Broad-Based Black Economic Empowerment Amendment Bill: deliberations

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Trade and Industry

13 May 2013
Chairperson: Ms J Fubbs (ANC)
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Meeting Summary

The Department said that it would only be able to report back on the trumping provision in the legislation by  Friday 17 May because the work had been outsourced. The Committee deliberated line by line on the Broad-Based Black Economic Empowerment Amendment Bill up to section 13G(2). All amendments up to this point were accepted save the following sections which were flagged for further discussion: section 1(b), section 1(b)(b), section 3(2), section 10(1), section 13F(4) and section 13G(2).

Members deliberated on preferential procurement being couched in terms of the scorecard rather than racial terms. Some Members re-iterated the case of preference being given to those born before 1994, but that those born after 1994 (the born frees) be treated equally.  The Department raised the point that some of the  terminology in section 10(1) was an escape clause and should be removed from the amendments. Members noted that not all entities on the JSE were public companies; some were trusts and questioned whether they would also be subject to the legislation.

Meeting report

Mr B Radebe (ANC) said he had expected the Department to be finished with its investigation into the impact of the trumping provision on other legislation for which the Department had been given two weeks to complete.

Mr Sipho Zikode, Deputy Director General: Empowerment Enterprise Development Division, said that they would present it on Friday as the work had been outsourced to private companies.

The Committee then proceeded to go through the Amendment Bill line by line in conjunction with the corrections contained in the document marked Proposed Amendments BBBEE 2013/1D.

Mr W James (DA) said he was nervous about point 2 of the document marked Proposed Amendments BBBEE 2013/1D  dealing with Section 1(b), as he would prefer race not to be part of the definition and that people be defined based on their eligibility for BBBEE and asked that the matter be flagged for further discussion.

Mr G McIntosh (COPE) said that prior to 1994 the Population Registration Act had been used by the law to classify people into races and that perhaps this could be used. He proposed Section 1(b) read ‘…and Indians and Chinese as classified under the Population Registration Act before 1994..’.

He said he had already made a case with regard to Section 1(b)(b) and it was up to the Committee to decide.

The Chairperson flagged the matter for further discussion.

Mr James said that in section 1(c)(e) ‘ from enterprises that are owned or managed by black people ‘ should be deleted and replaced by ‘from black empowered enterprises by virtue of the application of the scorecard’.

Mr Radebe said that 1(c)(c) and 1(c)(d) already spoke to the scorecard and that the legislation should not exclude the term blacks and this was accepted by Mr James.

Clause 3 had been rejected and a new clause had been inserted which would follow clause 2. In this new clause Section 3(2) deals with any legislative conflict between the Act and other laws in force prior to the commencement of the BBBEE Amendment Act and that the BBBEE Act would prevail.

Mr McIntosh asked if the BBBEE Act really did trump other legislation.

Adv Johan Strydom, the Department’s law advisor, said that it would be best to wait until the coming Friday to identify the legislation it would trump.

Advocate Hermann Smuts, State Law Advisor, said that there had been a number of submissions asking for the provision to be included in the amendment bill but that it remained a contentious clause and that it was difficult to see its impact on other legislation. He used the Oceana case as an example where the question was whether the Minister should be able to trump the codes. The Minister had argued that there were no relevant codes for fishing and therefore policy, not the codes, prevailed. If the codes had existed prior to the case then BBBEE codes would have prevailed.

The Chairperson flagged the matter for further discussion.

Mr Radebe supported the call to await the report back from the Department.

Ms Nomonde Mesatywa, Chief Director: B-BBEE, said the report on the trumping provision was very important and the Department was nervous about the implications as there had been different pieces of legislation extant and business saw dti as the custodian of BBBEE legislation. In the Oceana case, the company had adopted the scorecard but only looked at ownership and management and that was what had disgruntled Oceana. There needed to be a harmonised legislative environment.

Mr McIntosh proposed that in section 9(c)(6), the word ‘exceed’ be replaced by the term ‘are different to’.

Mr James said this would undermine uniformity and would give the Minister discretionary powers.

It was agreed that the amendment remain as it stood.

Mr Zikode said that the amendments were to ensure that no-one performed below the codes. Section 10(1) had been debated at length in the Department and the removal of ‘as far as reasonably possible’ would remove any contradiction with the trumping provision and prevent its use as an escape clause. 

Adv Strydom said the words were problematic as they were a statutory defence for the non-application of the legislation.
 
Adv A Alberts (FF+) said one had to be realistic about the skills base of the country.

Mr James said that if specialists were needed then equity equivalents could be used. He feared that it was a ‘duck out’ clause and would paralyse the state.

The Chairperson flagged the matter for further discussion.

Mr McIntosh asked what was meant by the term ‘effective’ in section 11(2)(b). After deliberation it was agreed to keep the term.

Section 13F(4) was flagged for further discussion

With reference to the amended section 13G(2), Mr McIntosh said that some companies were tightly held and did not trade as easily as those regarded as ‘free floating’ and questioned whether the former should be burdened with this type of legislation. He recommended that the clause be amended to read ‘… companies which have a free float of less than 60% listed on the Johannesburg Stock Exchange…’

Mr G Hill-Lewis (DA) said it was not about the shares of the company but about the companies being publically traded on the JSE. However that not all entities on the JSE were public companies as some were trusts.

The Chairperson flagged the matter for further discussion.

The meeting was adjourned.

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