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DTI gets serious about B-BBEE

| Legislation

The Department of Trade and Industry (dti) has lowered its threshold for major Broad-based Black Economic Empowerment (B-BBEE) ownership transactions from R100million 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.


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.


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 30percent. The previous minimum was 25percent.

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


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