Broad-based Black Economic Empowerment Act 53 of 2003.

REPUBLIC OF SOUTH AFRICA

Vol. 463 Cape Town 9 January 2004 No. 25899

THE PRESIDENCY

No. 17 9 January 2004

It is hereby notified that the President has assented to the following Act, which is hereby published for general information:-

No. 53 of 2003: Broad-Based Black Economic Empowerment Act, 2003.

To establish a legislative framework for the promotion of black economic empowerment; to empower the Minister to issue codes of good practice and to publish transformation charters; to establish the Black Economic Empowerment Advisory Council; and to provide for matters connected therewith.

PREAMBLE

WHEREAS under apartheid race was used to control access to South Africa`s productive resources and access to skills;
WHEREAS South Africa’s economy still excludes the vast majority of its people from ownership of productive assets and the possession of advanced skills;
WHEREAS South Africa’s economy performs below its potential because of the low level of income earned and generated by the majority of its people;
AND WHEREAS, unless further steps are taken to increase the effective participation of the majority of South Africans in the economy, the stability and prosperity of the economy in the future may be undermined to the detriment of all South Africans, irrespective of race:
AND IN ORDER TO-

• promote the achievement of the constitutional right to equality, increase broad-based and effective participation of black people in the economy and promote a higher growth rate, increased employment and more equitable income distribution: and
• establish a national policy on broad-based black economic empowerment so as to promote the economic unity of the nation, protect the common market, and promote equal opportunity and equal access to government services.
BE IT ENACTED by the Parliament of the Republic of South Africa, as follows:—
ARRANGEMENT OF ACT
Sections
l. Definitions
2. Objectives of Act
3. Interpretation of Act
4. Establishment of Black Economic Empowerment Advisory Council
5. Functions of Council
6. Composition of Council and appointment of members
7. Constitution and rules of Council
8. Remuneration and reimbursement of expenses
9. Codes of good practice

Definitions

1. In this Act. unless the context indicates otherwise-

“black people” is a generic term which means Africans, Coloureds and Indians;
“broad-based black economic empowerment” means the economic empowerment or all black people including women, workers, youth, people with disabilities and people living in rural areas through diverse but integrated socio-economic strategies that include, but are not limited to-

(a) increasing the number of black people that manage, own and control, enterprises and productive assets;
(b) facilitating ownership and management of enterprises and productive assets by communities, workers, cooperatives and other collective enterprises:
(c) human resource and skills development;
(d) achieving equitable representation in all occupational categories and levels in the workforce:
(e) preferential procurement; and
(f) investment in enterprises that are owned or managed by black people:
“Council” means the Black Economic Empowerment Advisory Council established by section 4;
“members” means members of the Council;
“Minister” means the Minister of Trade and Industry:
“organ of state” means—

(a) a national or provincial department as defined in the Public Finance Management Act. 1999 (Act No, 1 of 1999):
(b) a municipality as contemplated in the Constitution;
(c) Parliament:
(d) a provincial legislature: and
(e) a constitutional institution listed in Schedule 1 to the Public Finance Management Act. 1999 [Act No. 1 of 1999);
“prescribe” means prescribe by regulation;
“public entity” means a public entity listed in Schedule 2 or 3 to the Public Finance Management Act. 1999 (Act No. 1 of 1999;
“strategy” means a strategy for broad-based black economic empowerment issued in terms of section 11; and
“this Act” includes any code of good practice or regulation made under this Act.

Objectives of Act

2. The objectives of this Act are to facilitate broad-based black economic empowerment by—

(a) promoting economic transformation in order to enable meaningful participation of black people in the economy;
(b) achieving a substantial change in the racial composition of ownership and management structures and in the skilled occupations of existing and new enterprises:
(c) increasing the extent to which communities. workers. cooperatives and other collective enterprises own and manage existing and new enterprises and increasing their access to economic activities, infrastructure and skills training
(d) increasing the extent to which black women own and manage existing and new enterprises, and increasing their access to economic activities, infrastructure and skills training;
(e) promoting investment programmes that lead to broad—based and meaningful participation in the economy by black people in order to achieve sustainable 5 development and general prosperity;
(f) empowering rural and local communities by enabling access to economic activities, land, infrastructure, ownership and skills; and
(g) promoting access to finance for black economic empowerment.

 

Interpretation of Act

3. Any person applying this Act must interpret its provisions so as-

(a)) to give effect to its objectives; and
(b) to comply with the Constitution.

 

Establishment of Black Economic Empowerment Advisory Council

4. The Black Economic Empowerment Advisory Council is hereby established.

 

Functions of Council

5. The Council must-

(a) advise government on black economic empowerment;
(b) review progress in achieving black economic empowerment;
(c} advise on draft codes of good practice which the Minister intends publishing for comment in terms of section 9(5);
(d) advise on the development, amendment or replacement of the strategy referred to in section 11;
(e) if requested to do so, advise on draft transformation charters; and
(j) facilitate partnerships between organs of state and the private sector that will advance the objectives of this Act.

Composition of Council and appointment of members

6. (l) The Council consists of-

(a) the President, who is the chairperson of the Council;
(b) the Minister, with the Minister’s Director—General as an alternate: 30
(c) three other Cabinet Ministers, appointed by the President, with their respective Directors—General as alternates;
(d) no fewer than 10 and no more than 15 other members appointed by the President.
(2) When appointing members in terms of subsection (l)(d), the President shall have regard to the need for the Council-

(a) to have appropriate expertise;
(b) to represent different relevant constituencies including trade unions, business community·based organisations and academics.
(3) In appointing members in terms of subsection (l)(d). the President shall follow an appropriate consultative process.
(4) The President shall appoint a Cabinet Minister who is also a member of the Council to act as chairperson of the Council in the President’s absence.

Constitution and rules of Council

7. (1) The Minister must establish a constitution for the Council.
(2) The Minister may amend the constitution of the Council from time to time, after consultation with the Council.
(3) The Council may, by resolution, and after consultation with the Minister. make rules to further regulate the proceedings of the Council.

Remuneration and reimbursement of expenses

8. Council members will not be remunerated for their services, but will be reimbursed for expenses incurred by them in carrying out their duties, as determined by the Minister, with the concurrence of the Minister of Finance.

Codes of good practice

9. (1) In order to promote the purposes of the Act, the Minister may by notice in the Gazette issue codes of good practice on black economic empowerment that may include-

(a) the further interpretation and definition of broad—based black economic empowerment and the interpretation and definition of different categories of black empowerment entities;
(b) qualification criteria for preferential purposes for procurement and other economic activities:
(c) indicators to measure broad—based black economic empowerment;
(d) the weighting to be attached to broad—based black economic empowerment indicators referred to in paragraph (c);
(e) guidelines for stakeholders in the relevant sectors of the economy to draw up transformation charters for their sector; and
(f) any other matter necessary to achieve the objectives of this Act.
(2) A strategy issued by the Minister in terms of section 11 must be taken into account in preparing any code of good practice.
(3) A code of good practice issued in terms of subsection (1) may specify-

(a) targets consistent with the objectives of this Act: and
(b) the period within which those targets must be achieved.
(4) In order to promote the achievement of equality of women, as provided for in section 9(Z) of the Constitution, a code of good practice issued in terms of subsection (1) and any targets specified in a code of good practice in terms of subsection (3), may distinguish between black men and black women.
(5) The Minister must, before issuing, replacing or amending a code of good practice in terms of subsection (1)-

(a) publish the draft code of good practice or amendment in the Gazette for public comment; and
(b) grant interested persons a period of at least 60 days to comment on the draft code of good practice or amendment, as the case may be.

Status of codes of good practice

10. Every organ of state and public entity must take into account and, as far as is reasonably possible, apply any relevant code of good practice issued in terms of this Act in-

(a) determining qualification criteria for the issuing of licences, concessions or other authorisations in terms of any law;
(b) developing and implementing a preferential procurement policy:
(c) determining qualification criteria for the sale of state-owned enterprises; and
(d) developing criteria for entering into partnerships with the private sector.

Strategy for broad—based black economic empowerment

11. (1)The Minister-

(a) must issue a strategy for broad based black economic empowerment;
(b) may change or replace a strategy issued in terms of this section.
(2) A strategy in terms of this section must-

(a) provide for an integrated co-ordinated and uniform approach to broad-based black economic empowerment by all organs of state, public entities, the private sector, non-governmental organisations, local communities and other stakeholders:
(b) develop a plan for financing broad-based black economic empowerment;
(c) provide a system for organs of state, public entities and other enterprises to prepare broad-based black economic empowerment plans and to report on compliance with those plans; and
(d) be consistent with this Act.

Transformation charters

12. The Minister must publish in the Gazette for general information and promote a transformation charter for a particular sector of the economy, if the Minister is satisfied that the charter-

(a) has been developed by major stakeholders in that sector; and
(b) advances the objectives of this Act.

Support services and funding of Council

13. (1} The Department of Trade and Industry must provide the Council with the necessary support services and funding out of money appropriated by Parliament for that purpose.
(2) The funds referred to in subsection (1), must be utilised for-

(a} the establishment and operating costs of the Council: and
(b} the development and implementation of a communication plan on broad-based black economic empowerment.

Regulations

14. The Minister may make regulations with regard to any matter that it is necessary to prescribe in order to ensure the proper implementation of this Act.

Short title and commencement

15. This Act is called the Broad—Based Black Economic Empowerment Act, 2003, and

comes into operation on a date to be determined by the President by proclamation in the Gazette.