Tuesday, May 31, 2011
Sharemax board seeks ways to pay investors
Sharemax board seeks ways to pay investors
The new board of the troubled Sharemax group of companies is looking at alternatives to its planned scheme of arrangement and offer of compromise to allow investors in the various Sharemax schemes to choose between a monthly income or the repayment of their capital "with a haircut".
About 40 000 shareholders have invested R4.5 billion through Sharemax's various property syndication schemes.
Dawie Roodt, a spokesman for the new Sharemax board, on Friday also denied that "all sins are forgiven" and action could not be taken against anyone for alleged illegal acts related to Sharemax once the scheme of arrangement in terms of section 311 of the Companies Act was in place.
Sharemax defaulted on monthly payments to investors in September last year when new investments dried up after an investigation by the registrar of banks found its funding model contravened the Banks Act.
This led to the registrar appointing statutory managers to manage the repayment of funds obtained in contravention of the Banks Act or to seek legal alternatives.
Roodt confirmed that some of the companies in the Sharemax group were "definitely bankrupt", and not only The Villa, the partially completed R3.5bn retail development to the east of Pretoria.
The amount owed to investors by some of the companies exceeded the value of the assets owned by the company, he said.
Roodt said one benefit of liquidation was that there was closure, certain investigations would take place where fingers would be pointed at who was at fault and all the ramifications resulting from that.
But Roodt said there was no doubt a liquidation would not be good for investors in Sharemax, although it "leaves open whose fault it is".
Roodt said lawyers and financial advisers maintained that if the scheme was put in place "all sins were forgiven", but that was not the case.
Without suggesting anyone was guilty of anything, Roodt said if an investor afterwards wanted to claim, they could do so but it would be difficult for them to prove how much they had lost.
Roodt said the new Sharemax board had been granted permission by the high court to convene meetings to seek the approval of investors in the Zambezi Retail Park, The Villa and so-called income plan schemes for the scheme of arrangement and offer of compromise but dates had not yet been set for any of these scheme meetings.
He stressed that this was not because the Sharemax board was dragging its feet but because it was investigating possible better alternatives and opportunities than the scheme of arrangement.
Roodt said the board had "made very nice progress" on alternative options that the board members believed would be attractive to investors.
"We want to give investors options to allow them to stay in and ride it out or cash in now and take a haircut, but not in all instances. But investors in The Villa will not get all their money back.
"But we want to give investors those kinds of opportunities and choices. Many investors invested because they wanted a monthly return. We are investigating options and financial instruments so they can get a monthly income."
The lengthy repayment period in terms of the scheme of arrangement and the fact that many investors are pensioners means many will be dead before they are repaid.
Chase International managing director Pierre Hough, a business strategist who conducts specialist forensic investigations, previously claimed the planned offer of compromise sought to legalise an illegal act and was prejudicial to the rights of "prospective investors". He noted: "The issue of share certificates to prospective investors is highly irregular and possibly fraud."
Sharemax R200 000 claim hearing set for next month
April 13 2011 By roy cokayne
A claim of R200 000 lodged with the fidelity fund of the Law Society of the Northern Provinces relating to the alleged illegal release of funds from the trust account of Sharemax Investments attorneys Weavind & Weavind is set to be heard next month.
Pierre Hough, the managing director of Chase International and a business strategist, lodged the claim in October on behalf of Johanna Bosman, one of his clients.
Jaco Fourie, a senior legal official in the disciplinary department at the law society, said yesterday he had received a response on Monday from Hough to the comments made by Weavind & Weavind on the claim.
He said the matter would now be placed before a committee of the law society to decide how to deal with it.
A date had not yet been arranged for the committee meeting. Hough also lodged a R200 000 claim with the Attorneys Insurance Indemnity Fund related to the same matter on behalf of another client, Toffie Risk.
But this claim was rejected on the grounds that the fund’s liability was excluded by section 47(1) (g) of the Attorneys Act and non-compliance with section 26 of the same act.
In terms of section 47(1) (g), the fund shall not be liable in respect of any loss suffered by any person as a result of theft of money which a practitioner has been instructed to invest on behalf of such persons.
Section 26 of the Attorneys Act relates to the purpose of the fund and, among other things, states the fund shall be applied for the purpose of reimbursing persons who may suffer pecuniary loss as a result of theft by a practising practitioner, candidate attorney or employee of any money or property “in the course of his practice”.
Both claims followed the halting of construction on the Zambezi Retail Park and The Villa projects in September last year when Sharemax funds dried up, which also coincided with investors in the syndications not receiving their monthly payment.
The registrar of banks subsequently appointed statutory managers to Sharemax to manage the repayment of funds to investors after an investigation found Sharemax’s funding model contravened the Banks Act. - Roy Cokayne