New laws tightens the screws on defaulters

There are three key changes to the amended B-BBEE legislation of relevance to the industry, according to Norton Rose Fulbright director, Ismail Laher, writing in a recent blog. 1. BEE fronting: now a criminal offence The Amendment Act will introduce an offence and penalty regime for persons found guilty of BEE fronting. BEE fronting has, to date, not been defined and is not a criminal offence under the existing BEE laws. “The implications for committing BEE fronting are, currently, only that the entity’s BEE scorecard will be disqualified. The disqualification of an entity’s scorecard and the loss of a particular BEE status does not have criminal consequences but may have commercial consequences,” says Laher. With the new Act, any person convicted of an offence in terms of the Amendment Act relating to BEE fronting will be liable to a fine or to imprisonment for a period not exceeding 10 years or to both a fine and such imprisonment (or, if the convicted person is not a natural person, to a fine not exceeding 10% of the company's annual turnover). In addition, any person convicted of an offence in terms of the Amendment Act may not contract or transact with any organ of state or public entity for a period of 10 years from the date of the conviction. 2. BEE Commission: establishment of a central body A Broad-Based Black Economic Empowerment Commission will be established under the Amendment Act. One of the functions of the Commission will be to oversee, supervise and promote adherence to the BEE Act in the interest of the public. 3. Reporting: obligations for South African companies One of the functions of the Commission that will be established is to maintain a register of major B-BBEE transactions above a threshold determined by the Minister. The Amendment Act also seeks to introduce the requirement that all public companies listed on the JSE must provide the Commission with a report on their compliance with B-BBEE.