South Africa: BBBEE Commission Welcomes Lowering of Ownership Transactions

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The Broad-Based Black Economic Empowerment Commission (B-BBEE Commission) has welcomed the Department of Trade and Industry’s lowering of its threshold for major B-BBEE ownership transactions.

The dti lowered the threshold for major BBBEE ownership transactions from R100 million to R25 million.

“A Major B-BBEE Transaction” means any transaction between entities/parties that result in Ownership Recognition in terms of Statement 100. The threshold of registering the transaction with the B-BBEE Commission is based on the transaction value excluding administration, professional and legal fees.

According to the dti gazette, all transactions with a value that equals or exceeds R25 million as per Code Series 100, Statement 100 of the Amended Codes of Good Practice must be registered with the B-BBEE Commission.

Transactions concluded before the 24 October 2014 may be voluntarily registered with the B-BBEE Commission. The threshold excludes transactions under Code Series 100, Statement 103 of the Amended Codes of Good Practice.

In a statement recently, the Commission, which is an entity of the dti welcomed the gazette that appeared on Friday that was signed by Minister Rob Davies.

“So, from 09 June 2017 all major B-BBEE transactions must be registered within 15 days of being concluded in accordance with regulation 18 of the B-BBEE Regulations,” said the Commission.

In the gazette, the Minister has limited the threshold to ownership transactions excluding equity equivalent transactions for multinationals, and further extended the registration obligation to all transactions with the value of R25 million concluded between 24 October 2014 and 8 June 2017, which must now be registered with the B-BBEE Commission within 60 calendar days from 09 June 2017.

Minister Davies further added that documents to be submitted in registering major B-BBEE transactions must be prescribed by the B-BBEE Commission.

The Commission on Tuesday issued an explanatory notice outlining the documents to be submitted with the FORM BBBEE 18.

The documents required by the Commission include a brief description of the major B-BBEE transaction, signed sale agreement, signed shareholder’s agreements and a valid B-BBEE Certificate or a B-BBEE Sworn Affidavit, among others.

The Commission reminded parties that the process is for registration only and not a pre-approval for major B-BBEE transactions, and therefore will not result in any delays whatsoever in implementation of deals concluded from time to time.

“Parties are encouraged to approach the B-BBEE Commission for advisory opinions prior to concluding B-BBEE deals to ensure that they are B-BBEE compliant. Many companies have already started using this service with more than 50 advisory opinions already issued by the B-BBEE Commission.”

The Commission said the main benefit of the register for major B-BBEE transactions is that it will allow for the monitoring of compliance, levels of transformation and extent to which benefits of the major B-BBEE transactions flow to the black persons that are part of these deals in compliance to the objectives of the B-BBEE Act.

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