Johannesburg - Revised black economic empowerment codes
could prejudice some companies, corporate law firm Webber Wentzel said on
The revised broad-based black economic empowerment codes
"contain a controversial amendment which could result in a reduction (in)
companies' empowerment ratings," the firm said in a statement.
Webber Wentzel partner Safiyya Patel said the most sweeping
amendment was the introduction of sub-minimum targets for "priority
The draft codes were released on Tuesday.
Trade and Industry Minister Rob Davies said at the launch
that the revised codes were introduced to "plug the gaps" in the
Broad-Based Black Economic Empowerment Act and related legislation.
This included revising the codes' scorecard to include five
elements instead of seven.
Some of the elements, such as ownership, enterprise and
supplier development and skills development, were now classified as
These were elements which companies had to meet to satisfy
black economic empowerment (BEE) criteria.
"If the amendments are processed in their current form,
companies will be required to achieve a minimum compliance of 40% of the
targets for the priority elements," said Patel.
"If they do not achieve the minimum compliance for any
of the priority elements, their overall contributor status will be reduced by
two levels if they are large entities or by one level if they are qualifying
This would have an adverse impact on companies, particularly
large companies, that had overlooked black shareholding to focus on other
elements of BEE, she said.
"For example, a large company that may have seven
percent black ownership, but is a level three contributor, will be
automatically reduced to a level five contributor because it does not meet the
10% minimum black ownership target," Patel said.
The public had 60 days to submit comments on the codes
before they were finalised.
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