Beneficiaries of B-BBEE
A recent article by Business Tech, regarding South African companies trying to dodge BEE laws, illustrates how critical it is to understand and adhere fully to the B-BBEE Act.
Zodwa Ntuli, the current B-BBEE commissioner, said that 83% of complaints received since 2016 were related to fronting. The mining, transport, construction and engineering sectors account for most of the fronting complaints.
“We want the public to know about these cases of fronting and misrepresentation of B-BBEE status to raise awareness of these practices that are detrimental to transformation and criminal in nature, with a view to identify and prevent them from occurring in our economy.
Any person convicted of fronting may be imprisoned for up to 10 years and an entity may be fined up to 10% of their annual turnover, in accordance with Section 130 of the B-BBEE Act.
In other recent news reports, individuals have recently been charged with fraud from incorrectly stating their race. We have also noticed that there seems to be some confusion regarding the definition of B-BBEE beneficiaries:
Who are the beneficiaries of B-BBEE?
In terms of the Codes of Good Practice a Black person is a generic term which means African, Coloureds and Indians who
- Are citizens of the Republic of South Africa by birth or decent, or
- Became citizens of the Republic of South Africa by naturalisation
(i) Before 27th of April 1994
(ii) On or after 27th of April 1994 and who would have been entitled to acquire citizenship by naturalization prior to that date.
To explain number (ii) more fully: If a foreign national came to South Africa after 1994, it is unlikely that such an individual would qualify as a B-BBEE beneficiary, unless such a person was already in South Africa prior to 1994 and was not able to gain citizenship due to apartheid law.
On average it takes 5 years for someone to acquire permanent residence within South Africa and a further 5 years to be eligible to apply for citizenship. Once a citizen, this individual is still not considered a beneficiary of B-BBEE.
Why not give us, at EconoBEE, a call on 011 483 1190 so that we can help you understand the Act and assist with the design and implementation of cost-effective strategies to increase your company’s B-BBEE scorecard!
EconoBEE is hosting online workshops for both our existing clients, and for anyone interested in attending. For our BEE Managed Services clients, all BEE half-day workshops are free and our full-day workshops are half-priced! Please see our website for more information on our workshops.
To book, or to tailor-make a workshop for your company, please email email@example.com or call 011 483 1190.