About Me

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I am a qualified Attorney. I specialise in Property Law, Commercial Law, Corporate Law and Trusts.
 
Please visit our website at www.prop-law.co.za for more details.
 
I am an elected Committee Member of the Property Committee of the Association of Pretoria Attorneys and through my involvement, I like to ensure that I am constantly at the "sharp-end" of Conveyancing Practice.

I am the elected Chairman on the Gauteng Council of SAPOA. The South African Property Owners Association (SAPOA) is the biggest and most influential institution in the property industry. SAPOA members control about 90% of commercial property in SA, with a combined portfolio in excess of R150 Billion (about $22 Billion). I am also on the National Council and the National Legal Committee of SAPOA.
 
Member of the Institute of Directors South Africa.

15 December 2011

Special Report Podcast: Niki Vontas – CEO, Bonatla

Special Report Podcast: Niki Vontas – CEO, Bonatla

Niki Vontas cries foul says communication process to shareholders is flawed.
- DOWNLOAD THIS INTERVIEW
ALEC HOGG: It’s Tuesday December 13 2011 and in this Boardroom Talk special podcast, Niki Vontas, chief executive of Bonatla Property, joins us now. Niki, good to have you on the programme, there’s been big developments in the Sharemax saga. From your perspective though, you did propose a rescue scheme and walked away, why? What was the background to that?

NIKI VONTAS: I put together a proposal that was originally accepted by the directors of Sharemax and they circulate it to the constituencies. Unfortunately, if you remember, there were a lot of public debates and public analysis in the Financial Mail or the Finance Week in which I commented and obviously I commented on controversial findings of my due diligence and they invoked this disclosures to the press for canceling the transaction summarily for disclosure of, for a breach of non-disclosure, which I find very funny because the press knew almost as much I knew already.

ALEC HOGG: So, you didn’t really walk away it was more a question of being kicked out.

NIKI VONTAS: I need to tell you I still haven’t walked away, there could be still some surprises but I cannot comment on that yet.

ALEC HOGG: But at the moment shareholders or investors, 35 000 of them, at Sharemax have actually voted in favour of a rescue scheme that’s being decided on right now. You don’t think it’s such a good idea?

NIKI VONTAS: Well, first obviously I wouldn’t like to comment on the process but from the little I’ve seen, if you visit the Sharemax website you’ll see that there’s less than 200 people visiting that website a day, there’s very little visits. What you find generally speaking in this doomed [UNCLEAR] syndication schemes like Bluezone that we salvaged or Sharemax or [UNCLEAR] or Realcor, you’ll find that the investors are generally older investors, generally Afrikaans, they haven’t got an email address, they haven’t got proper communication skills and they really rely on [UNCLEAR] communication to get decisions or information passed onto them. So, what I dispute really is that the process is completely flawed. I don’t believe that proper documentation has been circulated to investors to allow them whether or not they will get the investment of such a long period as [UNCLEAR] ten years and what Magnus Heystek, in fact, commented on the Business Report is absolutely right. It’s a total circus.

ALEC HOGG: It’s a circus you say?

NIKI VONTAS: It’s a total circus…[UNCLEAR] a total circus because if you want to put a proposal to 30 000 or 40 000 people on most probably the biggest failure in physical property in South Africa, you at least make the owner of at least the proper analysis of the merit or the pitfalls, you give feasibilities, you give time value of money, your present value, the returns over such a long period. You give them some form of information to ponder about and you don’t give them such a short time basically. Basically to me it’s a little bit of a hit and run operation that’s basically the way I consider it.

ALEC HOGG: From a business perspective though, can this rescue plan that has been proposed work?

NIKI VONTAS: I don’t think so. You’ll find that the Sharemax [UNCLEAR] is not finished, you’ll find some further applications for liquidations, further litigation. Obviously by now the investors are desperate and therefore they are going to consider anything but I still believe that in property there is always a solution. Sometimes if the difficulties are extreme, like in Sharemax, the solutions are more extreme but I still believe its investors deserve proper information in order to make a proper decision. They should, I think…if you want to talk to shareholders you can work like in the old Company Act, [UNCLEAR] to get special resolutions, you conduct meetings, you’ve got quorums and things like that. I haven’t seen anything of that sort. It looks like a bosberaad and the next day you basically announce a 99.9% approval. Last time I’ve seen that it was 1938 and 1939 in Hitler’s referendum. So, my feeling, you need to apply corporate governance, the new companies act, you need to apply proper process to give the time and information to investors to decide whether or not these solutions be good for them an what applies for them, applies for anybody. If I do that transaction, they should also call special meetings and give information and give analysis and ask the press to comment. This thing is a little bit of an occult operation.

ALEC HOGG: Do you know Connie Myburgh, the lawyer who’s behind this rescue scheme?

NIKI VONTAS: Yes, I’ve heard about him, yes.

ALEC HOGG: I believe our investigation journalist, Julius Cobbett, says that he was one of those who vigorously defended the Garek disaster. Lots of people lost much money there as well. What is his motive in this? Are you saying that his motive perhaps is questionable?

NIKI VONTAS: I believe Mr. Myburgh was involved also, if I remember, with Colin Barnard and the fiasco on the Melrose Arch deal with the mine pension fund in 2004, on which I think the late Ian Fife put some very nice article on them, so there must be a bibliography on the SM available if [UNCLEAR]

ALEC HOGG: So, if the courts are to sanction this, would you then try to go to court to get it reversed?

NIKI VONTAS: No, we’ve got other things pending but I cannot believe a court, looking at the way this process was handled, is going to sanction it. I don’t believe a proper judge is going to sanction a process like that. It’s the biggest failure in property in South Africa with 40 000 or 45 000 victims that are asked to give the money over and most of them, I can guarantee you, will be dead before the last payment because they are generally - the syndication investors in all these schemes – are generally retired people, who unfortunately invested their life savings in a property investment with obviously a property and a financial risk and therefore they lost their investment and now ask to receive the return on the investment through their estates because a lot of them won’t survive that [UNCLEAR], I can tell you that.

ALEC HOGG: Niki, outside of Sharemax there’s another controversial property issue going on at the moment, where the shareholders in a company called Accentuate or 26% shareholders there are tackling the management on a lease that was signed by the management before the property was sold. Do you have any insight into this?

NIKI VONTAS: Well, no, I’m quite aware of that transaction, all I can comment from what I…and I pursued it over the last year as well, all I can comment is that first if you as a director are involved in a property company and you’re obviously a director of the operating company, which is listed on the AltX I think, you should technically, if you sell that property company or the property you should have a related party circular, whereby you recuse yourself from any voting on your shares and you allow your shareholders to decide if this deal is good or bad for the company. I don’t think this process was followed and the other comment that I have is that if you do a leaseback, industrial leaseback, traditionally the operating company sells its property by signing a lease and obviously receives the proceeds from the sale of the property. In this case the property went into a ten year onerous lease but without receiving any proceeds from any sale. The proceeds of the sale went obviously to the shareholders of the property company or the directors, I suppose, and therefore there’s no merit whatsoever. If I was in the property company I would have only signed a three or four year lease or five year lease because it doesn’t help you to be on the [UNCLEAR] for ten years for the benefit of somebody else who’s unrelated to your operations.

ALEC HOGG: You call it an onerous lease, is it above market rates?

NIKI VONTAS: It is, I would say it is. There is obviously, although it’s an industrial area, they could argue that the ratio of non-industrial space to office space is not the same because traditionally in industrial property you find that 80% of your space is industrial and perhaps 15% to 20% of the gross lettable area is offices, in this Steeledale property you’ll find the ratio of office is higher but still I believe Steeledale is Steeledale, it’s not a prime area anymore. It used to be a good industrial area in the olden days of apartheid but for the new change of…since 1994 a lot of the old industrial areas, which are very largely your areas in the south were generally created to separate the white townships from the black townships. Now it’s not anymore the case. Your new industrial areas are created just for the economic value, not anymore for a demarcation between racial groups. I think all the…I visited, in fact, two or three of these industrial areas like Troyeville and Booysens, all these areas are basically declining quite substantially at the present moment because there’s an exodus of these industrial tenants towards your Lindor Parks [UNCLEAR], your Medowdale, all your new generation industrial townships.

ALEC HOGG: How did you get involved in investigating the Accentuate deal?

NIKI VONTAS: I put an offer two years ago, I put an offer last year, which obviously didn’t succeed.

ALEC HOGG: Because you were…for what reason?

NIKI VONTAS: Well, I was not satisfied with the transaction.

ALEC HOGG: Oh I see, so you actually had the opportunity to see the transaction and you felt that it wasn’t fair?

NIKI VONTAS: Well, I’ll tell you want makes me nervous. In a similar transaction what you should do technically if you want to be really fair the director should engage with the company in which they’re also directors, I suppose, the listed company, and say, listen guys we want to get out of this property transaction, we want to sell back the property to Accentuate, so the tenants must buy the property at a market related price so there’s no conflict of interest. So, suddenly now Accentuate is the owner of the property company, okay at a market related value, so the directors obviously take the proceeds, cash the proceeds. But now Accentuate at least can sign the ten year lease after having received its proceeds from the sale. So, the correct way to do it would be to sell back the property to Accentuate and allow Accentuate to do the ten year lease with the new buyer. That would have been much more fair.

ALEC HOGG: What would the difference in value be for this property without a ten year lease and with a ten year lease?

NIKI VONTAS: Well, what counts is not the length of the lease, it’s the confident of the tenant. [UNCLEAR]. My argument is that your lease is first as good as the tenant, the property is really a pretext. In property investment you could have a big tent in the Kalahari desert with Microsoft as a ten year tenant, it’s better to have that and have the cash flow than having a beautiful marble building in Steeledale with Accentuate as a tenant for ten years.

ALEC HOGG: So, in other words it’s the ten year lease that’s the important part here. What would that be worth on this…?

NIKI VONTAS: What counts is the discounted cash flow of this lease, basically it’s all the ten year income streams, which your present value at a discount rate, which is your [UNCLEAR] rate, which takes into consideration the risk free, let’s say the total return from the bond market, which is a risk free rate, plus a little risk premium attached to the risk of this property, its location, its age, the Accentuate financial covenant. So you could discount anywhere at around I would say 16% to 18% discount rate. If you discount this cash flow of this ten year lease at this rate you will arrive at a net present value, which will give you the value of the property.

ALEC HOGG: And roughly, this property, what would the deal have gone through at?

NIKI VONTAS: I would hesitate to give you my comment on that.

ALEC HOGG: But what were you prepared to pay for it with a ten year lease?

NIKI VONTAS: Me, I took the income and, if I remember, I capitalised at around 13% yield. If I can give an example at the present moment, prime property transactions are arrived at at capitalising the first year net income from rental at around 9%. The Accentuate deal I would have capitalised at 13% because I would have expected a much higher initial return, taking into consideration the risks. So, I touched around the 13% return. But obviously my deal didn’t arrive because it was not acceptable.

ALEC HOGG: But in rand terms what would that make it worth?

NIKI VONTAS: Try to remember, to tell you the truth…

ALEC HOGG: Is it a R5m deal or a R20m deal?

NIKI VONTAS: No, no, no, it was, if I recall, it was a R7m or R8m deal, if I recall.

ALEC HOGG: All right, so it’s not a huge deal then.

NIKI VONTAS: No, it was not a major consideration because ultimately it was a B grade industrial property in a B grade industrial area. Also, if I recall, there were other tenants in that property [UNCLEAR], if I can remember.

ALEC HOGG: Niki Vontas, the chief executive of Bonatla.

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Sharemax rescue hits speed bump

Sharemax rescue hits speed bump

Court decision will take place next year, giving dissenters time to argue their case.

Investors in Sharemax’s syndication companies will have to wait at least another month to hear if a proposed rescue plan will receive court approval. The North Gauteng High Court has delayed its decision until late January to allow dissenting investors time to argue why they believe the plan is flawed.

This means that the immediate threat of liquidation has not yet been removed. It is generally agreed that a liquidation would crystalise billions of rands worth of losses for Sharemax’s 35 000 investors. These investors, many of them elderly, have placed roughly R4.5bn in Sharemax’s various syndication schemes.

The rescue plan was presented to Judge Bert Bam this week for court sanction. According to those familiar with the process, court approval would have been virtually guaranteed, provided the plan was unopposed. However, an advocate representing a small handful of investors arrived in court and opposed the plan.

Attorney Chris de Beer, who represents the dissenting investors, explains it is not their intention to liquidate the Sharemax syndication companies. They argue, however, that proper process was not followed, and that the rescue plan seeks to legalise an illegal scheme.

The Sharemax rescue plan has been accepted by the vast majority of investors who voted. It has been reported that of the investors who voted, more than 99.9% were in favour of the scheme. Voter turnout is estimated at nearly half of all Sharemax investors.

If the rescue plan receives court sanction, the directors of the syndication companies will be free to begin the hard task of returning money to investors. If it fails, the Reserve Bank has indicated that it may have no option but to liquidate the various syndication schemes. If the Reserve Bank does not apply for liquidation, it is almost certain that someone else will.

But if the court approves the rescue plan, investors are by no means out of the woods. The scheme would provide Sharemax investors with a “clean”, legal structure, but it does not remove their financial problems.

The rescue plan proposes that investors are issued with new debentures that comply with the Banks Act. The repayment terms of each debenture will depend upon the health of the underlying syndication. The repayment terms, which are not open to public scrutiny, have been based on a fair and reasonable opinion obtained from BDO Corporate Finance. This opinion is, in turn, based on valuations and financial projections performed by DP Cohen Consulting.

If the syndication companies fail to meet their debenture promises, it may open them to fresh liquidation threats.

In the case of Sharemax’s two largest syndications, Zambezi and The Villa, much funding is necessary to complete the projects. These schemes together account for about R2.5bn of investors’ funds,

Investors have received half of the ownership of Zambezi, but must pay tens of millions to developer Capicol to receive the other half. With The Villa, investors have acquired just 30% of the massive unfinished shopping centre. Developer Capicol has 20%, and the remaining 50% has been reserved for anyone brave and rich enough to commit funds to finish the project.

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New Retail Trading Density Index launched

New Retail Trading Density Index launched

Shows foot traffic at shopping centres has declined, but spending has increased.

An IPD (Investment Property Databank) Retail Trading Density Index has revealed that foot traffic in shopping centres across the country has declined in the past three years but that shoppers have been spending more over the same period. The IPD index has been compiled in collaboration with the South African Council of Shopping Centres. It tracks the performance of shopping centres based on information gleaned directly from the retail outlets’ owners and managers.

The index will be released quarterly. The IPD’s Jess Cleland says while footfall has declined slightly shopping centres across the spectrum are showing higher turnovers. The index took into account super regional, regional, small regional and community shopping centres. The table below illustrates the turnover of the various shopping centre types for the year end to September 2011.



Cleland says smaller centres have performed particularly well which can be partly attributed to the global economic crisis as shoppers pop in for groceries and other necessities rather than frequent the malls with their luxury goods items in addition to the food offering.

The IPD said in a statement: “Stronger than expected retail sales growth in the third quarter of 2011 has helped to maintain the robust performance of South African shopping centres.” It said while turnover growth of shopping centres had recovered from the downturn in 2009 and 2010, the momentum had now slowed and dropped below inflation for some centres. “It is the larger centres where the growth in trading density, which is measured as turnover per square metre, has been the most muted.” “For the year to September 2011, trading density increased by 5.2% for super regional centres, by 5.5% for regional centres and just 3.8% for small regional centres when compared to the previous year.” The smaller community and neighbourhood centres in turn increased their trading densities by 10.2% and 15% respectively.

The smaller centres rely more heavily on necessities such as groceries to drive their sales compared to larger ones with more specialised tenants catering for more discretionary spending.

New property income fund lists on the JSE

New property income fund lists on the JSE

Plans several acquisitions and the Spar connection.

Synergy Income Fund has listed on the Johannesburg Stock Exchange (JSE) with a view to raising capital for possible acquisitions in 2012. CEO William Brooks says the company needs access to the capital markets “for further acquisitions that are well progressed and will be coming through early next year”. Most of Synergy’s properties are anchored by retail giant Spar or SuperSpar as part of a formal co-operating agreement between the fund and the Spar group. “We think that’s a real competitive advantage going forward,” Brooks says.

Synergy’s portfolio includes Sediba Plaza Shopping Centre in Hartebeespoort, the Nzhelele Valley Shopping Centre in Makhado, Hubyeni shopping centre in Elim, Richdens Village Centre in Hillcrest, the KwaMashu Shopping Centre outside Durban and the Taxi City Shopping Centre in Newcastle. Brooks said the company was concentrating on the lower LSM segment of the population due to its growth potential for disposable income. Around 70% of Spar’s growth is also coming from this segment, which Brooks believes is likely to offer investors good returns.

On Synergy’s link with Spar, Brooks said the group was owned by independent retailers who had no retail property assets in their portfolio, they don’t own any shopping centres nor do they have a property development team. This, together with the fact that Spar does not invest group capital in terms of retail property investment, provided the perfect opportunity for Synergy to align itself with the group.

It also gave Spar a chance to expand its retail footprint by having strong relations with a property investor and developer. “It’s about driving growth of new centres as well as expanding and improving existing centres and managing them more effectively.”

Asked how Synergy had raised the capital to list, Brook explained the company had raised R300m through a private placement last year while R240m came from the Liberty Group. Another R50m had come from RE:CM and the company’s founders put in R20m. “This gave us an initial capital base of R300m which enabled us to buy shopping centres at the beginning of the year. We got to the stage where we needed to finance some lumpy acquisitions, hence the decision to go to market to raise additional capital,” Brooks said.

He added he could not elaborate on Synergy’s pipeline as yet but that an announcement would be made “fairly soon”. In a statement the company said the listing would make Synergy the first specialised convenience retail property fund on the JSE, comprising 12 properties with a gross lettable area of more than 130 000m², valued in excess of R1.1bn. “The properties range in size from 5 000m² to almost 23 000m² and are focused on the high-growth low LSM sector of the consumer market.”

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Re-zoning delays killing businesses

Re-zoning delays killing businesses

 Johannesburg’s processing of re-zoning applications is taking twice as long as it should, severely hampering the small businesses sector.


According to a wide range of experts and professionals interviewed by Moneyweb, the processing of applications to re-zone residential land for commercial use has become excessively slow and is getting progressively worse. “Even if it’s a straight forward rezoning application, if it’s in line with the municipal policy, namely the regional spacial development framework (RSDF) … and there are no objections … you would be lucky to get it through in 12 months,” says George Van Schoor, a professional town planner at C-Plan consultants. Straight forward applications should take around six months according to Van Schoor.

This is echoed by Jean-Luc Limacher, the CEO of SA’s biggest town planning consultancy Urban Dynamics. While “there is no question that there is a bottleneck,” Limacher notes that the processing times for applications will vary markedly depending on the nature of the application.

The problem seems to have arisen from a lack of experience and capacity at Johannesburg’s administrative branches charged with processing the applications and extends to the transfer of property ownership.

Johannesburg’s billing crises has worsened the situation, the experts say. With these slow processing times, businesses are finding it more difficult to set-up shop in new areas, reducing their potential access to market. “Each time a small business can’t get re-zoned, he’s losing money, he can’t get set-up,” says Keith Brebnor, CEO of the Johannesburg Chamber of Commerce and Industry (JCCI).

Van Schoor has 21 years of experience in his field and believes that the problem is getting worse despite the introduction of the RSDF which is designed to fast-track applications that comply with its guidelines. “There have always been undertakings from the top management of town planning that they will improve, but it’s not happening,” he says. “The whole philosophy behind the regional spacial developmental framework is to simplify the process. If an applicant submits an application … the idea is that it should be fast tracked, but that is not happening.”

Van Schoor, Limacher and Brebnor believe that the route of the problem is a lack of experience and capacity at Johannesburg’s municipal departments tasked with handling rezoning applications. This under-capacity has resulted from a loss of experienced staff, high staff turn-over rates and a collapsed mentorship programme, say the experts. As administrative bottlenecks delay the processing of applications, Johannesburg’s billing crises has worsened the plight of those seeking to re-zone.

Brebnor says the billing crisis means that it takes an extremely long time to receive rates and utility clearances: “So even before it gets to the planning [stage to re-zone the property] … you are stuck at first base. “You have a problem where they don’t know who paid rates, who paid for the water and who paid for the land.”

In response to Moneyweb’s queries, Johannesburg Metro’s Deputy Director of Communication Nthatisi Modingoane, said that “Depending on the configuration of the property, geological circumstances, engineering services and number of objections received it is difficult to give an exact time frame for the completion of a rezoning. “In as far as the City's Land Regularisation Programme is concerned, we are looking at legal ways to assist in vesting zoning as expeditiously as possible,” he said.

...

13 December 2011

Joburg set to stop cut-offs after group goes to court

Joburg set to stop cut-offs after group goes to court

The City of Joburg is set to halt its spate of electricity and water cut-offs after it was served with an urgent interdict this week.

The Property Owners and Managers' Association (Poma) an organisation representing the majority of property owners in Joburg's inner city, obtained an order from the Johannesburg High Court calling for, among others, the suspension of cut-offs where there are legitimate queries on the city's chaotic billing system.

And now it has emerged that after a meeting between Poma and council officials this week, an out-ofcourt settlement is likely to be reached.

Maurice Crespi, managing partner at Schindlers Attorneys, which represented Poma, did not want to discuss the details of the settlement but said they were likely to be announced next week.

"All I can say for now is there will be an outcome which will extremely beneficial to consumers," he said. "They (the city) have committed to meeting their legal obligations and our discussions were not only about a solution but dealing with the overall problem."

Crespi said his expectations were that the city would agree to the residents' demand on suspension of cut-offs, where there were legitimate queries.

The group of inner-city property owners applied for the interdict following the spate of disconnections over the past few weeks which have affected thousands of people, despite most of them having valid queries on their accounts.

The interdict called on the city to: ensure that it issues correct accounts; gives proper readings and not estimates for more than six months, as per its by-laws; issue regular and accurate accounts; post or deliver the accounts to correct addresses; gives owners a reasonable time, or 20 days, in which to pay; gives a proper 14-day notification of cut-offs; and, not cut off water completely.

Poma members claimed the council's chaotic billing system was destroying efforts by private investors to rejuvenate the inner city.

Chairman Renney Plit told the Saturday Star's sister newspaper, The Star, this week the interdict was not only being applied for on behalf of about 250 000 tenants in the inner city affected by cutoffs but for other residents of the city.

"We are simply asking the council to adhere to its own by-laws. Our tenants in the inner city have been badly affected by the workings of the council.

"We have had services cut off in buildings where the council claims that there are huge amounts owing", Plit said. People had been forced to climb 16 flights of stairs because there was no electricity to power the lifts.

"Our tenants have also been without water for days because of disputes on the accounts. We have been appealing to the council to work with us – we are trying to rejuvenate the inner city by offering decent accommodation to lower-income earners, but it has been thwarting our efforts at every turn," Plit said.

The city had until next Monday to submit its answering papers to Poma's urgent application for the interdict.

City spokesman Nthatisi Modingoane said he would only comment once he had spoken to the council's legal department to hear the latest on the matter.

At the time of going to print he had not responded to the Saturday Star's inquiry.

Saturday Star




12 December 2011

Sharemax: Liquidation averted?

Sharemax: Liquidation averted?

Not quite, say critics, who think the rescue scheme may not get past a court.

Sharemax investors have reportedly voted overwhelming in favour of a rescue scheme. The scheme aims to prevent the liquidation of syndication companies sold under the Sharemax banner.

All that remains is for a court to sanction the scheme. But some believe this won’t happen.

Approximately 35 000 investors, many of them elderly, have placed about R4.5bn in the various Sharemax schemes. Virtually all of these investors were acting on advice received from brokers who received generous commission from the sales.

One of the most outspoken critics of the rescue scheme’s process is Niki Vontas, CEO of listed property stock Bonatla. Bonatla once proposed its own rescue scheme for Sharemax, but subsequently walked away from the deal.

Vontas describes the Sharemax scheme as a “joke”. He says: “A competent judge will not validate such a ridiculous scheme.”

Vontas is no stranger to rescue schemes. His company successfully saved troubled Bluezone syndications from liquidation. The Bluezone syndications had already been provisionally liquidated, which makes the rescue all the more remarkable. Companies placed under provisional liquidation are almost always liquidated permanently.

It remains to be seen how successful Vontas’s Bluezone rescue will be, but most experts agree that there are few fates more damaging to property syndication investors than liquidation.

The Sharemax rescue plan has been led by corporate lawyer Connie Myburgh, who readers may remember for his aggressive defence of Garek, a scheme that cost its investors untold millions.

The scheme is not cheap; documents (click here to download) estimate the total cost at R11m, the bulk of which comprises legal fees. These fees are paid regardless of whether the scheme is successful. The fees are paid from those syndication schemes that have cash available, incurring further debt for those that don’t.

Vontas says that for the scheme to be properly put together, each company in the Sharemax stable should have voted separately. This was not the case; votes were pooled. Vontas also claims that shareholders were not given proper notice.

Chris de Beer, an attorney representing Sharemax investors, agrees that the process is flawed. He says that the rescue plan, if approved, will serve to legalise Sharemax’s illegal structure. His clients have instructed an advocate to attend court in a bid to prevent the scheme’s sanction.

De Beer has previously applied to the North Gauteng High Court for the judicial management of a handful of Sharemax syndication schemes. The matter is due to be heard on May 7 2012. However, De Beer concedes that if the Sharemax rescue scheme is sanctioned by the court, it would mean that his judicial management application is less likely to be successful.

De Beer says that it has never been his intention to liquidate the Sharemax syndication companies. “We just want to make sure a proper process is followed.”

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