Author Archives: Nicole

It is so quick, easy and convenient to convey a message on social media platforms such as Facebook, Twitter, LinkedIn, Instagram etc.

Despite the convenience and satisfaction of typing and then posting a rant, it is recommended to pause and consider the circumstances of these actions. The leading risk is potential defamation.

Defamation according to South African law constitutes the following:

1. the content must be published;
2. it must refer to you or your company, directly or indirectly; and
3. it must be injurious to your reputation.

Defamation arising from the use of social media has led to numerous cases locally and internationally. In 2012, a South African court issued an interdict when the sale of church premises led to a Facebook campaign wherein the Dutch Reform Church was associated with Judas Iscariot selling out for 30 pieces of silver. The court held that this was harmful and injurious.

In the ground breaking case of Herholdt v Wills, the court relied on constitutional rights in coming to the decision that a post on social media was defamatory. The court relied on the right to privacy and the right to freedom of expression and held that the founders of the Constitution could not have foreseen the tensions that social media would create for these rights. Being mindful of the conflicting nature of these rights, the court had to conduct a balancing act between the right to privacy and the right to freedom of expression. The fact that the published statement may be true is not a defence. This does not mean that one is not allowed to voice opinions and make defamatory statements, it is required for the statement to be both true and to the benefit of the public. Sensational gossip is not protected by law.

In light of the court’s obligation to develop the common law in terms of the Constitution, the court held that “the tensions between every human being’s constitutionally enshrined rights to freedom of expression and dignitas is all about balance.” A mandatory interdict was granted and the posts had to be removed from all social media platforms.

In the case of Isparta v Richter the court held that merely repeating or sharing a defamatory post is sufficient to constitute defamation, and that a person may be equally liable for another person’s posts where a person knows that they have been tagged in another’s post, and they allow their name to be used, and fail to take steps to disassociate themselves from the defamatory post.

The recourse to defamatory statements is to send a letter to the person/company making the defamatory statements and to ask the person/company for an undertaking to stop making these statements, request an apology, and/or a retraction of the statement/s in order to correct and cure the harm done. Alternatively, one could sue for defamation depending on the nature of the defamatory statement.

Defamatory statements may have a serious impact on individuals and companies. Having regard to freedom of expression in an open and democratic society, we should also be mindful of the consequences of publishing an opinion. We have instant access to platforms to voice our opinions and it is therefore crucial for everyone to know what may be regarded as defamatory before clicking the post or share button.

With great power comes great responsibility ~ Voltaire.

Nicolé Maré – Candidate Practitioner

nicole@mrf.co.za

Kim Rademeyer – Partner

kim@rademeyer.co.za

With the passing of the first anniversary of the Exchange Control Regulation amendments of 01 March 2017, (Exchange Control Circulars Nos.  7 & 8 of 2017) we consider whether such amendments have been a help or hindrance over the last 12 months.

Prior to 01 March 2017 South African residents (both natural and juristic) were prevented from selling, transferring or assigning intellectual property (“IP”) to, as well as licensing IP from, a non-resident without first obtaining prior approval from the Financial Surveillance Department (“FSD”) of the South African Reserve Bank (“SARB”).

Form DTP001 was used when licensing IP and such pre-approval was required in respect of:

• new or substitute agreements as well as extensions of agreements;
• situations where goods were manufactured in South Africa under license of a foreign licensor; and/or
• agreements containing clauses relating to down-payments, minimum payments or once-off payments.

In terms of assignment of IP and Exchange Control Regulation 10(1)(c), such pre-approval was required whenever a transaction sought to directly or indirectly export any capital, or right thereto,  from South Africa.

“Capital” has been defined to include any IP right, whether registered or not and “exported” has been defined to include cession, creation of a hypothec, other forms of security or any assignment in favour of a non-resident.

There were several issues with the Exchange Control position in respect of IP prior to 01 March 2017, including, but not limited to:

• no standardisation of requirements for applications and/or approval (save for Form DTP001);
• no guidelines / objective basis with which to judge applications;
• capacity of relevant authorities to appreciate the complexity of IP laws; and
• perceived bias against permission for assignments in connected party situations (i.e. inter-group assignment of IP).

As a result, in the lead up to former Finance Minister Pravin Gordhan’s Budget Speech of 2017, government recognised that previous regulations “may affect legitimate commercial transactions and discourage the use of ZA-based group infrastructure to further develop offshore IP”.

It was therefore decided that the pre-approval requirement should be relaxed for certain transactions, excluding sale-and-lease-back structures. The relevant transactions are:

• the sale, transfer or assignment of IP from a South African resident to an unrelated non-resident; and
• the license of IP from an unrelated non-resident to a South African resident.

The relaxation has not removed the pre-approval requirement, but has shifted the authority for granting such approval from the FSD of the SARB to Authorised Dealers (“AD”) in general. Other requirements include:

• the transaction must be conducted at arm’s-length and for fair value;
• the agreement must be authorised by an AD who must have viewed the agreement and an auditor’s letter and/or IP valuation certificate confirming the basis for calculating the purchase price, royalties and/or license fees, as the case may be; and
• all inward funds emanating from such sale, royalties and/or license fees, as the case may be, must be repatriated to South Africa within 30 days of the recipient and/or licensor becoming entitled thereto.

Essentially government has stipulated that IP must remain registered in South Africa but may be assigned offshore, subject to appropriate tax treatment.

However, there are several issues with the new “relaxed” position, including, but not limited to:

• government’s failure to understand that assigning IP that is registered in South Africa to a non-resident does not change the registration of such IP in South Africa;
• competence and liability of ADs as they may not have been educated for the new responsibility that has been thrust upon them;
• how to test / verify an auditor’s letter / IP valuation certificate. Auditors are generally uneducated when it comes to IP and valuations thereof, therefore they are reluctant to issue such letters attesting to the value of IP;
• whether interested third parties may intervene in an application, and if so, how;
• auditor’s valuation v SARS valuation – which takes precedence?
• lack of provision for complaints / queries procedure; and
• how rejected applications may be appealed. It would seem that an application would have to be made to High Court where court date availability has a very negative impact on commercial transactions.

The general feeling has therefore been that government’s good intentions have actually introduced more uncertainty to an already uncertain procedure.

The result of which has been that ADs simply refer applications to the SARB, which has the effect of taking us back to square one – obtaining prior approval from the SARB.

Ashton Pollard – Practitioner

ashton@rademeyer.co.za

Kim Rademeyer – Partner

kim@rademeyer.co.za