The Information and Communications Technologies (ICT) sector has a broad scope of application. B-BBEE status measurement for entities that fall under the ICT scope is regulated by the amended ICT sector charter issued in terms of Section 9(1) of the Broad-Based Black Economic Empowerment Act 46, of 2013.
The Independent Communications Authority of South Africa (ICASA) and the Electrical Contractors Association of South Africa (ECASA) is the authority which promotes the economic empowerment of black people in general through ownership control.
In a publication of a Government Gazette on the 10th of October 2014, ICASA advised that it would no longer approve applications for licence transfer if there were less than 30% equity ownership of Historically Disadvantaged Groups (HDGs). Despite this, ICASA in its 2017 discussion document noted that 53% of individual communications service and individual electronic communications network service licensees has less than 30% HDG equity of ownership.
It became clear that the authority focused their attention on the transformation of the ICT sector, specifically equity ownership. In the run-up to this, the ICASA published a position paper in February 2019 with the following main principles:
- Maintenance of the 30% equity ownership requirement for all applicants for new licences, as well as transfer, renewal and amendment of licences;
- Equity ownership level for any licensee will not be permitted to fall below 30% and those penalties should be imposed if this happens.
On the 14th of February 2020, ICASA published draft regulations applicable to the ICT sector code. The main emphases in the regulations about this discussion were:
- That all existing licensees comply with the mandatory equity ownership requirement within 24 months of promulgation – 30% equity ownership by black people and achieving a minimum level 4 BBBEE status;
- Penalties of up to R5 000 000 .00 or 10% of the licensees’ annual turnover if the licensee cannot maintain the mandatory minimum requirements.
The publication of the final regulations is scheduled for the 2020/2021 financial year.
The repercussions of these regulations will have a massive impact on businesses that fall under the ICT sector.
Consultation with your SEESA B-BBEE Legal Advisor is imperative. Therefore, please contact your nearest SEESA Office to arrange for such a consultation.
About the Author
Nathan Marais is a BEE and Labour Legal Advisor at SEESA’s Kimberley office. He is an admitted Advocate of the High Court of South Africa. He obtained his LLB degree from the University of the Free State in 2013 and completed the Law Society of South Africa’s practical legal training course through UNISA in 2014.
Resources
- ICASA – Briefing to Portfolio Committee on Communications – 4th September 2020
- Government Gazette, 14 February 2020 – No. 43021