OKUSHA SOLUTIONS

Our team consists of highly qualified lawyers, exchange control specialists, tax advisors, chartered accountants, and financial and banking experts. We design and implement solutions for a wide range of clients, ranging from large listed corporates to high-net-worth individuals.

Our Products

Estate Planning

Holding the bulk of one’s assets in South Africa poses risks for various reasons, including:
• Currency and regulatory volatility
• Political instability
• A challenging macroeconomic environment

Challenging regulatory frameworks such as exchange control, which impose restrictions on the ability to freely trade with one’s assets
Thus, it is desirable for South African residents to hold a substantial portion of their assets offshore, if possible, which should be coupled with a coherent estate plan.

Estate planning structures are used for myriad reasons, including asset protection and seamless succession. In addition, it is often beneficial to indirectly own assets through a structure (such as a discretionary trust, insurance wrapper, etc.) in which the assets are still accessible, but not directly reported to the various regulators, whether it be for tax or other reasons.

The creation of the optimal structure is complex and is driven by numerous considerations. It is also not possible to apply a one-size-fits-all approach to such structuring – these structures need to be carefully considered and take account of an individual’s particular circumstances.

We assist clients by assessing their facts and helping them achieve the optimal estate planning outcome. In addition, we have a range of unique solutions, not readily available in the market, that can enhance any estate planning structure.

The outcome for our clients is an optimal estate planning structure that is robustly enhanced from a regulatory and commercial perspective through the use of sophisticated techniques that create value not only in the present, but for future generations.

B-BBEE

Transformation is a complicated framework for companies to deal with in South Africa. It is clear that the economy needs to be transformed to be more inclusive and to build a stronger foundation for future generations to prosper.
That said, the current broad-based black economic empowerment (B-BBEE) framework has been criticised on several fronts.

The legislation is at times unclear, and achieving the desired B-BBEE score can be challenging, as is configuring a transaction without compromising the tax integrity of the structure.

We assist clients in navigating this complex area of regulation in order to achieve the best commercial and social outcomes, as well as to comply with the applicable regulations.

If sensibly approached, a B-BBEE structure can elegantly balance the clear social imperatives in the country while also ensuring that a business achieves its best rating.

While there are many practitioners in the field, and a number of solutions touted, our team’s general transactional experience means that we can create bespoke solutions rather than “squeeze· a client into a generic structure template. We can also provide ownership partners and funding solutions where required. A number of clients have approached us to assist with restructuring their existing B-BBEE scheme.

These structures often were sub optimal, as they may have transferred insufficient n et value, adverse accounting consequences or may in hindsight have been insufficiently flexible.

Furthermore, changes in the value of the shares in question may have compromised the B-BBEE points associated with that scheme.

We assist clients to re-engineer existing structures to transfer a greater number of points, permit improved alignment between B-BBEE partners and the company, and reduce the cost of the previous scheme.

Disinvestment from Assets

Reluctant to take expert advice regarding pending transactions. The reasons include the costs related to such advice, the complexity in dealing with experts and managing the process, and, at times, not knowing what can be achieved through appropriate structuring.

Parties are encouraged to get opinions on transactions in order to ensure that the processes adopted are recorded and can be accessed by everyone in future. However, this frequently doesn’t happen, leaving parties trying to recreate the transaction in arrears, or do some planning once the horse has bolted.

We also assist parties in raising funding and/or introducing counter parties where we are aware that our clients are seeking to exit an investment or are looking for an acquisition in a particular field.

When implementing complex transactions, we have the experience to yield to our client’s favourable outcomes that are robust, commercially beneficial and cost-effective.

We always ensure that, where the issues are not clear, we obtain confirmation from senior counsel on any structures that we propose.

Share Incentive Schemes

Unfortunately, the schemes available, and the methodology behind selecting the appropriate structure, are often misunderstood. The issues are complex, and parties often don’t focus on the commercial outcomes they are seeking to achieve.

As a result, structures often do not adequately deliver on the goals the parties had in mind. The two most obvious aspects in which share schemes can be costly is if the tax implications of the structure are not properly planned, and/or if the accounting treatment is prejudicial to the employer company.

One is therefore well advised to utilise a team that understands how to realise the commercial outcomes sought, as well as the tax and accounting implications.

Finacial Instruments

Many South Africans cling to share incentive schemes as a remunerative tool. From an employer’s perspective, a share scheme should create alignment with employees and be a tool for retaining talent, particularly at senior management level. From an employee’s perspective, it is often a way, in growing a business, to increase one’s wealth and participate in the fortunes of the business.

Unfortunately, the schemes available, and the methodology behind selecting the appropriate structure, are often misunderstood. The issues are complex, and parties often don’t focus on the commercial outcomes they are seeking to achieve.

As a result, structures often do not adequately deliver on the goals the parties had in mind. The two most obvious aspects in which share schemes can be costly is if the tax implications of the structure are not properly planned, and/or if the accounting treatment is prejudicial to the employer company.

One is therefore well advised to utilise a team that understands how to realise the commercial outcomes sought, as well as the tax and accounting implications.

General

The use of sophisticated financial instruments in commerce has decreased.

As a result, the general understanding of these instruments and their uses has likewise diminished. This is particularly so in the South African context, where these instruments are, at times, regarded with suspicion by regulators.

Our clients benefit from our ability to simultaneously assess the tax, accounting and legal implications of transacting in financial instruments, including:

• Foreign currency transactions
• Hedging activities
• Derivatives

Foreign Currency Instruments

There are a number of instruments that can be used to hedge against foreign currency exposure. These hedges are often utilised by parties who, out of necessity, are required to settle, or receive, foreign currency. The volatility of the rand makes it optimal to try to hedge one’s exposure.

The range of instruments used includes cross-currency swaps, forward exchange contracts and foreign currency option contracts. These derivative instruments are complicated to construct, trade, manage and account for.

In addition, there are several regulatory frameworks governing these instruments, such as tax and exchange control, that make their use even more complex.

The tax on these types of instruments is not well understood and, in our experience, the rules are often misapplied by taxpayers. This is not through any attempt to optimise tax, but rather through an incomplete understanding of the application of the relevant rules.

We have significant experience in this field and can assist parties who have large foreign currency exposures, or hedges in place, ensuring that they understand the tax rules to be applied and optimise the tax, accounting and financial outcome from using such instruments.

Often, even advisors to taxpayers are unsure of how these rules should be applied, and there are invariably inputs that can be added to either make a tax calculation more robust and correct, or to enhance the tax outcome.