ConCourt denies Regiments Capital’s bid to appeal liquidation

The Constitutional Court (ConCourt) – South Africa’s apex court – has denied Regiments Capital (Pty) Ltd leave to appeal an earlier ruling by the Supreme Court of Appeal (SCA) that ordered its liquidation.

Regiments is one of the companies that was embroiled in State Capture in the country.

The ConCourt delivered its judgment on Thursday and said the matter does not fall within its jurisdiction, which led to the appeal being refused.

Read: Regiments Capital to be liquidated

The directors of Regiments and other parties with interest had brought an application to set aside Regiments Capital’s liquidation, which subsequently led to the South African Revenue Services (Sars) intervening and opposing the appeal. A March judgement by the SCA upheld Sars’s appeal.

On Friday, Sars commissioner Edward Kieswetter welcomed the ConCourt judgement.

The tax revenue service said during the process, it raised an assessment amounting to R690 million in terms of s42(5) of the Tax Administration Act.

Sars said the decision of the ConCourt confirms that liquidation proceedings should continue to benefit all tax-compliant creditors.

“Sars has taken the decision to pursue this matter to its logical conclusion because it believed that the company was acting to the disadvantage of its creditors,” Kieswetter said.

“Such taxpayers deprive Government of scarce resources to provide basic services to the poor and vulnerable. Non-compliant taxpayers need to take heed of Sars’s determination to make it hard and costly for those who willfully and intentionally seek to use creative ways to abdicate their responsibility,” he added.

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Regiments, which was founded in 2004, provided services to the state and government enterprises as well as corporates. It owed Sars R289 million, apart from understatement and statutory penalties and interest.

Its penalties related to an audit for income tax between the period 2014 to 2019, including value-added tax (Vat) for March 2023 to February 2016.

The winding up application against the company was initially set aside after a High Court ruling found that the firm has total assets of R935 million and that its assets exceed its liabilities by more than R260 million.

But following Sars’s appeal against the high court decision, the SCA found that the High Court had been misdirected both on the facts and the law and found that the firm’s liabilities far outstripped the value of its assets. It concluded that the company was effectively factually insolvent.