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Why Sharemax deserves a death blow

IT’S TIME for the coup de grâce for Sharemax and its property syndications. For its thousands of investors…  please put them out of their misery.

Declare the whole business model an illegal practice and use a general liquidation to start the process of recovering assets from all those who benefited from this illegal scheme – from the advisers who sold the products to the shareholders in Sharemax Investments, who derived considerable financial benefit from the illegal scheme over the years.

Investors and the entire financial community now need “closure”. Unfortunately, they’ll also have to accept that – at best – the investments in Sharemax aren’t going to realise more than 20c in the rand.

It will be some consolation to investors to know all those who benefited from this illegal business practice will lose their profit and luxurious lifestyle – through the orderly liquidation of the entire group, hopefully at the insistence of the SA Reserve Bank, which in any case has the final say via its two statutory managers, Neels Alant and Jaco Spies.

The past week or two was a rather tense time for the Sharemax group. The new “independent” board – with former Judge Hartzenberg and Dawie Roodt as its spokesperson – tried hard to convince investors – with whom nobody is actually communicating and who don’t have any statutory or other say in what happens – to follow a 311 scheme of arrangement route rather than liquidation.

Of course, the people they have to convince are Alant and Spies, plus Deputy Registrar of Banks Michael Blackbeard, who has become saddled with the Sharemax problem.

On the other hand, there are one or two lawyers in Pretoria who are very keen to place Sharemax and all its syndications under judicial management or liquidation.
 
Once again, it looks as if the Reserve Bank has the power to put a stop to that, if it likes.

In brief, the difference between a 311 scheme and the process of declaring it an illegal business – which would involve compulsory repayment of all monies to the original investors – is as follows.

But no matter which way it goes, there’s no magic wand to wave that will save the investors, mostly elderly Afrikaans-speakers, from considerable losses.

* For more of Vic de Klerk on Sharemax, click here. Applicable only if you are a subscriber to Finweek’s print edition.

* If you are not a subscriber to Finweek’s print edition, click here.

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