BBBEE trumping clause brings clarity

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Monday, 20 May 2013  |  Comments

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Support for Trumping clause for BBBEE ammendment Bill

Clause brings some certainty to BBBEE

by Linda Ensor -  20 May 2013 - BDLive

THE introduction of a trumping clause in the Broad-Based Black Economic Empowerment (BBBEE) Amendment Bill has won the support of MPs, despite the Department of Trade and Industry’s initial opposition to the measure.

Parliament’s trade and industry committee decided on Friday to introduce a trumping clause that would ensure the act took precedence over all other instruments of black economic empowerment, such as codes of good practice and sectoral charters.

However, the committee decided the implementation of the trumping provision would be delayed for about a year after the commencement of the act so business could align itself with the new regime.

African National Congress MP Bheki Radebe said there was a call for a trumping clause to provide certainty on BBBEE requirements.

London-based Vodafone, for instance, said it wanted certainty with regard to what it had to comply with, rather than being subjected to a multiplicity of sectoral codes.

Mr Radebe said the legislation would set minimum standards, but industries would be encouraged to go beyond them.

The Black Business Council has also called for a trumping clause. Its CEO, Xolani Qubeka, welcomed its introduction on Friday, saying the clause would bring certainty to the application of BBBEE law.

In another independent move, the committee imposed restrictions on the ability of public entities and organs of state to overlook the codes of good practice. Whereas the original bill stated organs of state would be obliged to implement the codes "as far as reasonably possible", under the committee’s amendment they would be obliged to apply to the trade and industry ministry for an exemption to do so.

The entities would have to make a case for the exemption, for example if they were in an emergency procurement situation.

Public entities often have to enter into contracts with foreign suppliers, but this does not comply with the normal BBBEE requirements imposed on government contracts.

Committee chairwoman Joanmariae Fubbs said it was important to retain productive investment in the economy.

Another amendment introduced by the committee was to limit the period during which those convicted for any offence under the act would be prohibited from contracting, or conducting, any business with an organ of state to 10 years.

In the original bill the prohibition would persist in perpetuity. Those convicted would be listed on the register of tender defaulters maintained by the Treasury.

The bill will be adopted by the committee on Thursday.

One issue still to be resolved is what terminology to use for the beneficiaries of the legislation, with Democratic Alliance MP Wilmot James opposing any reference to race.

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