Categorized | B-BBEE Act

Significance of ‘token’ BEE shares reduced

Back of businessman getting lost in a maze

For many years it has been very easy for corporations to achieve compliance with Broad Based Black Economic Empowerment (BBBEE) codes. All they have had to do is to mobilise a  community and offer it token shares to score high ratings. This worked for years, as they used their scores to conveniently secure business from companies and government.

Now the rules of the game have changed. The Department of Trade and Industry (DTI) has published a notice in which it says black empowerment programmes benefiting community and special interest trusts and employees will contribute less to a company’s compliance rating.

Unsurprisingly, this has wrong-footed many companies, who are left wondering how much they will have to sacrifice to meet the new requirements.

Soon after the announcement, Transform SA Online called the COO of a JSE listed company for an opinion (who insisted that his opinion to be published on the condition of anonymity).

“What can I say? This is not fair. As if they what have introduced is not complicated enough, they throw at us another obstacle. This will only make doing business in the country even more difficult.”

It is interesting to observe whether the changes would also be introduced to areas of training black managers, promoting women and helping develop communities near operations.

Companies are most likely to challenge the legality of the law.

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Transform SA in conversation with Nompendulo Mkhatshwa about student movement.

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