ENSafrica newsflash | 12 June 2017

Final B-BBEE thresholds announced – casting the net wider

by Sanjay Kassen, Parusha Desai Valodia and Nkosi Tshabalala

On 9 November 2016, we reported on a notice published by the South African Department of Trade and Industry (the “DTI”), in terms of which the DTI proposed that all major broad-based black economic empowerment (“B-BBEE”) ownership transactions, as per code 100 of the B-BBEE Codes of Good Practice, which equal or exceed ZAR100-million, calculated by either combining the annual turnover of both entities or their asset values (the “Proposed Threshold”), must be registered with the B-BBEE Commission (the “2016 Notice”).

On 9 June 2017, the DTI released a further notice (the “2017 Notice”) confirming that all major B-BBEE transactions, as per code 100 of the B-BBEE Codes of Good Practice, with a transaction value equal to or exceeding ZAR25-million (the “Final Threshold”), must be registered with the B-BBEE Commission. 

The 2017 Notice (similar to the 2016 Notice) goes a step further and provides retrospective application in that all major B-BBEE transactions concluded between 24 October 2014 (being the date on which the amended Broad-Based Black Economic Empowerment Act, 2003 came into effect) and the date of final publication of the thresholds for major B-BBEE transactions (9 June 2017) (the “pre-June 2017 Transactions”) must also be registered with the B-BBEE Commission within 60 days after such final publication. 

Interestingly, the 2017 Notice differs from the 2016 Notice in four key aspects:

  • the Final Threshold has decreased by ZAR75-million from the Proposed Threshold, thereby casting the application of regulation 18 of the new B-BBEE Regulations (the “Regulations”) far wider than what was initially proposed by the DTI; 
  • the methodology of determining whether a major B-BBEE transaction equals or exceed the Final Threshold now only refers to a “transaction value” as opposed to the “annual turnover of both entities or their asset values”; 
  • all parties involved in a major B-BBEE transaction must jointly register the transaction as a “collective”; and 
  • the period in which to register pre-June 2017 Transactions has increased from 30 days to 60 days, thereby affording such parties a longer period of time to comply with its obligations. 

The registration of major B-BBEE transactions will effectively allow the B-BBEE Commission to vet the details of various transactions so as to ensure that it complies with and meets the spirit of the B-BBEE framework.  

Going forward, it is important for entities to scrutinise their current and new B-BBEE transactions in order to avoid non-compliance with the Regulations and avoid potential penalties. To this end, it is highly recommended that all parties to a major B-BBEE transaction (including pre-June 2017 Transactions) seek appropriate advice from their advisors and the B-BBEE Commission in order to satisfy the requirements of the Regulations.

For details on the process of registering a major B-BBEE transaction, please click here.

 

Sanjay Kassen

corporate commercial | director
skassen@ENSafrica.com
cell: +27 82 561 1509

add to Outlook contacts

print

 

Parusha Desai Valodia

corporate commercial | associate
pdvalodia@ENSafrica.com
cell: +27 82 560 4129

add to Outlook contacts

print

 

Nkosi Tshabalala

corporate commercial | senior associate
ntshabalala@ENSafrica.com
cell: +27 82 560 1451

add to Outlook contacts

print



No information provided herein may in any way be construed as legal advice from ENSafrica and/or any of its personnel. Professional advice must be sought from ENSafrica before any action is taken based on the information provided herein, and consent must be obtained from ENSafrica before the information provided herein is reproduced in any way. ENSafrica disclaims any responsibility for positions taken without due consultation and/or information reproduced without due consent, and no person shall have any claim of any nature whatsoever arising out of, or in connection with, the information provided herein against ENSafrica and/or any of its personnel. Any values, such as currency (and their indicators), and/or dates provided herein are indicative and for information purposes only, and ENSafrica does not warrant the correctness, completeness or accuracy of the information provided herein in any way.

 

feedback

Please fill in the form below to send us any queries, requests, feedback, suggestions - we'd love to hear from you:
 *
 *
 *
 *
 

 

latest news

 

our awards

African Legal Awards Chambers and Partners Rankings DealMakers Awards Global Competition Review 100 (GCR100) Rankings IAM Patent 1000 Rankings IFLR1000 Rankings International Tax Review (ITR) Rankings Legal 500 Rankings Managing Intellectual Property (MIP) Rankings World Trademark Review 1000 (WTR 1000) Rankings
info@ENSafrica.com | level 2 BBBEE rating (South Africa)