The question, “Does my company really need to be B-BBEE compliant?” is asked by many business owners irrespective of the size of their company or the industry in which they operate and remains a valid question to this day.
Though being B-BBEE compliant has its benefits in being able to apply for government tenders and giving you a leg up on your competitors, one cannot ignore the fact that during the past few years there has been a major shift in focus regarding transformation. B-BBEE compliance is becoming a prerequisite for all businesses irrespective of their dealings with the South African government. As such for the following sectors, B-BBEE compliance is a prerequisite for companies to obtain or maintain their trading or operating licenses:
The Finance Sector
Each entity conducting business in the South African financial sector is required to report annually to the Financial Sector Transformation Council (FSTC) on its progress made in implementing the provisions of the 2017 Amended Financial Services Sector Code. Non-submission with this reporting requirement, results in the entity being deemed non-compliant and impacts the outcome of their next B-BBEE Verification whereby their overall B-BBEE Level will automatically be discounted by one level.
The Gambling Sector
As the National Gambling Board is involved in the process of ensuring that the entire gambling industry achieves at least a Level 2 B-BBEE status as per the 2013 General Amended Codes, the Provincial Gambling Boards are also requiring some form of B-BBEE compliance from licensees in order to maintain or renew their licenses. These prerequisites, unfortunately though implemented with good intentions, have a negative impact on new or international companies who are finding it difficult to enter the local South African gambling market.
The Alcohol Sector
Entities operating within this sector who are applying for a new trade license, liquor distribution license or a renewal of a current liquor license must ensure that they are B-BBEE compliant. Currently there are no specific requirements on having Black Ownership and as such, even a non-compliant certificate is deemed sufficient.
The ICT Sector
ICASA’s “Regulations on the limitations of Control and Equity ownership by Historically Disadvantaged Groups and the application of the ICT Sector Code” issued on 31 March 2021 specifically refer to Individual & Class Licenses as defined in the 2005 Electronic Communications Act. For Class Licenses, licensees will need to have a Level 4 B-BBEE status whereas for Individual licenses, licensees will need to comply with the following:
Obtain or maintain a Level 4 B-BBEE Status with 30% Black ownership using the flow- through principle and
If in a 24-month period, there are any changes which will decrease Black shareholding or ownership with 5% or more or which will decrease Black People’s voting rights, the Individual licensee needs to notify ICASA.
The Property Sector
The 2019 Property Practitioners Act is applicable to property practitioners (PPs), who are defined in section 1 of the Act and include all entities within the real estate sector. Section 2 of the Act stipulates that the Act will apply to all activities pertaining to property such as marketing, promotion, managing, sale, letting, financing and purchasing of immovable property, and to any rights, obligations, interests, duties or powers associated with or relevant to such property. As per Section 50(a)(x) of the Act “(a) any person who is not in possession of a valid BEE certificate” is disqualified as a PP and cannot be issued with a Fidelity Fund Certificate”. Currently there is no specific B-BBEE level or percentage Black ownership required and though the Act may be vague, this should also apply to exempt micro enterprises (EMEs) and Qualifying Small Enterprises (QSEs) using the DTIC or CIPC affidavits.
The above shift in focus is a clear indication of how B-BBEE requirements are changing and more importantly, that being B-BBEE compliant is critical in order to receive or renew one’s trade or operating licences.
Should you need assistance in becoming compliant with B-BBEE legislation, kindly contact LabourNet.
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