Revised Aligned ICT Sector Code Now Published For Public Comment

ICT Sector Code
11 Mar 2016

The Minister of Trade and Industry (Minister) published a draft aligned ICT sector code for public comment in the Government Gazette on 24 February 2016. Five days later, on 29 February 2016, the Minister published a further notice in the Government Gazette, replacing the draft aligned ICT sector code with a revised draft aligned ICT sector code. Interested parties now have until 29 April 2016 to submit comments on the revised draft aligned ICT sector code. 

Livia Dyer, partner specialising in public law and technology, media and telecommunications (TMT) law at Bowman Gilfillan Africa Group, says, “In the revised draft aligned ICT sector code, the  overall ownership target of 30%  remains higher than that under the general codes (which is 25% plus 1 share). The deviation in the revised codes is in recognition by the ICT sector of the need to accelerate the pace of transformation in the sector and to ensure that more companies are owned by black people. This overall ownership target of 30% correlates with the Electronic Communications Act requirement for a minimum level of equity in a new individual licensee by historically disadvantaged individuals, including black people, of 30%.”

“Importantly,” explains Dyer, “the deemed ownership compliance clause contained in the draft aligned ICT sector code as published on 24 February 2016 (ie where the Rand value of the total BEE stake is in excess of ZAR 7.5 billion, there will be deemed compliance with the equity target in the scorecard) has been removed from the revised aligned ICT sector code.”

In addition, the weighting of 15 points for the enterprise development indicator under enterprise and supplier development in the revised aligned ICT sector code continues to be higher than under the general codes (where the weighting for enterprise development is 5 points). The compliance target of 3% of Net Profit After Tax (NPAT) under the ICT sector code for this element also remains higher than the compliance target under the general codes (1% of NPAT).The weighting of 12 points for the socio-economic development element under the revised aligned ICT sector code is also higher than that under the general codes (5 points).

Where a beneficiary entity was, before 24 October 2014, measured under the general codes or any other sector code, instead of the ICT sector code, the measurement and recognition of enterprise development and socio-economic development contributions under the aligned ICT sector code will not be limited to contributions made to black owned ICT entities or ICT programmes. The measured entity will be entitled to earn weighting points as if the beneficiary entity was measured under the ICT sector code.  This will be valid until the future review of the ICT sector code.

Dyer concludes, “Most of the proposed changes that have been made to the ICT sector code to bring it into alignment with the general codes are not unexpected. We hope that once the new sector code is finalised,  companies in the ICT sector will be in a better position to develop their transformation plans, particularly given the importance of BEE in the assignment of spectrum,”.

(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.)

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