The B-BBEE Commission has published a notice explaining how a complaint about fronting may be lodged and how it will respond

The Broad-Based Black Economic Empowerment Commission (B-BBEE Commission) recently published an explanatory notice on its fronting investigations.  It may investigate fronting on its own initiative or as a result of complaints received.

The explanatory notice states that for the B-BBEE Commission to consider a complaint, it must relate to a contravention of the Broad-Based Black Economic Empowerment Act (B-BBEE Act). It may occur within any of the B-BBEE elements, namely ownership, management control, skills development, enterprise and supplier development and socio-economic development contributions. The B-BBEE Act defines a fronting practice very broadly as a transaction, arrangement or other act or conduct that directly or indirectly undermines or frustrates the objectives of the B-BBEE Act.

Any person affected by a fronting practice or any concerned member of the public can lodge a complaint with the B-BBEE Commission, at no cost. A complainant may do so through legal representation, although this is not mandatory. A complaint may also be lodged anonymously.

The explanatory notice states that at any time after a complaint has been initiated, the B-BBEE Commission may publish a notice disclosing the alleged fronting practice and inviting further complaints about it. The B-BBEE Commission may also consolidate two or more complaints into a common investigation if the complaint involves the same person(s).

The submission of a complaint should be accompanied by supporting documents, including:

• an affidavit by the complainant providing the background to the complaint;
• a certified copy of the complainant's identity document;
• the complainant's share certificate, if the complaint relates to an ownership issue;
• any applicable shareholders' agreement and/or memorandum of incorporation of the company against which the complaint is lodged (respondent);
• any applicable and relevant resolutions or minutes of meetings;
• the respondent's financial statement or information;
• the respondent's B-BBEE certificate or sworn affidavit;
• salary advice of the complainant; and
• recent contact details of the respondent.

Within five days of receiving a complaint, the B-BBEE Commission must acknowledge receipt and allocate a case number.

The B-BBEE Commission must, within 12 months, investigate the complaint and make a finding with or without a recommendation. As part of the investigation, the Commission may hold a formal hearing before a panel chaired by the Commission.  Before publishing its final findings, the B-BBEE Commission must provide the respondent with 30 days (which may be extended by up to 10 days) to respond to its findings. The Commission may then publish its findings.

Written by Safiyya Patel, Partner & Loatile Baiphaphele, Associate at Webber Wentzel