Registration of B-BBEE transactions

17 Jul 2017

On 9 June 2017, the Minister of Trade and Industry published the final threshold for the registration of major Broad-Based Black Economic Empowerment (“B-BBEE”) transactions with the B-BBEE commission (“Commission”).

A “Major B-BBEE Transaction” entails any transaction between entities/parties that has resulted or will result in a measured entity claiming ownership recognition in terms of the ownership scorecard of the applicable BEE codes of Good Practice. All such transactions that either equal or exceed the value of R25, 000, 000.00 (twenty five million Rand) must be registered with the Commission. The R25, 000, 000.00 (twenty five million Rand) threshold is based solely on the transaction value and excludes any administration, professional or legal fees.

Importantly, the requirement of registration does not constitute obtaining the Commission’s approval prior to the B-BBEE transaction being implemented but rather a report of the B-BBEE transaction to the Commission after it has been concluded. However, parties are encouraged to seek advisory opinions from the Commission prior to concluding B‑BBEE transactions to ensure that they are B-BBEE compliant. The Commission has issued an explanatory note relating to the documentation required to be submitted for registration, which includes, inter alia, the signed sale agreement, signed shareholder’s agreements and a valid B‑BBEE Certificate. The regulation prescribes that it is the collective responsibility of all parties to the B-BBEE transaction to ensure that the B-BBEE transaction is registered with the Commission.

Once a B-BBEE transaction has been registered, the Commission is entitled to advise the parties of any concerns that it may have regarding the B-BBEE transaction, and the parties must then take steps to address the Commission’s concerns. If sufficient steps are not taken to address such concerns, the Commission may initiate an investigation into the B-BBEE transaction.

The regulation applies retrospectively to all B-BBEE transactions concluded on or after 24 October 2014. Consequently, those B-BBEE transactions which were entered into on or after 24 October 2014, but before 9 June 2017, must be registered with the Commission within 60 (sixty) days of the publication of the regulation (being 9 June 2017). For those B-BBEE transactions concluded on or after 9 June 2017, parties must submit the B-BBEE transaction for registration within 15 (fifteen) days after concluding the B‑BBEE transaction.

Excluded in the registration requirement mentioned above are Equity Equivalents (a specific concession potentially available to multinationals) as these programmes already have a separate approval process with the Department of Trade and Industry.

As a result of the retrospective application of the regulation, parties should consider whether any B-BBEE transactions entered into on or after 14 October 2014 require registration with the Commission. Additionally, parties currently in negotiation or implementation of a proposed B-BBEE transaction must be cognisant of their reporting requirements.

(This article is provided for informational purposes only and not for the purpose of providing legal advice. For more information on the topic, please contact the author/s or the relevant provider.)