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Trumping Provision

By July 26, 2016September 26th, 2019No Comments

The Minister of Trade and Industry, Dr Rob Davies has announced that the Trumping Provision of the Broad-Based Black Economic Empowerment Amendment Act, 2013 came into force with effect from the 24 October 2015.

Section 3 (b) of the BEE Amendment Act also known as the “trumping provision” stipulates that “in the event of any conflict between the B-BBEE Act and other law in force immediately prior to the date of commencement of the Broad-Based Black Economic Empowerment Act, this Act prevails if the conflict specifically relates to a matter dealt with in this Act.”

This trumping provision was given a twelve month transitional period from the date of Proclamation which was 24 October 2014.

Great – what does this mean and what are the implications? Some have speculated that this clause could pull the Mining Charter and the Liquid Fuels Charter into the Dti’s BEE world of BEE Certificates and Verification and remove the control of BEE from the DMR.

My personal belief is that this trumping clause is “capstone legislation” that permits a specific change to be universal in effect across all BEE related legislation such as the role of the BEE Commissioner or the definition and penalties relating to Fronting. For example the provision in the BEE Amendment Act that states “Any contract or authorization awarded on account of false information furnished by or on behalf of an enterprise in respect of its broad-based black economic empowerment status, may be cancelled by the organ of state or public entity without prejudice to any other remedies that the organ of state or public entity may have” is now universal in its application across all Charters, including DMR Charters and BEE related legislation such as the PPPFA .

We do not think that this trumping clause, in itself, can be used to nullify or repeal Sector Charters that have not aligned with the Amended COGP by the end October. However, there is a new clause inserted under Section 9 of the BEE Act relating to Sector Charters that states “(7) A code of good practice remains in effect until amended, replaced or repealed’. This gives the Dti the capacity to repeal any Sector Code but the Minister would have to follow the appropriate legislative repeal process.

The next few weeks should prove interesting as regards Sector Codes and any informed comments on this subject would be most welcome; we will provide an update to this newsletter as soon as we have more clarity.
PS: The ever active BEE grapevine has it that the long promised Amended COGP BEE Verification Guide is now available to a few selected agencies for comment and that its provisions significantly increase the BEE verification compliance workload!

It also seems that IRBA will not be the BEE Regulator and that SANAS will fulfill that role in future. If you have any information on either of these matters please let us know.