Broad-based black economic empowerment (“B-BBEE”) is a policy of the South African government that is aimed at increasing participation by previously disadvantaged South Africans in economic activities. The Broad-Based Black Economic Empowerment Act, 2003 (the “B-BBEE Act”) is the primary legislation through which this B-BBEE policy is implemented. In terms of the B-BBEE Act, B-BBEE consists of measures and initiatives that are aimed at increasing levels of equity ownership by black people in businesses operating in South Africa, increasing the numbers of black people who participate in management roles in business, improving the skills of black employees, assisting small and medium businesses that are majority-owned by black people, procuring goods and services from businesses that are good contributors to B-BBEE, and promoting corporate social investment.

The B-BBEE Act, the B-BBEE Codes of Good Practice and the B-BBEE regulations promulgated thereunder are complex pieces of legislation that are often difficult to navigate. Non-compliance with the B-BBEE regulations has significant penalties, including up to 10-years' imprisonment for fronting.

It is becoming critical for South African businesses to clearly understand the B-BBEE legislative framework and the B-BBEE requirements and obligations imposed on them.