The Department of Trade and Industry (dti) has announced that Sector Charter Councils in South Africa now have until 15 November to submit their updated and aligned sector codes to the Minister of Trade and Industry (Minister) for approval, and that all existing sector codes that have not been submitted by this date will be repealed. If an existing sector code is repealed, an entity operating in the affected sector will be measured under the Codes of Good Practice which came into effect on 1 May 2015 (the new Codes) until an aligned sector code is published.

Bowman Gilfillan Africa Group's Deputy Head of Corporate Ashleigh Hale explains, "The Minister has published various sector-specific codes which detail the manner in which broad-based black economic empowerment must be measured for businesses operating in particular sectors including the tourism, forestry, information communication and technology (ICT), chartered accountancy, finance, construction, transport, and agriculture sectors”.

Some sectors have been more successful than others in updating and aligning the existing sector codes with the provisions contained in the new Codes. For example, draft aligned codes for the tourism; marketing, advertising and communications (MAC); and property sectors have been published for public comment in the Government Gazette. The draft aligned Property Sector Code was published for public comment on 23 October 2015, the draft MAC Sector Code was published for public comment in September 2015, and the draft aligned Tourism Sector Code was published for public comment in June 2015. In terms of the Broad-Based Black Economic Empowerment Act, 2003 (BEE Act) the Minister is required to publish the draft amended sector codes in the Government Gazette and give interested persons a period of at least 60 days to comment on the amendments. None of these draft aligned sector codes have yet been finalised.

Hale says that the dti has indicated that they have received the draft aligned AgriBEE Sector Code as well as the draft aligned Forestry Sector Code, although neither has been published for public comment in the Government Gazette as yet.

Meanwhile, the alignment process in other sectors is reportedly still being finalised. Hale notes that, “with regards to the Construction Sector Code, the Construction Sector Charter Council issued a member advisory notice to member organisations of the Established Sector on 16 October 2015 in light of the impasse on ownership percentages that has prevailed during the 14 months of negotiations with the Emerging Sector. In this notice, the Council indicated that there had been no agreement on the alignment of the Construction Sector Code as yet, but that the aligned construction sector code would be submitted to the dti once agreement had been reached. The Council has indicated that this will likely mean that, to the extent that the dti repeals the existing Construction Sector Code, an entity in the sector will be required to comply with the new Codes until an aligned construction sector code is finalised and published."

“Further, the Chartered Accountancy Charter Council published a draft aligned code on its website for public comment late last year, while the Financial Services Sector Charter Council indicated that it would publish changes to its sector codes after an ownership review, but no further progress on either of these aligned codes has been reported as yet,” Hale explains.
Hale says that a draft aligned Integrated Transport Sector Code has also not been made available as yet (although a draft aligned Maritime Transport and Services Industry Subsector Code is available). Further, while the ICT Sector Council was only established on 23 September 2015, it reportedly submitted a draft aligned ICT Sector Code to the dti for approval at the end of October 2015.

"With regards to the Mining Charter, a Government Gazette notice published at the end of October 2015 exempts the Department of Mineral Resources from applying the new Codes for 12 months while the Mineral and Petroleum Resources Development Act and its underlying Mining Charter is reviewed and aligned with the provisions in the BEE Act and the new Codes.

"The Department of Energy has announced that it has commenced a process to align the Liquid Fuels Charter with the new Codes, but no further progress has been reported in this sector either,” says Hale. "There is also no clarity yet on how the exemption notice published at the end of October 2015 impacts on the provisions in the Petroleum Products Act, 1977 which requires the Department of Energy to apply the Liquid Fuels Charter in licencing," she notes.

"Businesses should have more certainty on the alignment of the sector codes by 15 November. If the aligned sector codes are not submitted to the Minister by this date, the non-aligned sector codes will continue to apply in their existing form until repealed. Further, even if draft aligned sector codes are submitted to the Minister and are published for public comment, these draft aligned sector codes are not effective until they have been finalised and published in the Government Gazette, meaning that the existing (non-aligned) sector codes will continue to apply until such date," Hale adds.

Submitted by Bowman Gilfillan