Proposed amendments may lead to the collapse of BEE as we know it
Expect to see a whole generation of sophisticated ‘intermediaries’ who could effectively shield white-owned business from compliance, writes Deon Oberholzer
On March 29, the Department of Trade and Industry issued draft amendments to the amended Codes of Good Practice for public comment. One of the stunning proposals is that all black-owned companies — of any size — are to be exempt from any obligation in terms of the BEE legislation. This was previously restricted to EME and QSE, meaning companies with revenue of less than R50m. These companies now all obtain a Level 1 if they are 100% black-owned and Level 2 if 51% or more. The department proposes a number of clarifying restrictions that seek to ensure that "real black-owned business" would be exempt, and not structured companies that make use of the many alternative allowances that companies could use to amplify their BEE ownership. This includes the modified flow-through principle, sale of assets, mandated investments, Private equity funds, BEE facilitators and more. It’s not rocket science to understand why this happened: to a certain extent it was probably inevitable. The voice of...
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