The re­vised BBBEE pro­vi­sos af­fect firms’ ex­ist­ing cre­den­tials and black share­holder num­bers, warns Am­ber von Steiger

CityPress - - Business -

For the pur­pose of broad-based black eco­nomic em­pow­er­ment (BBBEE), it is gen­er­ally un­der­stood that an in­di­vid­ual qual­i­fy­ing for this cat­e­gory of as­sis­tance has to be African, coloured or In­dian, as well as a South African cit­i­zen. BEE al­lows for a per­son to be a South African cit­i­zen through birth, de­scent or nat­u­ral­i­sa­tion. How­ever, cit­i­zen­ship through nat­u­ral­i­sa­tion only ap­plies in lim­ited cir­cum­stances.

With an in­creas­ing num­ber of peo­ple im­mi­grat­ing to our shores and ac­quir­ing cit­i­zen­ship, the pro­viso that an in­di­vid­ual be a South African cit­i­zen is com­ing un­der in­creas­ing scru­tiny.

This has re­sulted in peo­ple who pre­vi­ously qual­i­fied as be­ing black no longer do­ing so.

The cir­cum­stances in which cit­i­zen­ship by nat­u­ral­i­sa­tion re­sulted in qual­i­fi­ca­tion as a black per­son were re­cently amended.

This oc­curred when the Codes of Good Prac­tice on BBBEE were amended in 2015.

In terms of the re­vised codes, cit­i­zen­ship through nat­u­ral­i­sa­tion must have oc­curred:

Be­fore April 27 1994, the date of the com­mence­ment of the Con­sti­tu­tion of the Re­pub­lic of SA Act of 1993; or

On or af­ter April 27 1994 – for any­one who would have been en­ti­tled to ac­quire cit­i­zen­ship by nat­u­ral­i­sa­tion prior to that date.

Hence, the test for whether an in­di­vid­ual meets th­ese nat­u­ral­i­sa­tion cri­te­ria is fac­tual and ob­jec­tive.

By com­par­i­son, the orig­i­nal BEE codes stip­u­lated that cit­i­zen­ship through nat­u­ral­i­sa­tion must have oc­curred: Be­fore the com­mence­ment date of the Con­sti­tu­tion; or Af­ter the com­mence­ment date of the Con­sti­tu­tion, but also ap­pli­ca­ble to those who – with­out the apartheid pol­icy – would have qual­i­fied for nat­u­ral­i­sa­tion be­fore then. The word­ing, “but who – with­out the apartheid pol­icy – would have qual­i­fied for nat­u­ral­i­sa­tion be­fore then” was broad enough to al­low for a va­ri­ety of cir­cum­stances to be ac­cepted as rea­sons for an in­di­vid­ual not be­ing nat­u­ralised be­fore the spec­i­fied date. The orig­i­nal BEE Act de­fined a black per­son even more widely than the orig­i­nal BEE codes. The act de­fined black peo­ple as be­ing Africans, coloureds and In­di­ans with­out any link to South African cit­i­zen­ship. This act has sim­i­larly been amended to re­flect the same def­i­ni­tion as that which ap­pears in the re­vised BEE codes. As a re­sult, where an in­di­vid­ual is a South African cit­i­zen through nat­u­ral­i­sa­tion, they may have qual­i­fied as be­ing black for BEE pur­poses un­der the orig­i­nal BEE act or BEE codes – but may no longer do so un­der the re­vised ones. This also has im­pli­ca­tions for en­ti­ties in which that per­son holds shares, be­cause, given the op­er­a­tion of law and the amend­ment of the def­i­ni­tion of a black per­son, such en­ti­ties will no longer have the same black own­er­ship num­bers that they had prior to the amend­ments. Ac­cord­ing to the ex­tent that the in­di­vid­ual has given war­ranties that they qual­ify as be­ing black – or the en­tity through which they hold shares qual­i­fies as such – that in­di­vid­ual may be in breach of those war­ranties. In ad­di­tion, a com­pany which has pro­vided war­ranties to third par­ties re­gard­ing its black own­er­ship may be in breach of their war­ranties as a re­sult of their share­hold­ing no longer qual­i­fy­ing as black. Peo­ple, as well as com­pa­nies which have pre­vi­ously re­lied on in­di­vid­u­als qual­i­fy­ing as black through nat­u­ral­i­sa­tion, should un­dergo an anal­y­sis and take the nec­es­sary steps to man­age this risk with re­gard to past, present and fu­ture trans­ac­tions. Von Steiger is a se­nior as­so­ciate at Nor­ton Rose Ful­bright

BEE codes


BIRDS OF A FEATHER A staff mem­ber poses for pho­tographs with a dodo skele­ton, Ra­phus cu­cul­la­tus, on Thurs­day. It goes un­der the ham­mer on Tues­day, cour­tesy of Sum­mers Place Auc­tions, based in Billing­shurst in the UK. This rare com­pos­ite skele­ton of a dodo is the first to come up for sale in 100 years and is es­ti­mated to fetch up to £500 000 (R9 066 584) in the Evo­lu­tion sale. The bird species, once found on the is­land of Mau­ri­tius, has been ex­tinct since the 17th cen­tury

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