Walkers Attorneys

As you can see from the Articles below, there is a somewhat mixed medley of issues being dealt with. The Legislation is not necessarily new but it is of great importance to us as consumers and the person on the street.
Our query in each case, however, relates to the ability of the Legislation to be enforced and, indeed, interpreted. The problem caused by over-complicated or hasty Legislation is that in failing to being able to effectively enforce its provisions, respect for and compliance by the public at large becomes a problem.
You will have been bombarded with summaries, analyses and statistics relating to the Budget. We have given you a few thoughts from a philosophical point of view on where the Tax Legislation is going.
We would welcome your comments and thoughts on any of the points raised and are proud to announce that Walker’s is the first firm of attorneys in the country to introduce a “Chat-room” or “Coffee Lounge” facility whereby your views and queries can be put up on our Website and dealt with by members of our firm, or other clients, or, indeed, the public at large.
We hope to keep you and ourselves in the vanguard of change! Click on “Home” and scroll down to “Lounge Room”.

The Coincidental Build-up to April 1

For months I have been too frightened to ask certain questions about what effect the new Companies Act will have on Shareholders’ Agreements.  

I have drawn more Shareholders’ Agreements than any other category of document. Without an Agreement, some critical areas are not catered for by either the old or new Companies Act.

Firstly, on what basis may shareholders dispose of their shares, and what will happen to their shares when they die? Most Shareholders’ Agreements provide that shares must first be offered to other Shareholders, and if not taken up must then proceed through any of the Texas Auction or the Come-Along options or on death, to the Deemed Sale.

Secondly, what governs the protection of minority shareholders? Commonly, a Shareholders’ Agreement specifies matters that need a special vote. The norm is to require a 75% vote to approve matters such as the appointment of directors and executive staff members, contracts in excess of a defined value or period, or a change of business.


Thirdly, how are disputes between shareholders to be resolved?  No good capitalist will invest in a company that leaves the dispute resolution in the realm of guesswork. For clarity, it is the Shareholders’ Agreement to which one turns.

The new Act provides that in case of conflict between the provisions of the Act and the Company’s Memorandum and Articles of Association, then, for a period of two years as from 1st April 2011, the existing Memorandum and Articles will apply. But the Act is – as yet -- silent on conflict with a Shareholders’ Agreement.  There is now an Amendment Bill remedying this silence by providing for the same two-year hiatus, but the Bill has yet to be passed, and covers some one hundred and thirteen Amendments, and April 1 is hovering close.  

The new Act also creates a new protection for minority shareholders who, on objecting to a major disposal, merger, or scheme of arrangement, may demand fair value for their shares.  This is probably a sensible departure from the previous position, where minorities were bound by majority decision, but it will surely conflict with many Shareholders’ Agreements.  Beware the Ides of March in 2013!

To find the new Act, and/or Amendments, on DTI’s website evidently requires genius as well as dedication. I seem to fail on one or other of those counts, so I resorted to the call centre and became an expert on recorded announcements and reassuring promises, despite which I eventually abandoned hope of encountering a human being. The Department vigorously stands by its effective date of 1 April. What an oddly coincidental day to launch this of all Acts.

by Taryn Herbert

Things you may not know about the Consumer Protection Act

1. If you buy faulty or unsafe goods, you have 6 months to return them.


2. You may choose repair, replacement or refund.


3. If you chose repair and the goods remain faulty, you have three months to choose replacement or refund.


4. The supplier warrants all parts and labour supplied during maintenance or repair, except against wear-and-tear, misuse, or abuse.


5. The supplier must write to you in a specified period before a contract ends, letting you choose to renew it, modify it, or cancel it. If you don’t respond, the contract continues month-by-month.


6. If goods or services are not delivered at the right place at the agreed time on the agreed date, you may cancel the agreement.


7. Salespersons may only approach you within defined limits. If they exceed these or you decide to, you can enter their name on a registry that stops them from contacting you.


8. If you tire of a fixed term contract you may cancel it at any time as long as you give 20 days notice to the supplier. (You may have to pay a 10% cancellation fee.)


9. If your purchase resulted from advertising addressed to you in person, you have five business days to change your mind. The supplier must then refund you within 15 days.


10. A franchisee may cancel a franchise agreement within ten business days at no penalty, by giving notice in writing.

So consumers, you can’t complain that the law ignores the little person. (Just don’t get big; the Act does not protect a judicial person with a turnover of more than R3 million.)

Of course, if you go into business and look at things from the supplier’s angle, you might think the little person has become a giant. Even an ogre.

Worse, you may be less inclined to go into business.

Keep your eyes peeled for a Consumer Protection Amendment Bill, before the 21st Century gets to adolescence.

by Liesl Winter

The name says it all: for a clean break after a divorce, pension funds monies should be paid out promptly.

Previously, payment to the non-member spouse of pension interest was made on the retirement of the member spouse. That could mean decades of non-clean break. The Pension Funds Amendment Act of 2007 created the clean break principle, and allowed payout either by way of a transfer to a pension fund in the non-member's name, which is tax free, or by withdrawal, which is subject to tax.

So far so good. But in 2009 the legislation regarding the date of payout changed. SARS were not uniform in applying the new tax tables and there were instances where both methods for calculating tax were used. Anyone who may be affected should be alert to correct calculation of tax on these payouts. The problem should be over by now, but then, the problem should not have arisen in the first place.

Crucial distinctions arise according to (a) whether the divorce order was granted before or after 13 September 2007, and (b) whether the date of payout was to be before or after 1 March 2009.

The Revenue Laws Amendment Act, which changed the tax implications, was only promulgated on 30 September 2009. Between 1st March 2009 and 30th September 2009 SARS used both the old and new systems, resulting in cases where either a refund or further tax may now be due.

Simply put, if you may be affected it would be a good idea to take professional advice.

by Andrew Duncan

The National Budget speech, as well as the Budget Review, were available on the National Treasury Website prior to the speech given by the Minister. I paged through the various sections and heaved a sigh of relief because it seemed a “tinkering” type Budget that I would not need to prepare a commentary or attend any presentations. Luckily I, nevertheless, went to Deloittes’ presentation and listened to the irrepressible Brian Kantor debate philosophies with Keith Engle, the Chief Director of Policy at National Treasury. The duel was fascinating and the concepts fundamental to the economic well-being of our country.

For the technical stuff:

• There were no tax surprises, no increases, no new taxes, but a well of investigative proposals as to changes of approach. There is, however, a new gambling tax, being a 15% withholding tax on winnings above R25 000,00 as from 1st April 2012!


• SARS intends to modernize and broaden its base. Implicit in this is a determination to simplify the tax system, particularly for the individual.


• The tax brackets have been extended, but the rates remain unchanged.


• No change to Estate Duty or Donations Tax.


• There have been some minor changes to CGT and, in particular, an increase of the exclusion to R200 000 on death.


• No change to VAT, but Transfer Duty has been substantially lessened so that the 8% rate applies only as from R1,5 million. Interestingly, the rates apply across the board to companies and trusts, and not just to individuals as was previously the case.


• The previously suggested possible abolition of Estate Duty and Donations Tax is not mentioned, probably because of political and redistributive wealth issues notwithstanding the relative minuscule input of those taxes.


• In his State of the Nation speech President Zuma promised that his finance Minister was going to reveal all in regard to Exchange Control, but not a word. My stomach had suggested complete abolition – but wrong again!


• STC will be replaced on 1 April 2012 with a dividend tax. This led to a whole debate about the taxation of “income” being different depending on the title given to it. A dividend or a preference share “distribution” is tax free. Interest is subject to full tax. Foreign dividends are, likewise, subject to full tax less the deductions applicable. Capital Gains are subject to 10% tax. Dividends as of 1st April will be subject to a withdrawal tax of 10%.


• The view of Treasury is that there should be uniformity between these different types of income or products. There is no reason why receipts from a preference share should be different from a loan.

We are in for some interesting changes to the Tax Act!

by Renier Kriek

Renier Kriek terrifies you with things to think of before a road accident

As I’m writing this article, I am recovering from the shock associated with being involved in a car crash. Luckily no-one was seriously hurt or traumatised, save for a few small bruises (mostly the other driver) and a tear or two from my shocked fiancée. The mechanical participants, especially the other driver’s scooter, are not doing too well however. But the accident got me thinking: what if this accident happened after my coming wedding, and what if I was hurt, would my soon-to-be-wife or I be able to claim adequate recompense?

Many of our readers may be aware that the Road Accident Fund Act (“RAF Act”) was recently amended, and that the amendments were challenged by the Law Society of South Africa and several other parties all the way to the Constitutional Court. Our readers may even be aware that the constitutional challenge was dismissed. What I do not believe our readers will be aware of is precisely how inadequate the protection afforded citizens has become.

The RAF Act applies to any claims arising out of the injury or death of persons associated with the driving of a motor vehicle. For the sake of simplicity, we’ll say the Fund compensates claimants for car crashes. The RAF is substituted for the negligent party, to ensure that there is a deep pocket for everyone to claim from. Ultimately, it ensures that valid claims for compensation are settled in full, irrespective of the ability of the negligent party to pay, and that no claimant is left in the lurch by the negligent party’s impecuniosity.

Due to the most recent amendments of the RAF Act, it is presumed that no-one earns more than R182,000.00 per annum. This means that all claims for loss of income or loss of support due to injury or death from a car crash are capped at that amount. To illustrate the problems with this, let’s presume you are an executive earning R2 million a year, with 4 dependants. Should you be killed in a car crash, your dependants will be able to claim only R182,000.00 per annum multiplied by your life expectancy. Since you have four dependants, that money will still have to be divvied up between them as well.

Separately, claiming damage suffered as the result of the psychological effects of witnessing a car crash, while previously very widely possible, has been severely limited. A person is only entitled to such ‘general damages’ for emotional harm which results from ‘serious injury’ as certified by a competent doctor. Passengers with ‘non-serious’ injuries, say, who have PTSD after witnessing something gruesome at the scene of the crash, will not have a claim against the Fund for the emotional harm.

Another problem with the new amendments is to remove any claim against the negligent party (i.e. the driver who caused the crash). This amendment, taken together with the capping of claims at R182,000.00 per year, creates the real problem. There will be no possibility of claiming any excess from the negligent driver, and claimants will be absolutely barred from claiming anything more than R182,000.00 a year from the Fund.

One more thing to note is that the medical bills piled up by the victims of car crashes will only partly be reclaimable from the RAF. The amendments determine that any claim for medical costs will be limited to the tariff used in public hospitals. The actual cost of private care will not be recoverable from the Fund.

My experience has made me realise the importance of comprehensive insurance and timeous estate planning, and in the light of the current state of the law around third party claims, I hope this is an awareness our clients share.