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01 Aug 2017

SARS and the Special Voluntary Disclosure Programme: It’s Deadline Time!

“The SVDP is meant for individuals and companies who have not in the past disclosed tax and exchange control defaults in relation to offshore assets” (SARS)

If you aren’t sure whether or not you should apply for the Special Voluntary Disclosure Programme (SVDP), take advice immediately –

  • The deadline is 31 August 2017, and you will need time to prepare properly.
  • By the end of next month, SARS will have in place an automatic exchange of tax information with the revenue authorities of over 50 other countries (100 by September 2018) under the OECD’s “Common Reporting Standard”.
01 Aug 2017

Enjoy Winter Like a Viking!

If you are struggling to enjoy what’s left of Winter (and doesn’t it always seem hardest just before Spring?), think about how Denmark manages to retain its title of “Happiest Country in the World”, despite its long, cold, dark winters.

How do the Danes manage it? Perhaps there’s some truth in the idea that a big part of their secret lies in the old Viking concept of “hygge”. Hygge is, says the OED “A quality of cosiness and comfortable conviviality that engenders a feeling of contentment or well-being (regarded as a defining characteristic of Danish culture)”.

It’s really not difficult to cosy up your home. Here’s 10 tips for you: “How to Hygge: Embrace the Cosy Danish Concept”.

05 Jul 2017

Articles for Foreigners

  1. Foreigners rights to own property in South Africa

  2. Immigration regulations

Foreigners rights to own property in South Africa

South African Law does not prohibit a foreigner from purchasing immovable property in the Republic of South Africa. Foreigners are furthermore permitted to sell the property at any time and repatriate the original capital expended plus their profit at such time of their choosing. In as much as South African residents [natural persons or legal entities whose normal place of residence, domicile or registration is within the Republic of South Africa] are subject to certain exchange controls, foreigners are required at the time of wishing to repatriate their funds, to establish that the funds initially utilized for purchasing the property were imported into the Republic at the time of purchase from foreign sources [the purpose being to ensure that no South African resident/citizen is trying to expatriate funds].

This is best achieved by opening a special “non-resident” bank account with a South African commercial institution and ensuring that all funds expended for purposes of the property investment, travel through that account. The opening of this account is however not a prerequisite to the purchase of the property. In such circumstances the funds would be remitted directly to the conveyancing attorneys appointed to attend to the registration of the transfer of ownership of the property purchased who will, if requested, cause the title deed issued to the foreign investor to be endorsed by the attorneys’ own bankers, and thereby facilitate the repatriation of the funds when required. This “endorsement” will serve as proof that the purchase price of the property was paid with imported funds. Foreigners are furthermore permitted to borrow funds from a South African financial institution and permit the registration of a mortgage over the property purchased as due security for such loan. The South African laws however restrict the capacity of foreigners to procure such a loan to a sum amounting to a maximum of 50% of the proposed purchase price of the property.

Prepared by Milton Koumbatis

 

IMMIGRATION REGULATIONS AND THE EFFECT THEREOF ON INVESTMENT IN SOUTH AFICAN IMMOVABLE PROPERTY

Much has been made of the “new” regulations promulgated in terms of the “new” Immigration Act.

Lest the publications cause unnecessary anxiety in the minds of foreign investors, it is important to stress that the new laws do not change the existing laws relating to the right of a foreigner to purchase immovable property in the Republic of South Africa. In this regard our own publication on “Foreigner’s Rights to own Property in South Africa” remains entirely correct and is an accurate representation of the law as it stands. There is also no indication whatsoever from any government authority that any change to the above position is proposed or contemplated.

The “New Regulations and Act” deal entirely with the right of foreigners to reside in the Republic of South Africa whether on a permanent or temporary basis and are therefore relevant only insofar as they might affect the right of the foreign investor to enter South Africa for purposes of using his property.

The majority of foreigners wishing to purchase property in South Africa fall within the following four categories and we shall accordingly restrict our commentary on the New Regulations and Act to the impact which they might have on such foreigners:

  1. People who wish to own immovable property in the Republic and to use same for vacation purposes
    There has been no significant change in the law affecting investors of this nature. Such investors traditionally qualified for entry into the Republic on the basis of a “visitors permit”. This situation has not changed and there is no reason to believe that it will change. A visitors permit is granted for a period of three months and can be renewed by the Department of Home Affairs if required.
  2. People who wish to own immovable property in the Republic of South Africa and to use same as their retirement accommodation
    Changes have occurred which affect investors of this nature. The permit which such an investor would wish to acquire is entitled a “retired person permit” [whether permanent or temporary]. The permanent permit is of course valid for an indefinite period. A temporary permit is valid for a period of four years at a time and will be renewed by the Department if the investor continues to qualify in terms of the prescribed criteria. The temporary permit is specifically capable of dealing with investors who wish only to remain in the Republic for limited or seasonal periods during the validity of the permit. The criteria for qualification for the permits are that the investor must be able to establish that he has a pension [or retirement annuity or retirement account] producing a minimum income of R20 000.00 per month or that the net worth of the investor is R12 million producing an income of at least R15 000.00 per month.
  3. People who wish to own immovable property because they wish to conduct business in the Republic of South Africa
    The particular permit which such an investor would require is a “business permit” [whether permanent or temporary]. A permanent permit would endure indefinitely if, for a total period of five years after its issue, the investor continues to meet the criteria for qualification. A temporary permit is valid for two years at a time and can be renewed as long as the investor continues to meet the criteria for qualification. The criteria for qualification [for both permanent and temporary permits] are that the investor must invest at least R2.5 million in a business and must [amongst other prescribed alternatives] have either a proven entrepreneurial skill or prove that at least five citizens or residents will be employed by the business or prove that the business is in one which will operate in one of the listed sectors of the economy [example – information and communication technology, clothing and textiles, tourism or crafts].
  4. People who wish to own immovable property because they have relatives in South Africa who are citizens or permanent residents of South Africa
    A temporary permit would be given to any foreigner if the foreigner is “immediate family” of any South African citizen or permanent resident provided that the South African citizen or resident establishes certain prescribed financial assurances relating to the care for such foreigner. “Immediate family” includes the South African citizen’s / resident’s children, grandchildren, parents, brothers and sisters. Children and parents in fact qualify for permanent residence on the same criteria. The above summary hopefully makes it clear that our immigration laws are still very “foreign investor” friendly and that such persons will continue to feel comfortable about investing in our thriving property market.

Prepared by Milton Koumbatis

Caution: While every effort has been made to ensure that the information contained in this article is correct, Miltons Inc. will not be liable for any loss suffered by any person due to any error in the article.

30 Jun 2017

Is Your Domain Name at Risk from “Drop Catching”?

Can you afford to lose your domain name? What happens to your business if your website and emails suddenly go down because you’ve lost it? For many businesses, that would be a disaster. For some, it could spell financial ruin, especially if the new owner wants money – a lot of it – to sell the name back to you.

An adjudication matter recently heard by SAIIPL (the South African Institute of Intellectual Property Law) illustrates how this could happen to you via “drop catching”.

What is “domain drop catching”?

“Drop Catching” is a legitimate business model to acquire and then sell lapsed domain names. It is a fully automated process using software to identify domain names which have (for whatever reason) become available for purchase, and then to register those names to the domain catching business for re-sale.

“Cybersquatting” is different, it’s an “abusive” process whereby “squatters” pre-emptively register trademarks (or the names of famous people or businesses with which they have no connection) as domain names. They then put them up for sale at inflated prices, or use the goodwill in the names to attract business to their own sites.

An administrative oversight takes a website down; and a price-tag of R200k to get it back

  • A hair extensions business (which we’ll refer to as “the business”) held a registered trademark “Darling”, and for many years had advertised its products on its website at www.darling.co.za.
  • Its domain was administered by its then ISP (Internet Service Provider) which normally sent the business a reminder to pay the annual renewal fee – but no reminder was sent for the year in question and the fee wasn’t paid.
  • The website went down, replaced with a page advertising the domain name for sale. The domain name registration had lapsed due to non-payment of the annual fee, whereupon the new registrant’s drop catching software had acquired it. Its plan, it said, was to offer the name to the town of Darling as part of a proposal to develop an advertising website for it.
  • The business – no doubt with a sense of rising panic – offered the new registrant R1,000 to get the name back but was told the price was $15,000 (about R200,000) – a lot more than the costs incurred in acquiring the domain name.
  • The subsequent SAIIPL adjudication ended with an order that the domain name be returned to the business, despite the fact that it hadn’t noticed for 4 months that its website was down and hadn’t suffered any disruption to its business (it was, it seems, more active on its Facebook page and its .com website). Moreover, the Adjudicator found that the new registrant had acted in good faith and without any intention of extorting money from the business.
  • What sunk the registrant’s case it seems was the registered trademark held by the business. The fact that the domain name was the same as the trademark placed the onus on the new registrant to show that the domain name was not an “abusive” registration. The Adjudicator distinguished between “bad faith” and “abusiveness” here. Although the registrant had shown there was no “bad faith” involved, it had failed to prove a lack of “abusiveness”, in that the business still had “residual goodwill” in the .co.za name, and in the potential risk that the name could be sold by the registrant, not to the town of Darling, but to another business with a field of activity similar to the original owner’s.
  • Even then, commented the Adjudicator “This complaint is a borderline case”, and the bottom line is that a simple administrative oversight could very easily have lost the business its domain name.

Don’t let that happen to your business!

Put a system in place to ensure that all your domain names are renewed in good time, and seek legal assistance immediately if you run into any issues.

30 Jun 2017

Your Property Sale Agreement: Be Careful How It’s Worded!

“In war and litigation, both sides suffer” (old Roman proverb)

Here’s yet another reminder from our courts on how important it is – if you want to avoid the trials of litigation – for you to have your property sale agreement drawn up professionally. One thing it must do, as the case in question clearly shows, is record the terms of your agreement precisely and without any room for argument.

This High Court case revolved around a “bond clause” in a sale agreement. A bond clause is a standard protection for any buyer who needs finance in order to pay the purchase price. It’s a “suspensive” clause that means the sale agreement only becomes enforceable if and when it is fulfilled.

The bond clause and the better offer

  • The bond clause in an agreement of sale required the buyers, within 30 days, to obtain from a bank a loan offer, quotation and pre-agreement. It did not specify that these had to be lodged with the seller.
  • The buyers duly obtained a loan offer (not accompanied by a quotation or a pre-agreement) and told the seller about it. Thereafter they accepted the bank’s loan offer but also asked the seller for more time so they could try and find another loan offer at a better interest rate.
  • The seller refused, having decided that the bond clause had not been fulfilled in time and that therefore the sale agreement was now void. She then put the property back on the market and accepted a better offer for it.
  • The buyers were having none of that and asked the High Court to interdict transfer to the “new” buyer and to instead order transfer to them.
  • The seller argued that there was no valid sale to the original buyers because they hadn’t fulfilled the bond clause by giving her the bank’s loan documentation within the 30 day period. She was therefore, she argued, entitled to regard the original sale as invalid, and to re-sell the property at a better price.

One clause, two interpretations

It boiled down to this – the seller and the buyers had each interpreted the obligations imposed by the bond clause differently. The buyers thought they had fulfilled the suspensive condition, the seller thought they hadn’t.

A hard lesson for the seller

The Court held that on the particular wording of this particular clause, it was enough for the buyers simply to have obtained a loan offer from a bank.

They could receive the offer and accept it without having to give the bank’s loan documentation to the seller. They could waive the protection given to them by the clause’s other requirements. In other words, they were entitled to regard the bank’s loan offer to them as fulfilment of the condition, and the sale agreement is valid and enforceable. Accordingly the seller must transfer the property to the original buyer at the lower price and will now have to suffer the consequences of breaching her contract with the “new” buyer.

As a seller, if you want certainty on whether or not your buyer really has obtained bond finance within the set time limit, make sure that your bond clause clearly and unequivocally requires the buyer to lodge with you proof that the bank has granted the loan.

More broadly, whether you are a buyer or a seller, the last thing you need is to have to go through the expense, stress and waste of time that litigation will inevitably subject you to. So have your lawyers draw up the sale agreement for you: or at the very least have them check it out before you sign anything!

30 Jun 2017

When Can You be Arrested for Traffic Offences?

It’s every motorist’s nightmare – being stopped by a traffic officer, arrested, and carted off to the local police cells.

Where you will likely languish (very, very unhappily by all accounts) until you are given “police bail”, or (in due course) taken to your first court appearance.

But for what offences exactly do you risk such on-the-spot arrest? And what truth is there in the alarming story now circulating on Social Media that just being caught without your driver’s licence could land you in handcuffs?

Read “These are the traffic laws you probably break every day – and how much you should be fined” on BusinessTech for a discussion of what offences you can be arrested for, and the penalties associated with them (including drivers licence suspension periods). The article also lists the – often substantial – fines for other common traffic offences (only Western Cape fines are quoted, but you get the idea).

13 Jun 2017

MILES FOR SMILES

Start your Youth Day on Thursday, 16 June 2017 with a beach walk or run for a good cause. Choose the 6km or 3km option on the Melkbosstrand beach. See all info and link to ENTER below!

TO ALL THE CORPORATES / AGENCIES:

Enter a Corporate team of UP TO 20 members and pay only R1000!

The entry fee goes to a VERY GOOD CAUSE – we want to give as many Children as possible their Smiles back! Join a team together, wear your corporate branding and join the Miltons Team on 16 June!

ENTER HERE – http://bit.ly/2qRUvFo

31 May 2017

Fighting the Flu with Food

“Let food be thy medicine, and medicine be thy food.” (‘Father of Modern Medicine’ Hippocrates in about 400 BC)

Don’t let colds and the flu knock you for a six this winter. Particularly if you run your own small business, every day in a sick bed is a day of opportunity lost forever!
“The 15 Best Foods to Eat When You’re Sick” from AuthorityNutrition sets out some of the science behind Hippocrates’ sage and ancient advice.

You may also be able to boost the “good food” effect with some medical help. See “Zinc acetate lozenges may increase the recovery rate from the common cold by three-fold” on ScienceDaily.

31 May 2017

Dagga / Marijuana at home? Arrest Risk Remains!!!

There’s still a lot of confusion as to whether dagga (cannabis) remains an illegal drug in South Africa, fuelled in part by conflicting media reports.

Here’s where we stand –

  • It remains in general illegal to cultivate, possess, supply or use cannabis “without the necessary authorisation from the Department of Health” (see below).
  • “Medicinal” cannabis
    • Individual patients needing to use cannabis products for medicinal purposes can apply for special permits (3 of them are required) to do so.
    • The Medicines Control Council (MCC) has to date approved only one medicine containing synthetic cannabinoids (Dronabinol) under Schedule 6 – i.e. it is available only on prescription.
    • Cultivation of “medicinal” dagga remains generally illegal, but the MCC is “working towards implementing a detailed regulatory framework to enable applications for licences and permits for the cultivation, production and manufacture of medicinal cannabis products.” No growing permits will be issued until the necessary legislative amendments have been passed by Parliament, and the MCC’s current draft guidelines for growers contain very strict requirements and controls which are likely to limit the number of farmers able to comply.
  • What about the new “at home” defence?

The recent high-profile Western Cape High Court judgment did not, despite the impression to the contrary created by some media reports, “legalise dagga”. What it did do, on grounds of unconstitutionality of the legislation in question, is to provisionally provide a deemed “right of privacy” defence to anyone charged with a dagga-related offence where “the use, possession, purchase or cultivation of cannabis in a private dwelling is for the personal consumption of the adult accused”.

The Court was at pains to state that its findings “should not be construed as meaning that this court wishes, in any way, to understate the importance of curbing drug trafficking and the pernicious and socially destructive activities of drug dealers … this case is only concerned with acts / conduct of individuals performed in the confines of their own homes”, nor did it in any way extend to children.

In other words, the defence – if it is currently available at all (see below) – is only available to adults growing or using dagga in the privacy of their own homes for their own personal use. Any other cultivation, possession, supply or usage will fall outside that deemed defence and remains a fully prosecutable offence.

It’s now over to the Constitutional Court to confirm or overturn the declaration of unconstitutionality (which is suspended for 2 years accordingly) and thereafter Parliament will need to amend the relevant legislation as necessary. It remains so be seen whether or not that process will eventually result in full decriminalisation.

  • Even “at home” offenders still risk arrest

SAPS have indicated strongly that, with an appeal having been lodged against the High Court order, pending a Constitutional Court decision on the matter, and pending any necessary amendments to legislation, the police will continue to arrest offenders even for contraventions in their own homes. Although there is at date of writing no clarity on how the NPA will handle resulting prosecutions, the best advice for now to anyone thinking of “at home” dagga cultivation or use is to be cautious and to be aware that the risk of arrest and prosecution remains a real one.

  • And what about the workplace?

As cannabis remains in law an illegal drug in South Africa, and as the new “deemed defence” to any criminal charges applies – if it applies at all – only to own-home possession and usage, workplace restrictions against drug use and abuse remain unaffected. Your employees cannot turn up for work with a joint and claim to be acting lawfully – they aren’t.

03 May 2017

Creditors – Your Special Notarial Bond is Good for 30 Years

Some good news for creditors here – the SCA (Supreme Court of Appeal) has just held that a 30 year prescription period applies to special notarial bonds.

That’s important because it’s always prudent when making a loan or extending credit to take as much security from the debtor as you can.  And whilst a mortgage bond over immovable property is usually going to be first prize here, movables can also provide strong security.

If possible, hold the debtor’s movables yourself and take a pledge over them.  Where however your debtor cannot give you actual possession (which is likely to be the case with substantial business assets such as machinery in a factory), consider registering a “special notarial bond” over them.

That will give you the same strong security (in law, not necessarily in practical terms) as you would have with a pledge, even though you don’t have actual possession.  Just make sure that each asset is listed in such a way that it is, as required by law for validity, “…specified and described in the bond in a manner which renders it readily recognisable…”, so give full descriptions with any available serial numbers and the like.

What about prescription?

You will know that most debts prescribe after 3 years, but some only after 6 (cheques for example), some after 15 (most State debts), and some after 30 – judgment debts, tax debts, some State debts and “any debt secured by a mortgage bond”.

A creditor’s R500k victory

  • A bank’s loan to a close corporation was secured by a special notarial bond over specified movables.  The sole member also signed a personal suretyship.
  • Having failed to pay per the loan agreement, both the close corporation and the member were sued by the bank for just under R500k. They defended the action on the basis that the claim had prescribed after either 3 or 6 years.
  • Agreeing with the High Court that the term “mortgage bond” was wide enough to encompass a special notarial bond, which in consequence won’t prescribe for 30 years, the SCA handed victory to the bank.

If your debtor has significant movable assets, ask your lawyer about registering a special notarial bond over them.  Not only will it give you security for your claim, but it will also protect you from a “3 year prescription” defence.

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