BBBEE UPDATE ON FRONTING AND TRUST ISSUES

What’s News?

10

OCT

BBBEE UPDATE ON FRONTING AND TRUST ISSUES

Do not get caught by marketing emails. We will assist all our clients and their suppliers in the dilemma of whether Trusts are legal.

Ownership comes in many forms as clearly stipulated in the Amended Codes. These Codes allow for Mandated Investments, Sale of Assets, Trusts, Employee Share Ownership Programs (ESOP), Private Equity Funds and Designated Groups. One would ask, after receiving one of the numerous emails telling you your Ownership structure is illegal, how Mandated Investments or Sale of Assets can be measured and if this is legal? The answer is simply YES. The Codes are written with numerous parties input taking into effect that companies ownership is complex. Mandated Investments, Public Shares, Sale of Assets and Trusts are complex, but done with the guidance of the BBBEE Codes and in the Spirit of these Codes they are 100% Legal.

We have been made aware, once again, of various companies in our industry trying to CON our clients into believing that Trust Schemes are not Legal. I ask you, very humbly, to please read the article in the Engineering News on 29 September 2016 regarding the Empowerment Deal ArcelorMittal South Africa (AMSA) has just unwrapped, http://www.engineeringnews.co.za/article/amsa-insists-r227bn-empowerment-deal-meets-highest-governance-standards-2016-09-28

The Key points in this deal are as follows:

  • 17% of AMSA has been sold through an Empowerment Deal
  • 5,1% is through AMSA Employee Empowerment Share Trust (ESOP)
  • A percentage of the balance is through  Trust and the rest is individually owned.

The article mentions this deal as having met “the highest standards of probity and governance.” This confirms the BBBEE Commission and Government have approved the use of a Trust to purchase shares and recognise this as BBBEE Transformation. Both AMSA’s ESOP and the smaller shares are in a Trust proving that the formation of Trust is 100% Legal.

Despite AMSA Ownership Scheme, Trust are being utilised by numerous large corporations to issue shares in their company. This is done through consultation with top Legal Firms and Trust experts. Bbbee Wise has had the privilege of being involved in a few of these deals and is very versed in ensuring compliance and Transformation.

Bbbee Wise is extremely confident of their ability to assist in Ownership structures and can assure all our clients that we have your best interests at heart. We are embracing the BBBEE Codes and ensuring Transformation whilst simultaneously maintaining the Spirit of the Codes.

Please don’t be influenced by misinformed data.

LEGALITY of EME “CERTIFICATES”

Our company has been receiving numerous “certificates” for EMEs issued by SAIPA and SAICA auditors. Due to the quantity being processed we contacted the BEE Commssion to ask for clarification on this point. It is our intention to insure our clients will score maximum points under Procurement.

The BEE Commission were very quick to respond and have clearly indicated that any ‘certificate” issued by SAIPA and SAICA may not be used a proof of a Suppliers BBBEE Status as this is NOT legal as per the DTI Amended Codes and BBBEE Codes of Good Practise.

Herewith the context of the email from the BEE Commission, “We have previously sent letters to SAIPA and SAICA requesting them to stop with the practice. Again we have contacted them after receiving your email to indicate to them that we have proof os such practice.”

 

EMPLOYMENT EQUITY

Please be advised submissions are open for Employment Equity returns. Manual submissions close at the end of October. Online close the 15th January 2017. All submissions can be done by our highly qualified team of experts. Call now for assistance.