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The DTI and the great confusion

27 Jul 2015

Jaco OdendaalThe official implementation of the Amended Codes of Good Practice on 1 May 2015 caused confusion right from the onset.

The reason for this was an inconspicuous one-liner in Notice 396 (in the Government Gazette of 5 May 2015), which stated that black participants in Broad-based and Employee Share Ownership Schemes would be eligible for contributing only 3 points out of a maximum of 25 points under the Ownership Element.

An outcry followed the realisation that this seemingly unimportant statement would have dire consequences for a significant number of measured entities, and the acting minister’s ability to make such a regulation without prior consultation was questioned by the private sector.

The validity of the statement was doubtful. However, some experts in the B-BBEE field commented that the Minister of Finance had clearly indicated in his budget speech that the country was looking to create “black industrialists” and that in limiting the points available in Notice 396, a step was taken towards this goal.

However, by limiting the points available for ownership schemes, the “broad-based” component of Black Economic Empowerment would become null and void. It would in fact result in “narrow-based” Black Economic Empowerment – which surely cannot be in line with what the Government stands for.

The DTI subsequently realised its “error,” and issued Notice 444 on 15 May 2015, effectively withdrawing Notice 396, especially the limitation on the contribution of points by ownership schemes. Measured entities and B-BBEE consultants must have uttered a collective sigh of relief when this happened.

But this may be a brief respite. It may not be the last time that something is sneaked into the Codes in this way. In the months ahead, measured entities and consultants should be wary, as some interesting “notices” may see the light.

•    For more information regarding B-BBEE, contact Jaco Odendaal on 021 882 8140 or

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