New rule on empowerment enforced
THE threshold for the registration of all broad-based black economic empowerment (B-BBEE) transactions with the B-BBEE Commission has been set at R25-million, much lower than the R100-million expected by business.
This means that more transactions than previously thought will have to be registered, thereby considerably broadening the ambit of authority of the commission, which is required to ensure that transactions comply with the B-BBEE Act.
Trade and Industry Minister Rob Davies set the threshold, which will take effect immediately and also have retrospective application, in the government gazette on Friday.
All major transactions concluded on or after October 24 2014, the date on which the B-BBEE Act was promulgated, but before June 9, when the notice was gazetted, will also have to be registered with the commission within 60 days if they equal or exceed the R25-million threshold.
Transactions concluded before October 24 2014 can be registered on a voluntary basis with the commission.
Where there are multiple entities or parties involved in a transaction, they will have a collective responsibility to register the transaction with the commission.
According to previously published regulations to the B-BBEE Act, the registration of a new B-BBEE transaction with the commission must occur within 15 business days of its conclusion. If approved, the commission must issue a certificate of registration within 10 days of the application, following which there will be a 90-day period in which the commission can assess the adherence of the transaction to the B-BBEE Act.
The commission can raise concerns with the parties involved, who are advised to seek the commission’s input prior to concluding their transaction.
“The threshold itself is lower than the R100-million that was initially expected, but the manner in which it is calculated has been improved considerably,” Bravura head of corporate finance Soria Hay said. Previously, it was announced that a major B-BBEE ownership transaction would be a transaction which equals or exceeds R100-million, calculated by either combining the annual turnover of both entities or their asset value. This definition has been updated,” Hay said.
“[Now] a major B-BBEE transaction is any transaction that has resulted or will result in a measured entity claiming ownership points in terms of ownership scorecard of the applicable BEE codes of good practice, and where the B-BBEE transaction value is equal to or more than R25-million, excluding administration, professional and legal fees.” — BDLive