Sars applies to liquidate Sharemax

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Published Sep 18, 2014

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The South African Revenue Service (Sars) has applied to the North Gauteng High Court to liquidate Sharemax Investments, the property syndication promotion and marketing firm that collapsed in 2010 and was deemed a Ponzi scheme by the ombud for financial advisory and intermediary services (Fais).

Sars is also applying for Sharemax’s business rescue proceedings, which were launched in November 2011, to be set aside and terminated because of non-compliance with the Companies Act. The application has been prompted by the alleged inability of Sharemax to pay Sars R15.7 million in outstanding taxes.

The application, among other things, reveals that a business rescue plan has to date not yet been published for Sharemax Investments, despite a business rescue practitioner being appointed to Sharemax on December 7, 2011.

Rescue

The Companies Act requires a business rescue plan to be published by the company within 25 business days of the business rescue practitioner being appointed, or any longer time allowed by the court or the holders of a majority of the creditors’ voting interest.

About 33 000 investors invested about R4.5 billion in Sharemax’s various schemes.

Sharemax’s collapse in 2010 was precipitated when a finding that its funding model contravened the Banks Act became public knowledge after an investigation by the registrar of banks at the Reserve Bank.

This led to new investments drying up and it being unable to make monthly payments to investors.

The registrar of banks placed Sharemax under statutory management in September 2010 and appointed two statutory managers with a mandate to manage the repayment of investors’ funds or seek other legal alternatives.

In January 2012 the North Gauteng High Court sanctioned a scheme of arrangement and offer of compromise to shareholders.

The registrar of banks laid criminal charges against Sharemax for alleged contraventions of the Banks Act in March 2012.

In its application, Sars cites Sharemax and six other respondents, including Liebenberg van der Merwe, Sharemax’s appointed business rescue practitioner; the Companies and Intellectual Property Commission; former Sharemax managing director and creditor Willie Botha; former Sharemax director and creditor Andre Brand; former Sharemax director Dominique Haese, who is now managing director of the Nova Property Group and Frontier Asset Management, which took over and manages Sharemax’s property portfolio in terms of a high court-approved restructuring of Sharemax; and Nova Property Group chairman Connie Myburgh.

Elle-Sarah Rossato, a Sars official, said in an affidavit filed in support of the application that Van der Merwe confirmed in September last year that Sharemax was unable to pay the debt owing to Sars because of an unforeseen development.

This was the determination delivered by the Fais ombud between Gerbrecht Siegrist and various Sharemax group companies, including Sharemax Investments, in terms of which all of these companies were held jointly and severally liable for the payment of R580 000 to Siegrist.

Complaints

Rossato said Myburgh had indicated that about 500 further complaints had been lodged with the Fais ombud as a result of this ruling, and until the appeal against this had been determined, the debts owed to Sars could not be paid.

She said Van Merwe claimed in October last year that a business rescue plan for Sharemax could not be finalised until the Sars claim was finally quantified and finality was achieved on the complaints adjudicated by the Fais ombud.

Rossato said the quantification of Sars’s claim was “disingenuous and incorrect” because the correctness of the tax debt was confirmed at a meeting in September last year.

Van der Merwe’s assertion that the business rescue plan could not be finalised until finality was achieved regarding the Siegrist determination was “equally disingenuous”.

Rossato said Van der Merwe was appointed Sharemax’s business rescue practitioner on December 7, 2011, and the Siegrist determination was only handed down on January 29 last year.

To date, no business rescue plan for Sharemax Investments had been published, she said.

Rossato said Sharemax and Botha, Brand, Haese and Myburgh were aware that Sharemax did not have any assets to pay its creditors but “they disingenuously abuse the Siegrist determination”.

Rossato claimed Sharemax’s business rescue proceedings terminated after the expiry of the 25-day period from Van der Merwe’s appointment when he failed to publish a business rescue plan. She said Van der Merwe had claimed in October last year that consent had been obtained for an extension from Botha and Brand.

In a response to Sars’s application filed this week, Sharemax Investments said the failure by Sars to cite and join Siegrist as a respondent made its application defective because Siegrist’s rights as a creditor would be prejudiced if its application was successful.

A date has not yet been set for the application to be heard.

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