"Radical transformation is needed", says the B-BBEE Commission.

April 26, 2017

The Broad-Based Black Economic Empowerment (B-BBEE) Commission hosted a breakfast session in Midrand on Friday, 24 March 2017. Dr Rob Davies, minister of the DTI gave the keynote address. Dr Rob Davies affirmed governments view on B-BBEE and emphasized that radical transformation needs to take place.


Dr Rob Davies says the Broad-Based Economic Empowerment (B-BBEE) Commission should take action against companies that are found not to be complying with the B-BBEE requirements for transformation. 

  • Only 27 JSE listed companies have reported to the B-BBEE Commission. 

  • The Act requires all organs of state and JSE listed entities to submit their reports to the B-BBEE commission. 

  • It also requires that organs of state take into account a company’s BEE status when awarding tenders or licenses. 

The B-BBEE Commission had already initiated investigations into cases of fronting, targeting the verification industry to reduce fronting. The B-BBEE Commission's solution to this problem is to allow entities to seek direct guidance from them. The B-BBEE commission has since released a practice guide mentioned below.


BEE Commission Portal & Regulation of BEE Certificates

The B-BBEE Commission spoke about the launch of a verification portal which should have come into effect on the 1st of April. The portal will ensure that every verification agency that issues a BEE Certificate uploads the certificate and the report to the portal. The portal will be linked to the National Treasury Central Supply Database.


Enhancement to Level 2 and Level 1 BEE Status

On the 31st of March, the Commission released a Practice Guide 01 of 2017 "Enhanced recognition status for exempted micro-enterprises and qualifying small enterprises through application of the modified-flow through principle". The Commission is concerned that the modified flow through principle is being applied in ways to circumvent the codes.

This Practice Guide is issued as a non-binding guide purely to assist with the interpretation, to ensure consistency in the application of the Act. Should this Practice Guide not be clearly applicable to your specific set of facts at any given time, you are advised to approach the B-BBEE Commission for a non-binding advisory opinion, which will be more specific to your set of facts.


Non-Compliant JSE Listed Companies

The B-BBEE Commission will in future take action against companies that are found to not be complying with the B-BBEE requirements for transformation. Of approximately 400 listed JSE companies, only 27 had reported.

Section 13G of the Broad-Based Economic Empowerment Amended Act introduced the following reporting obligations:

  •  All public entities and organs of state must annually report on their compliance with B-BBEE in their audited annual financial statements and annual reports.

  • All companies listed on the JSE, must report on their compliance in terms of B-BBEE, to the newly introduced B-BBEE Commission. The format of reporting is yet to be prescribed but given the requirement on public entities to do so in their annual reports, one can expect a similar requirement on JSE listed companies.

  • All SETA's must report to the Commission on skills development spending and programmes.

    For further discussions on these elements, please contact bbbee@msct.co.za or contact Moore Stephens Cape Town BEE Services on 021 525 8600.

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