DJ Shimza accused of flouting tax laws at Kunye Records

DJ Shimza and his business partner have been accused of failing to register their record company, Kunye Records, for value-added tax (VAT) with the South African Revenue Service (SARS) for three years after its incorporation.

They have also been accused of failing to ensure that the company's financial returns were submitted to SARS, thus placing the company at risk of violating tax laws.

The allegations are contained in an affidavit by their fellow shareholder, Hannes Hoffmeister, which DJ Shimza and Jarrad Evan Treger attached to papers filed in the Western Cape High Court.

DJ Shimza, born Kholofelo Ashley Raphala, and Treger approached the high court to challenge Hoffmeister's decision to expel them from Kunye Records.

According to Hoffmeister's affidavit, DJ Shimza and Treger only submitted an application to SARS for VAT registration on October 28, 2024, three years after the company was incorporated.

"Raphala and Treger failed to register Kunye for VAT, and only submitted an application to SARS on 28 October 2024 (i.e. three years after the company was incorporated)," reads his affidavit.

Hoffmeister raises several other allegations against the two directors, accusing them of financial mismanagement, failing to comply with their corporate responsibilities and conducting the company's affairs without proper shareholder oversight.

He further alleges that DJ Shimza and Treger failed to convene any board meetings in 2023 and 2024, despite their responsibilities as directors.

Hoffmeister also accused the duo of making payments to themselves from Kunye without holding board meetings to approve the transactions.

He claims that the two musketeers failed to provide him with shareholder confirmation documents for the 2022, 2023 and 2024 financial years for signature and submission.

They are further accused of failing to update the company's registered address and their residential addresses with the Companies and Intellectual Property Commission (CIPC) and SARS.

According to the affidavit, Treger had not lived at the address listed as Kunye's registered address since April 2023, leaving the company without a properly updated registered address.

Hoffmeister also alleges that invoices were submitted to Kunye for payment without supporting documentation.

The alleged financial management failures extend to the company's reporting obligations.

Hoffmeister claims that quarterly management accounts were not prepared and distributed to shareholders within 30 days after the end of each quarter.

He alleges that since April 2023, DJ Shimza and Treger failed to calculate the exact profits and losses generated by Kunye or ensure that comprehensive profit-and-loss statements were prepared.

Hoffmeister says he had requested financial information and meetings with DJ Shimza and Treger as early as July 2023 to discuss the company's operations, planned expenditure and future investments.

However, he alleges that despite Treger indicating that he was willing to maintain open communication, the two directors failed to organise meetings or include him in company communications.

A further concern raised in the affidavit relates to a change in Kunye's business model.

Hoffmeister says his attorneys were only informed on December 12, 2024, that the company had moved from a profit-sharing arrangement with event promoters to a licensing model.

Under the new arrangement, he said, Kunye would allow event promoters and organisers to use its brand in exchange for payment.

He argues that the change constituted a material departure from the company's ordinary business operations and required written approval from shareholders holding at least 70% of the voting rights.

He alleges that no such approval was obtained.

Hoffmeister also raises concerns about alleged undisclosed financial interests in other companies doing business with Kunye, as well as claims that company funds were used for the directors' personal benefit.

Treger is further accused of incorporating Kunye Events, which Hoffmeister claims operates in direct competition with Kunye Records and has reduced the company's revenue streams.

Hoffmeister further alleges that shareholders have not received dividends since 2021, despite most of Kunye's events being allegedly sold out since April 2023.

He also claims that profits generated by individual events have declined substantially over the years, despite the events being advertised as sold out on social media.

In his affidavit, Hoffmeister argues that the directors failed to exercise their powers in good faith and in the best interests of the company, as required by the companies Act.

He further states that their alleged conduct has had a negative impact on Kunye's business and that their continued involvement as directors would not be in the company's best interests. Attempts to solicit comments from DJ Shimza and Treger drew a blank.