B-BBEE Amendment Bill

The B-BBEE Amendment Bill is a new Act and has been passed by Parliament. It now goes to the Council of Provinces before the President signs it into law. The Act’s main objective is to increase the effectiveness of and compliance requirements of B-BBEE.

A critically new provision in the Bill is the penalty for fronting being a maximum of 10 years in jail and 10% of a company’s turnover.

Fronting is defined as:
‘fronting practice’ means a transaction, arrangement or other act or conduct that directly or indirectly undermines or frustrates the achievement of the objectives of this Act or the implementation of any of the provisions of this Act, including but not limited to practices in connection with a B-BBEE initiative—
(a) in terms of which black persons who are appointed to an enterprise are discouraged or inhibited from substantially participating in the core activities of that enterprise;
(b) in terms of which the economic benefits received as a result of the broad-based black economic empowerment status of an enterprise do not flow to black people in the ratio specified in the relevant legal documentation;
(c) involving the conclusion of a legal relationship with a black person for the purpose of that enterprise achieving a certain level of broad-based black economic empowerment compliance without granting that black person the economic benefits that would reasonably be expected to be associated with the status or position held by that black person; or
(d) involving the conclusion of an agreement with another enterprise in order to achieve or enhance broad-based black economic empowerment status in circumstances in which—
(i) there are significant limitations, whether implicit or explicit, on the identity of suppliers, service providers, clients or customers;
(ii) the maintenance of business operations is reasonably considered to be improbable, having regard to the resources available;
(iii) the terms and conditions were not negotiated at arm’s length and on a fair and reasonable basis;

‘knowing’, ‘knowingly’ or ‘knows’, when used with respect to a person, and in relation to a particular matter, means that the person either—
(a) had actual knowledge of that matter; or
(b) was in a position in which the person reasonably ought to have—
(i) had actual knowledge;
(ii) investigated the matter to an extent that would have provided the person with actual knowledge; or
(iii) taken other measures which, if taken, would reasonably be expected to have provided the person with actual knowledge of the matter;’’;

This confirms the general principle that “ignorance of the law is no excuse”. The Bill recognises that the BEE scorecard is an important document that the directors and prescribed officers “ought” to know and understand.

As an IRBA (Independent Regulatory Board for Auditors) accredited BEE Verification Agency, we are guided by the South African Standard on Assurance Engagements 3502 and strict Codes of Conduct in conducting impartial and effective BEE verifications. The difference in our approach compared to other agencies is that we will work with you until the final report is issued to assist you in achieving the best possible rating. Contact us to ensure that you know and understand your BEE scorecard!!!

We also provide the following BEE value offerings to our clients. Perhaps these may also be of interest to you:

  • Free reminder service of what you need to complete before your financial year end to maximise your BEE rating.
  • Regular newsletter and blog updates of what you need to know to ensure that BEE works for your business.
  • Free updates on new developments and trends that provide you with planning opportunities for your business and ensure compliance with all legislation.
  • Free assistance with leveraging your B-BBEE status as a competitive advantage in the market.
  • Access to our Supplier database to save you time collating your supplier scorecards.
  • Telephonic support and guidance from our qualified verification specialists for all your BEE queries.
  • Training of your staff through the verification process as part of the BEE verification.
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