclusive use area is created by the body corporate then a further requirement is that the Registrar of Deeds should be notified of the amendment. Only after this notification will the rule be of force.

Nature of the right of exclusive use in terms of section 27

An exclusive use right created in terms of section 27 is deemed to be a right to immovable property over which a mortgage bond, lease contract or personal servitude of usufruct, usus or habitatio may be registered.

Nature of the right of exclusive use in terms of section 27A

The rights of exclusive use created in terms of section 27A are not real rights in immovable property and are not registrable in the Deeds Office. These rights are personal rights created in terms of the rules of the scheme.

Conclusion

It is very important for a person who wants to buy a unit in a sectional title scheme to know if he or she is entitled to an exclusive use area and also to know which type of exclusive use area he or she is buying. A section 27 exclusive use area provides the holder of that right with a real right which is registered in the Deeds Office and which is enforceable against the world at large. A section 27A exclusive use area gives the holder of the right only a personal right which cannot be registered in the Deeds Office and is only enforceable against the body corporate and other sectional title owners of that specific scheme. Also, a section 27 exclusive use area can be mortgaged, whereas this is not possible in the instance of a section 27A exclusive use area. So make sure you ask the right questions regarding exclusive use areas in your proposed sectional title scheme- extract from Du Plessis van De Westhuizen (April 2014)

EXTENDING A SECTIONAL TITLE UNIT: WHAT YOU SHOULD KNOW

Residents in a Sectional Title Scheme are subject to the rules and regulations of the Body Corporate. These rules and regulations are governed by the Sectional Titles Act.

When you intend to make structural alterations to your unit there is a procedure prescribed by the Act that should be complied with before you start with the alterations. Any alterations that extend the boundaries or floor area of the unit will be seen as an extension.

The legal requirements that must be adhered to are discussed below.

Step One:

The Act stipulates that you should first obtain the consent of the Body Corporate. Usually the trustees will hold a general meeting and the members must pass a special resolution to agree to the alterations. You will require the consent of 75% of the owners who are present at the meeting for the special resolution to be passed. This, however, could be time-consuming as the members have to be notified of the meeting thirty days in advance. Alternatively you can also obtain a special resolution by approaching all the owners individually and obtaining the consent of 75% of all the owners.

Step Two:

Once the Body Corporate’s consent has been obtained, plans of the extension should be drawn up and approved by the Local Authority.

Step Three:

A Land Surveyor should be appointed to draw up new Sectional Title Plans of the Scheme to incorporate the extension. These plans have to be approved by the Surveyor General.

Step Four:

Consult with your attorney who will submit the necessary application for the registration of the amended Sectional Title Plan, as well as the noting of the extension of the unit to the Deeds Office.

If the unit is bonded the attorney will have to obtain consent from the mortgagee of the unit.

With the application to the Deeds Office a transfer duty receipt from SARS must be lodged based on the increase in value of the property. It is advisable to obtain two estate agents’ valuations based on the pre- and post-alterations value of the property.

The Surveyor must stipulate on the Sectional Title Plan that there is not a deviation of more than 10 percent in the participation quota of the unit as a result of the alterations. If there is a deviation of more than 10% the attorney must obtain the consent of the mortgagees of each and every unit in the Scheme.

It is very important that Sectional Title owners adhere to the legalities as an omission could cause extensive delays when the property is sold.

References:
Section 24 of the Sectional Titles Act
Sectional Titles, Share Blocks and Time Sharing, Vol 1, Prof CG vd Merwe
Demystifying Sectional Title, M Constas and K Bleijs
Sectional Title on Tap, Vol 1, Tertius Maree
Article by J Paddock
Article by Rob White- extract from C&A Freidlander

SELLER’S PROTECTION UNDER “VOETSTOOTS” CLAUSE LIMITED

A seller’s protection under the “voetstoots” clause in a deed of sale for immovable property is not as “absolute” as some might think. It is still the seller’s duty to inform prospective purchasers about all latent (hidden) defects in a property. A seller’s failure to do so could cost the seller in the long run, as per a recent ruling by the Supreme Court of Appeal in Banda & Fynn vs Van der Spuy (781/2011) [2013] ZASCA 23 (22 March 2013).

Examples of latent defects are a leaking roof or a faulty geyser. It basically includes any defects that cannot be seen with the naked eye. Prospective purchasers will, for example, not see water marks on a ceiling resulting from a leaking roof in the “dry” months.

In the above mentioned case the sellers failed to inform the purchasers about the true extent of the damage to the property’s roof. The sellers were aware of the fact that the roof leaked and had some repairs done to it to try and fix the problem. On closer inspection by specialists it was found that the cause of the leaks were twofold. Firstly, the wooden roof poles were inadequate to properly support the weight of the thatch roof and resulted in the gradual sagging of the roof. Secondly, the pitch of the property’s thatch roof was only 35 degrees and not 45 degrees as it should be, which would have at least ensured that rain water would run off the roof. The specialists testified that due to the pitch of the roof being 35 degrees, water ran into the roof and caused the thatch to rot more quickly. It was found that the initial repairs were therefore not sufficient to stop the roof from leaking in future. The purchasers only discovered this after registration of the property and the sellers had to fork out to replace the roof, as the problem could not be permanently solved by doing repairs to it. Even though the sellers were not aware of the bigger problem, namely the incorrect pitch of the roof, they were still held liable because they were aware that the repairs which they had done were not adequate.

On the other hand, patent defects are still the purchaser’s responsibility. Prospective purchasers cannot sit back and think that if any problems occur after occupation, the sellers will be held liable. A patent defect is defined as “one which will be apparent on an ordinary inspection”*. An example of a patent defect will be a crack in a wall which shows through the paint. It is a prospective purchaser’s duty to ask the sellers about such defects and get all guarantees from the sellers in writing.

It is clear that a mutual responsibility rests on sellers and purchasers regarding defects in a property. Sellers should be honest regarding latent defects and purchasers should be vigilant, when viewing a property, for any patent defects. It will be wise for sellers to rather negotiate a lower purchase price due to defects in a property, and to disclose them to the purchaser. Failing to be honest with the purchaser could have huge financial implications for the seller after registration of the property.

References: Banda & Fynn vs Van der Spuy (781/2011) [2013] ZASCA 23 (22 March 2013) *Dictionary of Legal Words and Phrases, 2nd edition, Claassen extract from C&A Friedlander

EIS VIR ONDERHOUD? WAT JY MOET WEET!

Biologiese ouers, sowel as die wettige voog van `n kind het, `n regsplig om onderhoud te betaal, met ander woorde om die kind finansieel te ondersteun. Hierdie verpligting om onderhoud te betaal sluit in bydraes vir die betaling van kos, klere, akkommodasie, mediese sorg en onderrig.

Onderhoud moet betaal word ten einde `n behoorlike lewenstandaard en opvoeding vir die kind te verseker. Dit is verpligtend om onderhoud te betaal en die bedrag van onderhoud sal in verhouding tot die betrokke ouer se inkomste bepaal word. Ongeag of die kind binne of buite die eg gebore is, is beide ouers verantwoordelik vir die onderhoud van die kind.

Jy kan `n Onderhoudshof nader in die volgende omstandighede:

  • Wanneer enige persoon wat regtens verantwoordelik is om ‘n ander persoon te onderhou versuim om dit te doen; of
  • Wanneer goeie gronde bestaan om die onderhoudsbevel te wysig of op te hef.

Die Onderhoudshof in die gebied waar die kind of persoon in wie se sorg die kind (voog of ouer) woonagtig is moet genader word. Die Onderhoudshof kan gewoonlik in die Landdroshof gebou gevind word.

Wat is die prosedure ten einde `n eis om onderhoud in te stel?

  1. Begin deur jou plaaslike Landdroshof of prokureur te kontak om uit te vind watter hof die korrekte hof is om jou by te staan met jou eis vir onderhoud.
  2. Daardie Onderhoudshof kan dan telefonies gekontak word om met die klerk van die Onderhoudshof te bevestig watter dokumentasie jy saam met jou na die hof moet neem om aansoek te doen vir onderhoud.
  3. Dan kan jy voortgaan om die relevante aansoekvorm, verkrygbaar by die hof, te voltooi.
  4. Na voltooiing van die aansoekvorm sal die klerk van die Onderhoudshof jou van `n datum voorsien waarop jy moet teruggaan na die hof. Die respondent (die ander ouer) sal ook in kennis gestel word van die datum by wyse van `n dagvaarding.

Watter dokumente sal jy moet saamneem na die Onderhoudshof?

  1. Jou identiteitsdokument en die geboorte sertifikaat van die kind.
  2. Die identiteitsnommer en foto van die persoon/ouer van wie jy onderhoud wil eis.
  3. Indien jy `n bankrekening het, bankstate van die laaste 3-6 maande.
  4. `n Lys jou en jou kind se uitgawes tesame met dokumente om hierdie uitgawes te bewys, byvoorbeeld `n water en elektrisiteitsrekening, kwitansie van kruideniersware aangekoop ens.
  5. Jou huidige salarisstrokie, indien jy werksaam is.
  6. Fisiese-, residensiële- en werksadres van die persoon wat die onderhoud moet betaal.
  7. Fisiese-, residensiële- en werksadres van `n familielid of naasbestaande.
  8. Onderhoudsbevel (indien in die verlede toegestaan).
  9. Skikkingsooreenkoms (in die geval van `n egskeiding).
  10. `n Datum waarop jy die onderhoud van die ander party sal wil ontvang.

Die tydsduur vir die hele proses vanaf aansoek om onderhoud gedoen word tot die betaling van onderhoud sal afhang van die samewerking van beide partye. Sou die partye `n ooreenkoms bereik, kan die eerste betaling redelik vinnig geskied en sal die datum van betaling van die onderhoud in die onderhoudsbevel gespesifiseer word. Maar, sou die partye nie `n ooreenkoms kan bereik nie, sal die saak verwys word vir verdere finansiële ondersoek. So `n verwysing kan `n paar maande neem. By terugkeer tot die hof sal die hof na die finansiële posisie van beide partye asook die behoeftes van die kind kyk en dan besluit watter bedrag onderhoud betaal moet word.

Onderhoudstoelae kan op die volgende wyses gekollekteer word:

  1. `n Skuldbeslagbevel - die werkgewer trek die geld direk van die verantwoordelike persoon se salaris af en betaal dit oor in die hof se bankrekening. Jy kan dan die geld by die plaaslike hof oor die toonbank gaan kollekteer.
  2. Kontant betaling – jy kan die geld kollekteer oor die toonbank by jou plaaslike Landdroshof.
  3. Direkte betaling – die respondent of verantwoordelike persoon betaal die geld direk oor in jou bankrekening.

Watter stappe moet jy neem indien jy nie die onderhoud ontvang nie?

  1. Vra `n gedetailleerde bankstaat aan by jou bank.
  2. Neem die bankstaat tesame met jou identiteitsdokument na jou plaaslike Onderhoudshof.
  3. Die Onderhoudshof kan dan `n dagvaarding uitreik om `n kriminele klag teen die persoon wat verantwoordelik is vir die betaling van die onderhoud in te stel.

Onderhoud moet betaal word tot en met die kind selfversorgend is. Dit beteken dat, selfs indien die kind die ouderdom van 18 jaar bereik en hy of sy is nog nie selfversorgend nie, die onderhoud steeds betaal moet word totdat die kind selfversorgend word. In die geval waar die persoon wat verantwoordelik is vir die betaling van die onderhoud sterf, moet die onderhoud uit die bestorwe boedel betaal word ten einde toekomstige onderhoud te verseker.

Nadat jy `n onderhoudsbevel ontvang het, kan jy by die Onderhoudshof aansoek doen om die bevel te verhoog of te verlaag, veral wanneer die finansiële omstandighede rakende die versorging van die kind verander het- uittreksel van Brink De Beer en Potgieter (Maart 2014)

SO WHAT EXACTLY IS MY DOMICILIUM CITANDI?

Quite often when completing a form or signing a contract one comes across a clause, usually at the end, that refers to a domicilium citandi et executandi. This so-called domicilium clause is found even in documents as simple as, for instance, the form one would complete when visiting a new doctor for the first time. If a person were to ask someone what they thought the term meant, the answer would most probably be something like, “It’s just your address”. But is this correct?

Domicilium citandi et executandi is a Latin term which, if directly translated to English, means “house for summoning and upkeep”. The general meaning thereof can be construed as the address nominated by a party in a legal contract at which it elects to receive all legal notices and documents.

Completing such a clause in a contract or form has specific legal consequences that everyone should be aware of, such as:

  • The party who elected the domicilium address should be ready to receive any legal notice that is delivered to that address.
  • If a change in address occurs, a party should notify the other contracting party, preferably in writing, of such a change in address.
  • Delivery of a legal notice or document to the domicilium address chosen by a party to a contract will be considered sufficient for the purposes of legal action and such party would be deemed to have received the legal notice or document.

The last point above should not be taken lightly. The practical consequence thereof is, for instance, that a contracting party may deliver a letter of demand and a summons to the domicilium address, and whether or not it was actually received by the other party, he may proceed to obtain a judgment as he does not have to prove that the documents was received but merely that it was delivered to the correct address.

It accordingly goes without saying that it is pivotal that a person chooses its domicilium address wisely. In this regard the following tips might be useful when considering a domicilium address:

  • Choose the address at which you permanently reside.
  • If you have changed your residence, inform all contracting parties of the change in residence in writing and keep a record of such.
  • If you know that you will be absent from the address for a period of time, inform whoever is looking after the property or address to immediately inform you of the receipt of any legal notice or document.
  • Request that any legal notice or document that is served on your address, also be sent to your e-mail address or fax number.
  • And lastly, if you choose an address where you are not permanently residing, for example a property which is being leased out, request the tenant to inform you of the receipt of any legal notice or document as soon as possible.- exstract from Phatshoane Henney Attorneys (March 2014)

A MISUSE AND ABUSE OF THE INSOLVENCY ACT

On the 4th of March 2014, Cape Town High Court Justice Binns-Ward granted an interdict against a company for exploiting the Insolvency Act (hereafter referred to as ‘the Act’). This is what the Company did:

Every week the Company’s employees scanned the ‘green gazette’ for advertisements of sales in execution of residential properties. The Company employs consultants all over the country. The consultants then canvass the business of the execution debtors concerned. The debtors are told by the consultants that a cancellation of the sale in execution can be achieved by availing of the provisions of the Insolvency Act. The Company offers to arrange the publication of a notice of surrender in terms of Section 4(1) of the Act for the payment of a fee. They further indicate to the debtor that there will be no consequences if an application to court does not follow. This buys the debtor 30 days. In the 30 days the Company, if the debtor so wishes, will at an additional fee conduct a forensic audit in which it will demonstrate with great probability that the execution creditor (often banks) miscalculated its claim and afford the debtor an opportunity to reach a compromise with the execution creditor. When debtors default on their payments the banks instruct attorneys to take action against them. The bank can get these attorney fees back from them in a separate account with different interest rates, but they are not allowed to add it to the balance of their bond with higher interest involved; they can only add entries pertaining to their bond account, not legal fees. The Company then argues that the bank is in breach of contract, and applies to court for setting aside of default judgement.

What does the Insolvency Act say?

Section 4(1) of the Act requires a notice to be published not more than thirty days but not less than fourteen days before application is made for surrender of the estate of the debtor. Section 5(1) of the Insolvency Act provides that it is unlawful to sell any property in the debtor’s estate in question which has been attached under writ of execution, after the publication of a notice of surrender (in terms of Section 4(1) in the Gazette (this provision is for bona fide voluntary surrender application, not fraudulent applications), unless the person charged with the execution writ did not know of publication and the property is valued at less than R5000.

The decision to publish a notice of surrender by a debtor involves intention of the debtor to eventually apply to court for the acceptance of surrender and to carry out the necessary steps involved in order to obtain such sequestration order. One can withdraw a notice of surrender (in terms of Section 7) by applying to the Master of the Court for written consent, or in terms of Section 6 the notice of surrender lapses if no application for surrender is made after 14 days of the date specified in the notice of surrender. However this provision is intended for the benefit of creditors and not debtors. Section 6 makes it clear that no legitimate purpose can be served by the publication of a notice of surrender if the estate in question is not actually insolvent, and if it cannot be shown, sequestration costs can be paid and sequestration will be advantageous to creditors.

This case involved an application to court, where the applicant sought an interdict against the respondent for engaging in business of publicising notices of surrender (unlawfully) in terms of Section 4(1) of the Act. The Court held that the Company is interdicted from carrying on this sort of business. It is unlawful and fraudulent and a misuse of the provisions of the Act. It is clear from the facts of the case that in virtually all the cases the debtors never had the intention to go through with the surrender; it was merely done with the object of frustrating sales in execution. A notice of surrender is not an acceptable device for gaining time to undertake forensic audits of client’s accounts with the execution creditor, or to find a basis to apply for the rescission of the judgement that is in the process of being executed.

In conclusion it is therefore important to note that the publishing of notices in terms of Section 4(1) of the Act should only be done with the intention of a subsequent sequestration- exstarct from Heyns & Partners ( April 2014 )

References: FirstRand Bank Limited (Applicant) v Consumer Guardian Services (Pty) Ltd & 9 Others (Case no: 10978/2012)