A summary of the Broad-Based Black Economic Empowerment Amendment Bill 2011: For public comments

Posted by Dr Robin Woolley
Wednesday, 14 December 2011  |  1 comments
Dr Robin Woolley is a consultant at Transcend Corporate Advisors.
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December 2011

A summary of the Broad-Based Black Economic Empowerment Amendment Bill, 2011: For public comments

Download the BEE amendment bill here - 2011 BEE Ammendment Bill

The salient points of note:

• This is an amendment to the B-BBEE Act No 53 of 2003 and not the long awaited amendments to the Codes of Good practice (lets hold our breath for this next year)

• The main role of the Act is to manage the legislative framework and processes of B-BBEE, versus the Codes of Good practice that focus on the measurement and interpretive principles. Hence the natures of the changes are structural and process oriented.

• This is a draft bill for public comment (to 9 February 2012)

• Fronting is clearly defined and fronting practices are now punishable through, up to 10 years prison, or up to 10% of an enterprise’s annual turnover. This is a very positive development in principle. (Its good to have some teeth to stamp out bad behaviour), with possibly some challenges in practical implementation. The nature of the forms of fronting tend to follow the theme originally detailed in a draft version of the Codes of Good practice in section 002 (namely benefit diversion, opportunistic intermediaries and window dressing) feels like we have just come full circle (click here for copy of the original definitions of fronting).

• All organs of state are more strongly brought into the process which means that all organisations that deal with government will be required to produce B-BBEE scorecard. (Which is re-enforced with the revised PPPFA)

• Sector codes clarified, enterprises in a sector in which sector codes have been gazetted may only be measured for compliance in accordance with that sector code

• BEE commission, is established as a juristic person, that has a role of providing oversight to the B-BBEE process and has the responsibility to: investigate cases of fronting, investigate complaints, receive and monitors reports on B-BBEE from organs of state and listed companies. This commission is the focus of the changes and if well implemented could provide stronger leadership to the process, which has historically been sorely lacking.

• IRBA vs SANAS: It would appear that IRBA (Independent Regulatory Body for Auditors) will regulate B-BBEE Verification Professionals in the future (what happened to SANAS?)

Conclusion

All in all the revisions to the Act are a welcome strengthing to the process of implementing B-BBEE in the country, and I believe if quickly implemented can only improve the current state of affairs.

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