B-BBEE Sector Charter Conundrum

BEE charters have been a thorn in our side for many years. Although we don’t specifically support them, but since they exist, they must be followed.

Charter councils and members of various industries have long since believed in the importance of separate individual charters for the sector to which they belong. It is almost as if the industry is willing to subject itself to additional costs in developing the charter, additional costs in implementing the charter and additional costs in understanding a new piece of legislation in order to not follow it any better than the current Codes of Good Practice.

BEE charters have been used as an excuse for industries to adopt the ‘wait and see approach’ to avoid implementing any BEE activity that might fall out of the scope of that charter. To those businesses that proudly state that they have done well in terms of the charter – we ask – would you have done as well had you not had a charter?

Now everything changes. The Amended Codes of Good Practice have been gazetted. The current state of Charters and the Amended Codes quite simply cannot co-exist peacefully. In order for each charter to qualify as a sector code it must be substantially in line with the codes of good practice which they are modeled on.

The target date for implementation of the Amended Codes is October 2014. Those codes state;

“3.2.3 A Measured Entity in a sector in respect of which a sector code has been issued in terms of Section 9 of the BBBEE Act as amended, may only be measured for compliance in accordance with that code.”

Despite the fact that the Amended Codes quote an amendment to the Act that has not yet been signed we see no way for any charter to remain in their current format.

Amongst others the amended codes are going to become the new baseline with which empowerment will be measured. It could almost be described as a complete cleaning of the slate. We should in effect begin afresh as if this were the first time we approached compliance.

The charters will have to at some point in the very near future be adjusted to fully comply with the Amended Codes or be scrapped entirely.

Practically we believe a few scenarios may play out:

The charters will be repealed and any company in that sector will default to the amended codes
The charters will be amended in time and you will in October 2014 use the amended charter
The amended codes target implementation date will be delayed (most likely to take into account point 2 and many other reasons)

It should be noted that charters have not traditionally been drafted and then issued within this short time period. Sectors like ICT, Property and the FSC have only recently been introduced. If it takes the same amount of time as in the past we will see some of the currently available charters issued post 2018.

Moving forward – The Charter Councils are having a meeting with the DTI in November to discuss the charter problem in more detail. We imagine the purpose of that meeting is to plot a way forward for those charters. We are unsure why they are meeting after the Amended Codes were issued and not before.

Whichever way it goes it makes the most sense to implement BEE now as if you were to use the Amended Codes. Worst case you are ready for the new codes, best case you get a much higher level and get business -Source: EconoBee

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