B-BBEE deals vet­ting tighter

Thresh­old re­duced to R25m

The Star Early Edition - - LIFESTYLE - Ka­belo Khu­malo

THE DEPART­MENT of Trade and In­dus­try (dti) has low­ered its thresh­old for ma­jor Broad-based Black Eco­nomic Em­pow­er­ment (B-BBEE) own­er­ship trans­ac­tions from R100 mil­lion to R25m.

The depart­ment said deals meet­ing this thresh­old would be ex­pected to be reg­is­tered with the B-BBEE Com­mis­sion.

Trade and In­dus­try Min­is­ter Rob Davies said that all ma­jor trans­ac­tions con­cluded on or af­ter Oc­to­ber 24, 2014 that equal or ex­ceed R25m should be reg­is­tered with the B-BBEE Com­mis­sion within two months of fi­nal pub­li­ca­tion of the Gov­ern­ment Gazette.

“Any per­son may vol­un­tar­ily reg­is­ter any ma­jor B-BBEE trans­ac­tion con­sis­tent with the above thresh­old con­cluded be­fore Oc­to­ber 24 with the B-BBEE Com­mis­sion… Mul­ti­ple par­ties in­volved in the trans­ac­tion need to reg­is­ter as a col­lec­tive with the com­mis­sion,” the Gazette says.

The depart­ment said the amend­ment to the thresh­old would be im­ple­mented with im­me­di­ate ef­fect.

Cri­te­ria

So­ria Hay, the head of cor­po­rate fi­nance at Bravura, said the reg­is­tra­tion of ma­jor B-BBEE own­er­ship trans­ac­tions would ef­fec­tively al­low the com­mis­sion to vet the details of the trans­ac­tions to en­sure they met the re­quired cri­te­ria.

Hay said it would also en­able the com­mis­sion to fo­cus on overly com­plex struc­tures, lack of mi­nor­ity rights pro­tec­tion, cor­po­rate gov­er­nance fail­ures and third-party fa­cil­i­ta­tion.

“This clearly ex­presses a more proac­tive in­tent on the part of the dti to mon­i­tor B-BBEE own­er­ship trans­ac­tions to en­sure they meet with the spirit of the B-BBEE frame­work, with sub­stance over form an im­por­tant con­sid­er­a­tion,” Hay said.

Verushka Pil­lay, a di­rec­tor of cor­po­rate and com­mer­cial at Cliffe Dekker Hofmeyr, said that given the ret­ro­spec­tive re­quire­ment par­ties would have to give con­sid­er­a­tion to whether B-BBEE own­er­ship trans­ac­tions they had en­tered into from Oc­to­ber 24, 2014 had to be reg­is­tered.

“The no­tice pro­vides that trans­ac­tion value ex­cludes ad­min­is­tra­tion, pro­fes­sional and le­gal fees. The no­tice takes ef­fect im­me­di­ately. Ev­ery trans­ac­tion con­cluded on or af­ter Oc­to­ber 24, 2014 must be reg­is­tered. All par­ties to the trans­ac­tion have a col­lec­tive re­spon­si­bil­ity to reg­is­ter the trans­ac­tion,” Pil­lay said.

Non-com­pli­ant

Ear­lier this year, Davies urged the com­mis­sion to act against com­pa­nies found to be non-com­pli­ant with the B-BBEE re­quire­ments, af­ter it said it had re­ceived only 27 re­ports from JSE-listed com­pa­nies on their trans­for­ma­tion sta­tus.

Davies also took aim at ver­i­fi­ca­tion agen­cies that were found to be is­su­ing B-BBEE cer­tifi­cates that did not ac­cu­rately re­flect the trans­for­ma­tion sta­tus of com­pa­nies.

The com­mis­sion was launched in 2014 to en­sure that the B-BBEE codes and the B-BBEE Act were en­forced and ap­plied cor­rectly.

Pil­lay said the reg­u­la­tions state that reg­is­tra­tion was not a pre­req­ui­site to ob­tain­ing the com­mis­sion’s con­sent for a trans­ac­tion.

“The reg­u­la­tions pro­vide that the com­mis­sion is en­ti­tled to ad­vise the par­ties of any con­cerns that the com­mis­sion has re­gard­ing the trans­ac­tion, and the par­ties must then take steps to ad­dress the com­mis­sion’s con­cerns. If ad­e­quate steps are not taken, the com­mis­sion can ini­ti­ate an in­ves­ti­ga­tion in terms of the B-BBEE Act into the trans­ac­tion.”

The dti has been on a drive to amend its B-BBEE codes to cater for more black own­er­ship across in­dus­tries.

In Novem­ber last year, the depart­ment pub­lished the amended codes for the in­for­ma­tion and com­mu­ni­ca­tions tech­nol­ogy sec­tor, which re­quires busi­nesses to have a min­i­mum black own­er­ship of 30 per­cent. The pre­vi­ous min­i­mum was 25 per­cent.

The dti has also re­vised the con­struc­tion sec­tor codes, set­ting a min­i­mum black own­er­ship re­quire­ment of 30 per­cent.

PHOTO GCIS

Dr Rob Davies, the Min­is­ter of Trade and In­dus­try, an­nounced in the Gov­ern­ment Gazette of June 9 that the thresh­old for ma­jor B-BBEE own­er­ship trans­ac­tions would be R25 mil­lion.

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