In this article the same theme as in Child Maintenance Across Borders (22.08.18) continues. During any emigration process people dispose of their possessions as the majority thereof cannot be taken along for the move. Disposing of possessions may be as uncomplicated as giving your day to day possessions to relatives or, in respect of assets with significant value, by sale to a third-party purchaser as the proceeds from the sale will in all likelihood be necessary to set up a new life. Before continuing please note that you need not be emigrating to be party to a transaction as mentioned below; however, given the trend of emigration from South Africa, this article is written as a consideration and aid for people who do.
The emigration process may be more complicated for a business owner, as all businesses have commercial/legal/ethical obligations to third parties such as the consideration of what will happen to the employees of that business. Selling a business can be a daunting exercise. No two businesses are identical and there are many aspects to give thought to and decisions to make which will have different consequences. Until this point business has been spoken of in general,however note that there is a distinction between the sale of:
Disposal of any of the aforesaid may, and in all likelihood will, comprise a lengthy process with a number of tasks to be carried out. By way of indication, the typical life-cycle of a transaction of this nature comprises:
Disposing of shareholding can be less complicated than disposing of a business. In this instance the most important detail is the value of that shareholding. Another consideration is the other shareholders of the company as there may be limits on the type of shareholder which they are willing to introduce into the company (the purchaser) and this may be regulated by the memorandum of incorporation of the company and/or any shareholders’ agreement. As a shareholder what are your rights and obligations? Are you entitled to sell your shares to a third-party purchaser or must you first offer those shares to the existing shareholders of the company or the company itself (pre-emptive right)? Are you required to convene a meeting in this regard and what steps must be taken to ensure that the meeting is lawfully conducted. Must you obtain a valuation of the shareholding and if so, are you required to mandate a particular firm to do so?
Also to be dealt with on the other hand when selling a business are considerations of equipment, premises, employees, staff, clients, book debts, contracts, insurance policies for succession planning of the business (which may need to be transferred or cancelled) etc.
Ordinarily the first decision to be made is price and payment. Will the price be fixed or will it be relative to the performance of the business at a particular point in time? A further decision will concern specification of the asset being sold/purchased i.e. percentage of shareholding, equipment, how many employees and which employees, liability and/or debt etc.
There will be various aspects to these transactions to be managed, such as understanding the requirements of both seller and purchaser, deciding how to structure the transaction which is often tax driven, financing the purchase, and knowing which regulatory approvals are required in specific industries. For example, you may not be able to sell to a competitor with majority support of a market as Competition Commission approval may be required. Or, particularly in the instance of emigration, exchange control may play a role if the purchase price is payable on a date by when the seller has already emigrated and payment is made to a country other than South Africa.
In order to achieve an effective sale, the seller will be required to understand the needs of the purchaser, vice versa, and structure, as well as implement the transaction accordingly. The transaction will require legal advice in respect of, amongst other, the abovementioned particulars, and may require a team of professionals to provide advice in respect of legal, financial, tax, insurance and/or regulatory concerns.
The attorneys at Rushmere Noach are able to assist you by providing a wide range of legal advice and services and, where necessary, procuring the services of other professionals in respect of the related advice required.
This article is not intended to provide legal advice; it is for general information purposes only and to provide a general understanding of the law. It is advisable that advice relating to the specific circumstances of your matter be sought from an attorney before acting upon the content of this article. This article is written at a particular point in time and accordingly may not always reflect the most current legal developments, legislation and/or judgments which may be applicable from time to time. The author and/or Rushmere Noach Incorporated are not responsible for any errors or omissions in the content.