In this article we take a look at the current situation with the Master’s Office and the significant economic impact it’s having on our country. Businesses are effectively taken out of the economy and people are losing their livelihoods, because of conflicting efficiencies (or inefficiencies).
A Tale of paralising inefficiencies
Delays in the offices of the Master of the High Court received wide media coverage, even before the onset of the pandemic. Various organisations, including the former Law Society of the Northern Provinces, formed action committees to assist in alleviating huge backlogs.
With the onset of the pandemic and a ransomware attack during September 2021, the Master’s Offices seemed to have ceased to function at all. Obtaining a letter of appointment as Executor has simply become an impossible task.
Over and above the delayed finalisation of Deceased Estates and the payment of benefits or maintenance to destitute heirs, legatees, or dependants, another issue raised its head in a recent case.
The impact on businesses
A deceased’s interest in an ownership structure, such as the member’s interest in a Close Corporation, usually falls squarely within the deceased’s estate.
Where these interests are held by more than one person, no complications are expected (other than those normally associated with the delays). The remaining members will be able to continue with the operations of the business until an executor has been appointed to manage the affairs of the deceased member.
Ownership Structures with a single member, shareholder, or director prove to be a different kettle of fish altogether. For instance, the Close Corporations Act authorises an Executor to lodge and execute an amended Founding Statement with CIPC.
This means that the executor will lawfully manage and control what happens to the deceased’s members interest in the Close Corporation, pending finalisation of his/her estate. The authority to perform these functions are, however, subject to them assuming office by receipt of the delayed letter of appointment.
Pending the issuing of the letters of Executorship, a corporation is effectively rendered leaderless for prolonged periods, without the ability to legally conduct its affairs or to otherwise enforce proper corporate governance.
Overzealous for fear of prosecution?
Commercial Banks, being well aware of the current circumstances, insist on the punctual and almost overzealous pursuance of their compliance obligations in terms of the Financial Intelligence Centre Act, Money Laundering and Terrorist Financing Control Regulations, and the Prevention of Organised Crime Act.
The Economic Impact
Being unable to assist the banks in their client due diligence, nominated executors are faced with the financial paralysis of the business by the “freezing” of its bank accounts.
An otherwise financially viable organisation has now been rendered commercially insolvent due to its inability to pay creditors, employees, and expenses, thereby robbing heirs, legatees, and vulnerable employees of an income, all as a consequence of colliding efficiencies.
