The South African Revenue Service (Sars) has applied for the liquidation of Sharemax Investments and for the business rescue proceedings of the company to be terminated.
This follows a lengthy tug of war since 2012 between Sars and the directors of Sharemax and the Nova Group of Companies for the payment of R15.7 million of outstanding taxes.
Sars filed the application in June 2014, as it does not foresee the company being able to pay the debt.
Sars names, amongst others, business practitioner Dawie van der Merwe, former Sharemax directors Willie Botha, André Brand, Dominique Haese, as well as Nova Property Group chairman Connie Myburgh as respondents.
In a strongly worded affidavit Elle-Sarah Rossato contends on behalf of Sars that that the sole reason for placing Sharemax Investments into business rescue was to abuse the mechanism prescribed by the Company’s Act not to pay creditors.
“The inescapable inference is that creditors of Sharemax Investments were misled with a promise that R40 million would be coming their way, whilst the controllers of the first respondent had already decided to abuse the Company’s Act business rescue provisions.”
The R40 million refers to the amount earmarked to be paid to Sharemax Investments shortly after restructuring the investments, and was to be used to pay creditors.
Rossato said in the affidavit that the directors abused the Siegrist Determination as the reason for not paying the outstanding taxes.
Fais Ombud Nolantu Bam handed down the Siegrist Determination last year. Of all the determinations she handed down, it is the most controversial one, that not only held Siegrist’s financial advisor liable for his losses, but also the individual Sharemax directors.
The directors are appealing this judgment.
Rossato contends that Myburgh, the chairman of the Nova Group of Companies, said Sharemax couldn’t pay the amount to Sars due to approximately 500 new complaints lodged at the Ombud following the Siegrist Determination and because the appeal process against the determination has not been completed.
Rossato labeled this position as a “disingenuous abuse of the Siegrist Determination as a reason for the non-payment of the first respondent’s (Sars) debt.”
In total, approximately 2000 of the total 33 000 investors have lodged complaints against their financial advisors regarding investments in Sharemax.
Termination of rescue proceedings
As part of the liquidation process, Sars also applied for the termination of the rescue proceedings for Sharemax Investments, as the requirements for business rescue had not been fulfilled. Van der Merwe was appointed as the rescue practitioner in December 2011 and has since not filed a rescue plan, which according to the Companies Act should have been done within 25 days of his appointment.
Van der Merwe also used the Siegrist Determination as a shield for his non-compliance. Rossato said that this approach was “equally disingenuous”, as the Siegrist Determination was handed down on January 29 last year, more than a year after Van der Merwe’s appointment.
Sharemax and the directors have still not filed their answer to the liquidation application but instead filed a notice for joinder of Siegrist, alleging that Sars failed to include Siegrist as a respondent in their application. They contend that the application is “defective”, as Siegrist’s claim would be prejudiced if Sars’ application is successful. At most Siegrist will be a future creditor in the liquidation of Sharemax.