The controversial so-called trumping provision of the Broad-Based Black Economic Empowerment Amendment Act 46 of 2013 (the “Amendment Act”) has come into force and effect as of 24 October 2015, following an announcement by the Minister of Trade and Industry on 23 October 2015.
The trumping provision stipulates that in the event of any conflict between the Broad-Based Black Economic Empowerment Act 53 of 2003 (the “BEE Act”) and any other law in force immediately prior to the date of commencement of the Amendment Act, the BEE Act will prevail if the conflict relates to a matter dealt with in the BEE Act. This means that, for example, to the extent that any sector code is not aligned with the new Amended Codes of Good Practice, all applicable entities under such sector will be measured in terms of the Amended Codes of Good Practice.
Unfortunately, the reality is that that many, if not all, “other pieces of legislation” have not to date been aligned with the BEE Act (as was intended during the transitional 12-month period), thereby creating a significant amount of risk and uncertainty. For instance, an interesting issue that must still be decided is whether the BEE Act or the Mineral and Petroleum Resources Development Act 28 of 2002 (and its accompany Mining Charter) will govern BEE in the mining industry.
It is evident that all legislation pertaining to economic transformation (including sector codes and charters) needs to be aligned with the BEE Act so as to ensure that a coherent framework is applicable to the industry, failing which measured entities will need to prepare and avail themselves for implementing new BEE structures. Not only may this be costly, but it may also have an impact on such entities’ ability to obtain certain licences and approvals.