South African ICT companies must take note of the new BEE rules that the Independent Communications Authority of South Africa (ICASA) is planning to introduce before the end of the 2020/2021 financial year.
During a Virtual parliament meeting on 18 June 2020, President Cyril Ramaphosa reiterated that measures need to be taken and put in place to strengthen the economy, including Broad-Based Black Economic Empowerment (B-BBEE).
For now, it is clear that South African businesses will still have to comply with the ever-changing BEE legislature to remain competitive.
In February 2020, the regulator published the draft employment equity regulations applicable to the ITC Sector (Information and Communications Technology).
The purpose of these regulations is to promote equity ownership by HDGs (Historically Disadvantaged Groups and has the same meaning as Historically Disadvantaged Persons) and to promote B-BBEE. In achieving this, these regulations will:
- Facilitate diversity and transformation in the ICT sector by prescribing the implementation of revised ICT Sector Code;
- Prescribe the application of the HDG equity requirement; and
- Provide the manner in which to verify compliance with HDGs and B-BBEE requirements.
ICASA recently addressed Parliament that the regulations they seek to impose, among others are as follow:
- A requisite for all individual licensees to comply with the mandatory equity ownership requirements, 30% equity ownership by black people and level 4 B-BEEE status, within 24 months of the promulgation of the regulations;
- Publicly trading/listed licensees must submit an independent assurance report indicating compliance with HDGs equity requirement.
- The authority may request any other supplementary information from an Individual Licensee, which it deems necessary in order to verify the ownership equity held by HDGs at any given time during the license period.
- The 30% HDGs equity requirement is applicable to all sorts of applications pertaining to individual licences, including new applications, transfers, renewals and amendments.
- Licensee must submit a B-BBEE verification certificate annually in terms of the Compliance Procedure Manual Regulations, 2011 demonstrating its B-BBEE status calculated on a flow-through principle.
- A licensee must ensure that its ownership equity held by black people is not lower than 30% at any given time during the license period.
- Penalties include up to R5 million or 10% of the licensee’s annual turnover where a licensee fails to maintain the mandatory minimum requirement;
- If a person submits false, misleading or inaccurate information that person is guilty of an offence and subject on conviction to a fine not less than R50 000 but not exceeding R5 000 000 or imprisonment of not less than 1 week, but not more than 24 months.
While addressing parliament, The Broad-Based Black Economic Empowerment (B-BBEE) Commission stated that the B-BBEE Act must be applied consistently by both the private and public sector for real and enhanced B-BEEE to be achieved in South Africa.
As a business owner, ask yourself the following questions:
- Are you BEE compliant?
- Are you benefitting from BEE legislation?
- Are you participating at the correct level?
- Is your BEE strategy the best?
SEESA has always been committed to providing ongoing quality service to all of our clients. Should you require any assistance or require any other BEE related advice, please contact your nearest SEESA office and/or SMS “SEESA” to 45776 and a Legal Advisor will contact you.
Resources:
Draft
Regulations in respect of the Limitations of control and equity ownership by Historically
Disadvantage Groups (HDGS) and the application of the ICT Sector Code, Notice
91 of 2020.
About the Author:
Laurisé
Du Toit started her career at SEESA in 2009 and is currently the Provincial
Manager at the SEESA Polokwane branch.. She completed her LLB & B.Com Law
Degree at the University of the Free State.