From 9th June 2017, any Major B-BBEE Transaction is required to be registered with the B-BBEE Commission in the prescribed Form BBBEE 18, within 15 days of being concluded.
A Major B-BBEE Transaction is defined as “any transaction between entities/parties that results in Ownership Recognition in terms of Statement 100. The Threshold of registering the Transaction with the B-BBEE Commission is based on the Transaction Value excluding administration, professional and legal fees.”
The Transaction Value has been set at R25 million or more. The value of the Transaction is attributable to the value of the sale of asset/business/equity instrument.
It is noted that equity equivalent transactions for multinationals have been specifically excluded from Major B-BBEE Transactions. Reference Government Gazette No. 40898 dated 9 June 2017.
Whilst the B-BBEE Regulations specify that a Major B-BBEE Transaction must be registered with the B-BBEE Commission, the transaction itself does not require the approval of the B-BBEE Commission. However, the Regulations provide that the B-BBEE Commission can advise the parties of any concerns that the Commission has regarding the Transaction, and the parties must then take steps to address the Commission’s concerns. If adequate steps are not taken, the B-BBEE Commission can initiate an investigation in terms of the B-BBEE Act into the Transaction. All parties to the Transaction must register the Transaction as a collective with the B-BBEE Commission so as to avoid multiple separate registrations of the same Transaction.
From the B-BBEE Commission’s perspective, the main benefit of requiring registration of Major B-BBEE Transactions is that it will allow for the monitoring of compliance, levels of transformation and the extent to which benefits flow back to Black Persons as part of these transactions.
In order to register a Major B-BBEE Transaction with the B-BBEE Commission, the parties must complete and submit Form BBBEE 18 as prescribed.
The documentation required by the B-BBEE Commission includes:
- a brief description of the Major B-BBEE Transaction,
- signed Shareholders’ Agreement and Memorandum of Incorporation,
- signed sale agreement transferring the shares/interest/assets/business,
- signed trust deeds if the ownership structure includes a trust,
- signed financing agreement relating to the Transaction irrespective of whether or not it is vendor financed,
- schematic diagram of the ownership structure before and after conclusion of the Major B-BBEE Transaction,
- a valid B-BBEE certificate or a B-BBEE Sworn affidavit of the Measured Entity involved in the Major B-BBEE Transaction, and
- any document that the parties deem relevant to the Transaction. The B-BBEE Commission may request additional documentation.
Upon submission of the required documentation, the B-BBE Commission will issue a certificate of registration to the parties in respect of the Major B-BBEE Transaction.
|Liz Pinnock||Edson Munetsi|
|Director | Legal, Johannesburg||B-BBEE Consultant, Johannesburg|