The New Cannabis Act: Here’s What You Will and Won’t Be Allowed to Do

The New Cannabis Act: Here’s What You Will and Won’t Be Allowed to Do

“It’s high time they legalised cannabis” (Anon)

Much excitement has greeted the signing into law of the Cannabis for Private Purposes Act, which will formally regulate the cultivation, possession, and use of cannabis by adults in a private setting and, says the Presidency, lays the groundwork for regulatory reforms “to allow for the industrialisation of the cannabis sector.”

But although the new Act has been widely reported in the media as though it is already in force, this is not correct – it will only come into effect when its commencement date is gazetted. It is not clear at date of writing when we can expect this to happen, but it could be a lengthy process. Until then the rather vague parameters for private and personal use, possession and cultivation set by the Constitutional Court in 2018 will presumably remain in place.

In the interim, here are some highlights of the Act –

What is “cannabis” in the new Act?

“Cannabis” is defined for the purposes of the Act as meaning “the flowering or fruiting tops of a cannabis plant and includes products made therefrom” (i.e. “buds”, extracts, oils and the like) but the definition excludes “any seed, seedling, the stalk, leaves and branches.”

What you will be able to do, and what you won’t

In a nutshell, it will be legal within prescribed limits to grow, possess, use and share cannabis in private, but not to sell it. More specifically, and with the general requirement of “private purpose” –

  • In private: Any adult (18 or over) will be able to cultivate, use, possess and share cannabis “in a private place for a private purpose”. But not in the presence of a child or non-consenting adult, and not “if it is likely to cause a disturbance or nuisance to any person” in a nearby public place. Note that when it comes to sharing (supplying or obtaining), there cannot be any exchange of “consideration” defined as “any form of compensation, gift, reward, favour or benefit” (i.e. sale for recreational as opposed to medical use will remain prohibited, even for private purposes). The prescribed “maximum amounts” (see below) will apply in private as well as in public places.
  • In public: An adult will be able to possess (subject to prescribed maximum amounts), but not to use, cannabis in a public place.
  • Protections for children: No child (person under 18) can be given cannabis or any cannabis product, nor be allowed to possess or use it without a medical prescription, nor can they be used to deal in it. Importantly, any adult “who is in possession of cannabis must take reasonable measures to ensure that such cannabis is inaccessible to a child whether that child is under the authority, supervision or care of that adult person or not.”
Maximum amounts will be prescribed, and transport will be regulated

Regulations will prescribe –

  • The maximum amounts allowed for cultivation, possession and transport of cannabis.
  • “Conditions, restrictions, prohibitions, obligations, requirements or standards regarding the transportation of cannabis, by the person transporting cannabis as well as in respect of the passenger in such transport.”

Current speculation (i.e. you can’t hold us to this!) is that the prescribed amounts will be based on those proposed in a version of the Bill which was not incorporated in the final Act. That Bill proposed that adults would be able to –

  • Possess unlimited seeds and seedlings.
  • Privately cultivate four flowering cannabis plants per person (or eight per household occupied by two or more adults).
  • Privately possess 600 grams of dried cannabis per person (or 1,200 grams per household occupied by two or more adults).
  • Publicly possess 100 grams of dried cannabis or one flowering cannabis plant.
  • Provide/obtain for personal use 30 seeds/seedlings, 1 flowering cannabis plant, 100 grams of dried cannabis.

Note however that the 2020 Bill’s structure is different to that of the final Act, so wait for the final Regulations before relying on any of these speculated limits!

Criminal records to be expunged

Convictions for possession and use of cannabis (dagga) will be automatically expunged, as will convictions for dealing based on legal presumptions rather than actually dealing. Where records have not been automatically expunged, they will be expunged on application.

Disclaimer: The information provided herein should not be used or relied on as professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your professional adviser for specific and detailed advice.

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Can You Sign an Affidavit Over Zoom?

Can You Sign an Affidavit Over Zoom?

“These technological developments would have seemed far-fetched and science fiction a brief few years ago.” (Extract from judgment below)

It’s an important question – the invalidity of an affidavit could sink even the strongest case, so it’s vital to get this right. Of course, it’s always tempting to cut corners where you can on the commissioning side, and perhaps you urgently need to sign an affidavit but are far from a commissioner of oaths or perhaps for some reason you just can’t visit a commissioner physically.

That of course became a commonplace scenario during the Covid-19 restrictions on personal contact and the pandemic accelerated the need for our laws to evolve in step with all the new “science fiction made real” technologies enabling meetings to be held virtually, documents to be signed electronically, and secure online handling and storage of information generally.

Whilst legislation and our courts have made important strides in this regard, some areas of uncertainty remain. One of them is the question of whether or not affidavits can be commissioned remotely.

The problem – what does “in the presence of” mean?

For an affidavit to be valid, the relevant Regulations require that it be signed “in the presence of” a commissioner of oaths. And as much as we might think that we are for all practical purposes “in the presence of” everyone else in a virtual meeting or family chat session, it’s not clear yet to what extent virtual presence will be considered sufficient compliance with the Regulations.

Let’s look at three recent High Court decisions with differing outcomes –

  1. Case 1: An affidavit validly commissioned by Zoom from Italy:

    A commissioner of oaths in South Africa commissioned affidavits in a Zoom video call with deponents in Italy. The Court allowed the affidavits to stand, agreeing with previous judicial comments that “…Courts must adapt to the requirements of the modernities within which we operate and upon which we adjudicate…” and concluding that there had been “substantial compliance” with the requirements of the Regulations. However, the Court also cautioned against the idea that courts can “willy nilly accept non-compliance with acts and regulations.”
  2. Case 2: An application for a general declaration refused:

    A global publishing company asked the High Court for an order declaring that “in the presence of” is to be broadly interpreted to include the administration of an oath or affirmation “by means of live electronic communication, consisting of simultaneous audio and visual components”. The Court dismissed the application, distinguishing this case from the one above and commenting that, although the argument that “the object of the Act and the Regulations can be achieved by virtual means is tempting”, it could not ignore “the clear meaning of the words in the Regulations” and “It is not for a Court to impose its view of what would be sensible or businesslike where the wording of the document is clear”.
  3. Case 3: Courts have a discretion only if normal commissioning is impossible:

    A bank’s property valuation affidavits had been signed electronically in the absence of the commissioner of oaths. The Court agreed that a court has a discretion to accept such affidavits “if it finds that that there has been substantial compliance with the regulations” – but only where physical commissioning is not possible. Thus, in a previous matter, a court had exercised its discretion to allow an affidavit’s remote commissioning as a result of “the impossibility of the oath being administered normally because of the Covid restrictions against personal contact”. That, said the Court, “does not mean that a party may deliberately set out to achieve substantial compliance with such regulation rather than comply with its requirements.” In other words, you can’t elect to commission remotely just because it suits you. The valuator’s affidavits were rejected.
Err on the side of caution

There are some important grey areas there, and clearly remote commissioning will not be allowed as a matter of course. You’ll have to justify it.

So, regardless of how inconvenient it may be, unless and until new legislation (or perhaps a definitive ruling from the Supreme Court of Appeal) brings the Regulation’s wording up to speed with technology, the only way to be sure that a court will accept your affidavit as valid is to err on the side of caution and visit a commissioner of oaths physically whenever possible.

Disclaimer: The information provided herein should not be used or relied on as professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your professional adviser for specific and detailed advice.

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Ponzi Schemes: Can Liquidators Claw Back 600% of Payouts?

Ponzi Schemes: Can Liquidators Claw Back 600% of Payouts?

“MTl’s business clearly amounted to an unlawful ponzi-scheme, i.e. a fraudulent investing scam promising high rates of return to investors and generating returns for earlier investors with investments taken from later investors.” (Extract from the MTI judgment)

Recent media reports of the MTI (Mirror Trading International) liquidators making repayment demands of investors highlight once again the dangers of falling for “too good to be true” investment schemes.

The problem is that by their very nature, all pyramid schemes (including “ponzi” schemes) eventually fail, leaving the vast majority of investors with nothing but the hope of being awarded a partial dividend on their claims when the holding entity is eventually liquidated.

But what if an investor is one of the “lucky early birds” who got paid out before the scheme’s collapse?

Debunking the “early bird investor catches the worm” myth

A common myth is that the only losers in a collapsed pyramid scheme are those investors who didn’t get their money out in time, and that the “early birds” who did act quickly are winners in the equation.

The problem for them is that liquidators have wide powers to reclaim payouts made to investors (as creditors) before liquidation. The idea is that payouts by definition come from new money paid in by new investors, and that to be fair to them it is necessary to put everything back into the pot for all investors and other creditors to share according to their claims. But of course they only share in what’s left after all the liquidation costs and fees have been settled, and in a large and complex liquidation like MTI’s those costs will be particularly substantial.

The practical issue is that whatever was paid out to investors/creditors – both by way of the original investment and the “profit” on it – is likely to be claimed back by the liquidator. And the investor forced to repay everything is left with nothing but a concurrent claim in the liquidation.

Of course a liquidator’s prospects of recovery will be boosted if they can obtain a court declaration of unlawfulness of the scheme and invalidity of the investment contracts (as has already happened in the MTI liquidation), but let’s see how that could then play out in practice.

The liquidator’s options for recovery

To summarise the options available to a liquidator in recovering payouts made before liquidation –

  • “Voidable preference”: If the payout was made within six months prior to liquidation and immediately thereafter the company’s liabilities exceeded its assets, it is repayable to the liquidator unless the investor can prove that that the disposition was made “in the ordinary course of business” and without intention to prefer one creditor above another. That could be hard to prove in the case of a pyramid scheme.
  • “Undue preference”: If at any time a payout was made by the company with the intention of preferring one creditor above another, it is repayable to the liquidator if the company’s liabilities exceeded its assets at that stage. In this case, the onus is on the liquidator to prove the intention to prefer, but that may perhaps be easier to prove in a pyramid scheme scenario than in other corporate failure scenarios.
  • “Disposition without value”: Monies paid out to a creditor at any time must be repaid to the liquidator if the company received no “value” in return, subject to –
    •  Where the payout was made more than two years prior to liquidation, the liquidator must prove that immediately thereafter the company’s liabilities exceeded its assets.
    • But if the payout was made within those two years, the onus switches to the creditor to prove that immediately thereafter the company’s assets exceeded its liabilities. In the case of a pyramid scheme that may be impossible to prove.

    Note that the creditor in such a case will also generally lose their claim against the company.

  • “Collusive dealing”: If the liquidator can prove that a creditor colluded with the company to pay out monies with the effect of prejudicing creditors or of preferring one creditor above another, the colluder will not only forfeit their claim but can also be ordered to pay in a penalty of up to the same amount. A liquidator could for example try to prove that the investor/creditor was aware of the unlawfulness of the scheme at the time of the payout.
Even worse, could investors lose a lot more than they put in?

Media reports suggest that an MTI investor, who invested R20,000 and was paid out R21,000 shortly before liquidation, received a demand from the liquidators to repay not just his initial investment and profit, but for 600% of what he put in. The sum claimed (at date of writing) is R122,000, that being the current value of the bitcoin he initially invested – the argument being presumably that what was disposed of was “property” (bitcoin), in which case the liquidators would be entitled to reclaim either the bitcoin or its value at the date the disposition is set aside. The justification will no doubt be that that is what the company and its creditors as a whole have actually lost as a result of the disposition. If our courts agree with that view, being sued for a great deal more than the original investment will be a particular risk when the investment is a volatile asset like bitcoin.

The High Court has previously declared MTI an illegal and unlawful scheme and all agreements between it and investors unlawful and void, but that of course is only the first step for the liquidators in proving their claims against investors. Media reports suggest that many investors are lawyering up to oppose the claims so we must wait and see how it all plays out in the courts.

Regardless, the risk of not only losing the original investment but then also having to cough up a great deal more over and above that certainly does fire yet another warning shot across the bows of anyone tempted to invest in any scheme promising unrealistic returns. Prospective investors shouldn’t part with a cent until they confirm that the scheme is actually legitimate.

Disclaimer: The information provided herein should not be used or relied on as professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your professional adviser for specific and detailed advice.

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Dual Citizens: Good News if You Lost Your South African Citizenship, But…

Dual Citizens: Good News if You Lost Your South African Citizenship, But…

“Citizenship is the gateway through which a number of rights in the Constitution can be accessed.  It enables a person to enjoy freedom of movement, freedom of trade, and political representation” (Constitutional Court, quoted in judgment below)

Note: Many South Africans who should be aware of this new development will be overseas and/or may not have heard of the Supreme Court of Appeal decision we discuss below. If you know of any such person, please consider forwarding this to them as soon as possible.

Reportedly, thousands of South Africans have lost their citizenship through applying for citizenship or nationality of another country without first obtaining Ministerial permission to do so.

Most will have done so unknowingly, ignorant of the fact that whilst dual citizenship itself is allowed, our Citizenship Act requires you to get permission beforehand. Only minors (under 18s) and persons acquiring foreign citizenship by marriage were exempt.

The good news is that the SCA (Supreme Court of Appeal) has now ordered that –

  1. That provision is inconsistent with the Constitution and is invalid retrospectively; and
  2. Citizens who lost their citizenship by operation of that provision “are deemed not to have lost their citizenship.”
But – the Constitutional Court still has to confirm the invalidity order

The SCA’s order of invalidity has no legal force unless and until confirmed by the Constitutional Court (CC), and there is (at date of writing) no indication of when this will go to the CC for confirmation, whether or not Home Affairs will oppose its confirmation in the CC, and whether or not they will continue to enforce the section in the interim. In the interim, tread very carefully if you are either planning to apply for foreign citizenship/nationality, or if you were deprived of SA citizenship and plan to return to the country in the near future.

Another “but” – never let your SA passport lapse!

That new judgment does not affect in any way the fact that, although you can travel freely around the world on your second passport, you must always enter and depart from South Africa on your valid SA passport.  Keep renewing it!

Disclaimer: The information provided herein should not be used or relied on as professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your professional adviser for specific and detailed advice.

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Ponzi Schemes: Another MTI Judgment, Risks and Red Flags

Ponzi Schemes: Another MTI Judgment, Risks and Red Flags

“MTl’s business clearly amounted to an unlawful ponzi-scheme, i.e. a fraudulent investing scam promising high rates of return to investors and generating returns for earlier investors with investments taken from later investors.” (Extract from judgment below)

In times of economic turmoil, the promise of “easy money” can be incredibly enticing. Unfortunately, this allure often leads people into the clutches of fraudsters who operate ponzi and pyramid schemes.

But why are these scams so successful at fooling even the most astute investors? The answer lies in several factors. First, the promise of quick and substantial profits taps into our desire for financial security and independence. Second, scammers often prey on our emotions and exploit our fear of missing out on lucrative opportunities. Third, they employ persuasive tactics, such as using testimonials and social proof, to gain our trust.

The latest High Court judgment in the MTI (Mirror Trading International) liquidation saga highlights yet again the dangers for investors who get sucked into these schemes.

“An illegal and unlawful scheme”
  • MTI was founded in 2019, promising high returns to investors (members of “My MTI Club”), pooling bitcoin for trading “on the global cryptocurrency market”. In 2020, referral bonuses for introducing new members were implemented.
  • This latest judgment is part of an extensive saga of litigation involving liquidators, investors/members, creditors and directors (who still steadfastly deny any wrongdoing). In this matter the liquidators applied to the High Court for a series of declarations aimed at facilitating their claims against investors and others.
  • The liquidators succeeded in obtaining declarations that –
    • MTI’s business model is “an illegal and unlawful scheme”, and
    • “All agreements concluded between MTI and its investors in respect of thetrading/management/investment of bitcoin for the purported benefit of the investors, are declared unlawful and void ab initio [void from the beginning]”.
  • They failed in their attempts to have MTI declared “factually insolvent” (i.e., its liabilities exceeded its assets) from 2019, nor did they obtain declarations that payments made by MTI to investors/members, commission earners and others amounted to “dispositions” recoverable by the liquidators. Both would have made it easier for them to recover from anyone who ever received any form of payout from MTI, but that is unlikely to deter the liquidators from pursuing these claims.

In any event both sides will presumably appeal this latest judgment, and for now at least it seems that investors/members, whether “winners” (those who got payouts exceeding their investments) or “losers” (presumably the vast majority of investors/members as is invariably the case with ponzi schemes), must remain concerned that not only will their claims turn out to be valueless, they may also have to pay back into the liquidation everything they were ever paid out if the declarations of illegality and voidness are confirmed on appeal

Even if their claims are eventually allowed and proved, they must wonder what if anything they’ll be awarded in light of a R931m preferent claim proved by SARS.

The red flags to share with friends, family, colleagues and employees

The bottom line is that, when a ponzi or pyramid scheme inevitably collapses, investors risk losing everything.

To protect ourselves and others, it’s essential to be aware of the warning signs. Keep in mind at all times that “if it looks too good to be true, it probably is” and be alert to key “red flags” such as guarantees of high returns with little or no risk, complex investing and compensation structures, and an emphasis on recruitment rather than product sales.

Sharing this information with friends, family, and colleagues is crucial in preventing more people from falling victim to these schemes. Employers, in particular, should educate their staff about the dangers and provide resources to help them avoid becoming victims.

Stay informed, be vigilant, and protect yourself, your employees and others from the siren call of “easy money.”

Disclaimer: The information provided herein should not be used or relied on as professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your professional adviser for specific and detailed advice.

© LawDotNews

Ombuds – Why and How to Use Them

Ombuds – Why and How to Use Them

“Who you gonna call?” (Ghostbusters)

An “ombud” (often called ombudsperson, ombudsman or ombudswoman, and sometimes not referred to as an “ombud” at all) is an independent and impartial person or office who will investigate any complaint you may have against a business, government agency, or public or private institution falling under their authority.

Ombuds seek to resolve disputes (to the benefit of all parties) fairly, efficiently, and cost-effectively by acting as mediators between complainants and the entity being complained about. Many have the power to make binding “determinations”. Most are free to complainants.

Fighting your bank, body corporate, or panel beater: Who you gonna call?

When you have a beef with your bank or body corporate, a grievance against SARS, or a fight with the panel beaters, and whether you are an individual or a business, think of calling in the appropriate ombud.

There are many ombuds in South Africa, some limited to a specific sector and some to a specific entity – often institutions like universities, municipalities etc have their own internal ombud.

There are too many to list all the ombuds here but in particular bear in mind those ombuds with a wider remit than just one institution or industry player. We’ve compiled for you a list of some of the most important ones and their contact details (Name; Website; Tel. No.; Email; What areas they cover) –

  • Public Protector South Africa:; 0800 11 20 40; Investigates complaints against government entities, with “the power to investigate, report on and remedy improper conduct in all state affairs. The Public Protector must be accessible to all persons and communities. Anyone can complain to the Public Protector.”
  • Community Schemes Ombud Service (CSOS):; 010 593 0533; Alternate Dispute Resolution services for all participants in residential, commercial and industrial “community schemes” (sectional title bodies corporate, Homeowners Association complexes etc.).
  • FAIS Ombud (Ombud for Financial Services Providers); 0860 66 327; Complaints against financial service providers, including insurers, banks, insurance brokers (long- and short-term insurance), investment managers, and financial advisors and intermediaries. The FSCA (Financial Sector Conduct Authority also has a complaints procedure.
  • Ombudsman for Long-Term Insurance:; 0860 103 236; Complaints against subscribing insurance companies that offer long-term insurance products, such as life insurance and disability cover.
  • Ombudsman for Short-Term Insurance (OSTI): 0860 726 890 Complaints by the insuring public against short-term insurers offering motor, homeowners, household, travel, disability, credit protection, commercial etc cover.
  • Pension Funds Adjudicator:; 086 066 2837; Investigates complaints against pension funds and their administrators, including issues related to benefits and investments.
  • Ombudsman for Banking Services (OBS):; 0860 800 900; Complaints against banks that are members of the Banking Association of South Africa.
  • National Credit Regulator (NCR):; 0860 627 627; against credit industry participants (including debt counsellors), working with and cross-referring complaints with the Credit Ombud (below).
  • Credit Ombudsman of South Africa:; 0861 662 837; Complaints against member credit bureaus and credit providers, working with and cross-referring complaints with the NCR (above).
  • Consumer Goods and Services Ombud:; 0860 000 272; Complaints by consumers against members of the Consumer Goods and Services Industry (retailers, suppliers, importers, distributors etc.). Complaints relating to credit agreements need to go to the Credit Ombud (see above). If mediation fails or if a non-member entity is involved, complaints will be referred to the NCC (National Consumer Commission)
  • Motor Industry Ombudsman of South Africa:; 010 590 8378; Investigates complaints against the automotive industry, including car dealerships and repair shops. If mediation fails, complaints will be referred to the NCC (National Consumer Commission)
  • NHBRC (National Home Builders Registration Council): (Complaints process here); 0800 200 824;; Not called an “Ombud Service”, but all home builders must be registered with the NHBRC and it will address and attempt to resolve all complaints.
  • Health Ombudsman of South Africa:; 0860 104 146;; Complaints against healthcare providers, including hospitals, clinics, and doctors. Lodge complaints here. Complaints can also be lodged against specific industry players to these industry bodies –
  • Office of the Legal Services Ombud (OLSO):; 010 023 5501 or 076 235 9887; or Complaints against legal practitioners and the Legal Practice Council (LPC). Complaints must first be lodged with the LPC (complaints procedure here and provincial complaint forms here).
  • Office of the Tax Ombud.; 0800 662 837; Taxpayer complaints against SARS (South African Revenue Services).

There are many more – Google for any specifics.

Present your complaint effectively!

A final thought – how well you present your complaint and your side of the story to an ombud will directly impact your chances of a successful outcome, so specific legal advice is a no-brainer here, particularly in larger disputes.

Disclaimer: The information provided herein should not be used or relied on as professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your professional adviser for specific and detailed advice.

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