Revised BBBEE codes present legal conundrum

The Department of Trade and Industry (dti) could face a legal challenge if it pushes ahead and implements the revised broad based black economic empowerment (BBBEE) codes before completing and aligning nine sector codes as well as the codes guiding small companies. Brad Green, executive chairman of B1SA, says while it may very well be embarrassing for government to have to extend the deadline a second time, it is by far the most sensible option available. “The codes were supposed to be implemented in October last year but implementation was delayed to May 2015 to give the dti the time to align the different sector codes to the amended generic codes and to complete all other regulatory work,” he told FTW. “As yet not one sector code has been promulgated, while there are still numerous technical and interpretive issues that have to be clarified. The technical guidelines of the codes have not been published and neither has the verification methodology. The most sensible thing at this point – with less than a week before implementation – is to extend the deadline or at the very least give clarity on the status of the sector codes and other regulatory work.” The nine sector codes are for transport, construction, tourism, ICT, forestry, finance, property, accountancy and agriculture. Green believes that if the dti forges ahead businesses could very well have a legal foot to stand on when it comes to compliance with the new regulations. He, like many other BBBEE experts, says it is impossible to implement the generic codes if the sector codes are not aligned. “There is a lot of speculation and opinion around this issue and subsequently also a lot of confusion,” said Green. “The generic codes that will be implemented on May 1 state that sector-specific entities must continue to use their sector-specific codes – but because they have not been aligned to the new codes this will not be possible. The sector codes still refer to the old codes that refer to an old piece of legislation that no longer exists.” Green said there was a lot of talk that companies in the sectors, come May 1, would be subject to the generic codes and not their sector codes because of the lack of alignment. “That is the legal conundrum because legally you can’t do that – the generic codes that will now be in place stipulate they must still use the sector codes.” Even if the dti were to provide aligned sector codes prior to May 1 the BBBEE Act requires at least 60 days’ notice for public commentary following publication of proposed changes in the government gazette. INSERT It is impossible to implement the generic codes if the sector codes are not aligned. – Brad Green