Walkers Attorneys

We are again dealing with the window period for transferring of residences from Trusts or Companies into individual’s names. There has been a fairly dramatic development in this regard, which you can read about below, but critically action is needed to be taken before the end of September if the benefit of this dispensation is to be taken up. We are keeping a close watch on various other legislation, including the Protection of Information Act, which concerns us insofar as it constitutes an infringement of the free flow of information critical to the legal system in a democracy and a cautionary snippet on Competition Law. With nothing therefore of great moment in view, we include a brief look at the life and times of a Russian belly dancer.

Lastly, seats for the Foreign Assets and Tax Amnesty Seminar are filling up fast. For more information please go to our home page or This e-mail address is being protected from spambots. You need JavaScript enabled to view it

Your lawyer’s turn to panic
by Renier Kriek

We have provided regular updates on the changing tax regime covering the transfer of trust-owned and company-owned residences to their residents. Our readers may currently be relaxed, believing themselves in the middle of a transfer-duty window that expires on 31 December 2011. Alas, no longer. A new Taxation Laws Amendment Bill seeks to introduce a new dispensation.

On the upside, the Bill widens the ambit of relief, by including residences owned by complex structures such as a holding company with subsidiaries, or a trust owning the shares of the transferring company.

On the downside, the Bill proposes a new requirement. For transfer duty exemption or CGT relief to apply, the transferring entity must be dissolved after the transfer. Thus an entity holding assets other than the residence in question -- a trading company or family trust, for example – will have to forego the relief or otherwise transfer all the other assets as well, at huge cost to the trust or company.

The Bill is still before Parliament, but the date scheduled to be its cut-off is 30 September 2010. Yes; that is next Thursday!

To any Walkers client who owns a private residence through a trust or company or CC, here is a Mayday Emergency call: you have one week to get that document of disposal settled. Note that what is crucial is the date of disposal, not of transfer. Conveyancers need not try to rush transfers. If the disposal document is completed by Sept 30, you stand to benefit from transfer duty exemption and capital gains relief, and keep your company or trust operative. From Oct 1, you’ll lose on one or other of those counts.

Hitherto, sirens and flashing red lights have been the medical profession’s preserve. For this week, the tax and estate planning fraternities should borrow them.

Competition Law

by Roxanne Ker

The Competition Act 89 of 1998 has been in force for over ten years, yet many firms still conduct their business in contravention of the Act, whether knowingly or unknowingly. This is becoming progressively more dangerous for a number of reasons: the Competition Commission is becoming more proficient at investigating anti-competitive behaviour and prosecuting offenders before the Competition Tribunal; the consequences for non-compliance can be quite severe, leading to large penalties being levied of up to 10% of the total annual turnover of the company concerned, parent/holding companies potentially liable for infringements by subsidiary entities; reputational harm being suffered by the firm and its the entire group, if applicable, and now, with the coming into effect of the Amendment Act, directors, managers and employees can be held criminally liable.

We have found that while certain forms of anti-competitive behaviour like price fixing is a more obvious contravention, in some cases it is less apparent as to what may constitute anti-competitive behaviour. As the consequences for non-compliance can be harsh, it is important for directors, managers and employees to be trained to understand the provisions of the Act and how to apply them to their businesses.

Apart from training, we have found that formulating and implementing a competition compliance policy which provides guidelines in the form of do’s and don’ts specific to your business can be extremely helpful in guiding managers and employees on a practical day-to-day level in complying with Competition Law. Where there is any behaviour, whether intended, current or past, which you suspect might contravene the Act, consult your attorneys.

Lastly, conducting a competition compliance audit can assist firms in identifying any areas of the business where there is a contravention of Competition Law or where there is a danger that the law may be contravened. You may not realize that a practice may be anti-competitive.

by Renier Kriek

The remedy known as arrest tanquam suspectus de fuga has been a part of South African law since at least 1842. It is an extraordinary remedy, which allows a creditor who could prove that his debtor was planning an imminent departure from the country with the intention of evading the debt to have that debtor arrested and incarcerated, without first having to prove his claim. Although an extraordinary remedy, it was seemingly regularly sought, and could be granted by a Magistrates Court for any alleged indebtedness greater than R40.

Ms Tatiana Malachi, a national of Moldova, came to South Africa in 2009 to work as an erotic dancer under the patronage of two South African companies, Cape Dance Academy International (Pty) Ltd and House of Rasputin Properties (Pty) Ltd. Upon her arrival, her travel documents were seized by representatives of the two companies, purportedly as a form of security for repayment of the expenses incurred by the companies in relocating Ms Malachi to South Africa.

After working for the two companies for some months, Ms Malachi expressed her dissatisfaction with her employment conditions, and sought to return to her home country. Eventually she secured the help of the Consul General of Russia in obtaining an air ticket to return home. Upon learning of Ms Malachi’s imminent departure, the two South African companies applied for her arrest and imprisonment tanquam suspectus de fuga, and such an order was granted. Ms Malachi was arrested on 9 July 2009, and was incarcerated at Pollsmoor from 9 July to 24 July 2009, when she eventually approached the High Court for relief.

Judge President Hlophe in the Western Cape High Court declared the relevant sections of the Magistrates Court Act that allowed for arrest tanquam suspectus de fuga to be unconstitutional and invalid. Hlophe JP’s order included an order declaring the underlying common law to be unconstitutional and invalid, meaning that order of arrest tanquam suspectus de fuga will no longer be possible in the Western Cape High Court or any of the country’s Magistrates Courts.

On 24 August 2010, after the matter was duly referred to the Constitutional Court for confirmation, the highest court in the country made its ruling, confirming the order of invalidity made against the relevant sections of the Magistrates Court Act. The judgment relies mostly on the constitutional right to personal freedom as enshrined in the Bill of Rights. The court observes, among other things, that allowing for imprisonment for an unproven civil debt seems absurd in view of the fact that imprisonment for proven civil debts has long since been done away with.

We agree, based on the circumstances of this particular matter, that the remedy of arrest tanquam suspectus de fuga was open for abuse by unscrupulous creditors, but note with dismay the passing of one of the few remaining legal strong arms available to creditors. Collecting civil debts has become a nightmare in this country, and both the courts and the legislature seem to be engaged in excessive peering at the rights of the little man, at the expense of creditors, and ultimately to the detriment of commercial life.

The moral of the saga is presumably never a debtor or traveling pole dancer be!