Johannesburg - Grant
Thornton Verification Services on Tuesday indicated that there should soon be
more clarity on the extent of transformation brought about by Broad-based black
empowerment (B-BBEE) transactions with an ownership element.
According to Jenni Lawrence,
Managing Director of Grant Thornton Verification Services, this follows the
B-BBEE Commission’s decision that all such B-BBEE transactions with a value of
R25 million and upwards must be reported and registered.
The BEE Regulations were originally
gazetted a year ago, with instructions that major transactions with an
ownership element exceeding a certain threshold, would be required to be
reported to the Commission. A draft notice a few months later suggested the
threshold should be R100 million, followed by a final notice gazetted earlier
this month, lowering the threshold to R25 million.
“The lower threshold means
that more empowerment deals will come under scrutiny of the B-BBEE Commission,
and this should give the public a better idea of the extent of empowerment in
the economy” said Lawrence.
Lawrence said verification
Services at Grant Thornton believes this decision will enable the Commission to
have a significantly better understanding as to the level of broad-based
empowerment that has been reached.
According to the B-BBEE
Commission, the rationale behind registering certain empowerment transactions
is to allow for monitoring of compliance, the levels of transformation and the
extent to which benefits of major B-BBEE transactions flow to the black people
that are part of these deals.
“While there was initially
some confusion as to how the value of deals will be determined, the Commission
has since clarified that the transaction value excludes administration,
professional and legal fees. The value therefore refers to ‘the value of the
sale of asset, business or equity instrument,” said Lawrence.
Any party that enters into
such a transaction has to notify the B-BBEE Commission within 15 days of
concluding the transaction.
“A very interesting element
of this regulation is that it will be applied retrospectively to all major
broad-based empowerment transactions that have been concluded on or after the
B-BBEE Act was proclaimed (24 October 2014) and before the publication of the
latest notice (9 June 2017).”
The parties to these past
transactions will have 60 days to register the deal's’ details with the
Commission. She emphasises that this registration is not tantamount to seeking
approval for a deal, but rather a notification of transactions.
“We do not foresee this
decision resulting in more bureaucracy for those parties that have concluded
empowerment transactions since 2014, as the Commission requires a basic form –
that is contained in the Regulations – along with the documents the parties
would have drawn up to conclude the transaction, to be submitted for
registration purposes.
Read also: DTI gets serious about B-BBEE
This includes a brief
description of the deal, legal agreements, such as copies of the signed
shareholders’ agreements, as well as a schematic diagram of ownership before
and after the transaction,” said Lawrence. She believes that this
should give the Commission and the public more insight into an area often
criticised for being opaque.
“Over the past few years
especially there has been a perception that broad-based empowerment
transactions do not always comply with the goal of the legislation, and that
there is still only a handful of real beneficiaries. The registration of more
transactions should help to clarify this field and give policymakers an
indication of the efficacy of the regulations,” said Lawrence.
BUSINESS REPORT ONLINE