The new Licensing of Business Bill (“the Bill”) has already caused a stir in the business world. Many have voiced against the Bill stating that it would cause more bureaucracy and red tape in the formation and continuation of running a business. The Bill is aimed at anyone starting a business or has an existing business regardless of whether it is in the formal or informal sector. The purpose of the Bill, inter alia, is to promote the right to freedom of trade, occupation and profession and to provide a standardised regulatory framework within which business licensing would take place. In its current form, the Bill envisages compliance as set out below.

To apply for a license seems simple enough in that one is, inter alia, required to fill out an application form, be compliant with the necessary company laws and pay an application fee. The Bill allows for a thirty day period for the relevant authority to evaluate the application based on the requirements and, if it deems fit, to pose conditions on the license. The Bill does not define what conditions may be imposed or the boundaries of such conditions. The licensing authority, if they deem to reject the application because of a failure to comply with the requirements, may return the application to the applicant and request further information for compliance thereof. If the licensing authority requires more time, they must have justifiable grounds and they must inform the applicant. Further, they may only have an extension for fourteen days and may only apply twice for such an extension. Failure to issue a license after the expiration of an extension, the license is deemed to have been approved. Similarly, if the applicant fails to comply with any further information required by the licensing authority, then said application is deemed to have been abandoned.

Once issued, the license is valid for a period of five years. To renew the license one would need to again comply with the requirements mentioned above and to have done so at least three months prior to expiration of said license. The processes of objections by the licensing authority apply same as above. Similarly, the licensing authority’s failure to renew the application within the prescribed time is deemed to have been renewed; and where the applicant fails to comply with the requests from the licensing authority’s objections, the said application is deemed to have been abandoned.

Where a license was granted erroneously, dishonestly or fraudulently, or was in contravention of the Bill, then either by its own initiative or by the application of the license holder or in accordance with a court order, the license authority may revoke or suspend the license. Once revoked, all benefits and allowances lapse from the date of revocation. The license authority may automatically revoke a business license if inter alia it is found that the business license holder is:

• Found guilty of selling counterfeit goods in terms of the Counterfeit Goods Act or any applicable legislation;
• Found guilty of employing an illegal foreigner; or
• Found guilty of conducting an illegal business from the licensed premises.

The Bill also makes reference to fronting practices, which includes, inter alia, a person applying for a license on behalf of another and deems such practice an offence in terms of the Bill.

An interesting provision of the Bill allows for the licensing authority in its sole discretion to amend licenses or its conditions thereof if it is in the public interest, by providing reasons for the proposed amendments and allowing for the license holder to respond to such proposed amendments. The licensing authority is to publish such proposed amendments in the Government Gazette. Similarly, if a license holder wishes to amend his license, he may do so following a procedure that requests an amendment showing reasons and also publish said amendment in the Government Gazette.

Any person is automatically disqualified from having a license if he/she:

• Is an illegal foreigner or undesirable person, as defined in terms of the Immigration Act, Refugees Act or any applicable legislation;
• Was in the preceding two years found guilty of a contravention of the Act or any other law that results in revocation of the said license; or
• Failed to comply with the instruction or application requirements of this Bill.
• No person may trade in business or sell goods without a business license and as such the Bill would place stringent penalties as per the applicable provisions. These include either a fine or imprisonment for a period not exceeding ten years or both. In assisting the enforcement of the Bill, it allows for inspectors to be used. Businesses may not deny entry to inspectors for the purposes of the Bill and their powers, inter alia, include to:
• Inspect or copy any document, take photographs or make audio-visual recordings of any person, process, action or condition on or regarding any premises and take samples of any substance that is relevant to the inspection;
• Question any person on the premises which may be relevant to the inspection; and
• Question any person whom the inspector believes may have information relevant to the inspection.

If the Bill is enacted, it would be interesting to see whether the inspector’s powers hold up to a Court’s scrutiny as they seem invasive.

Amongst other aims, a pertinent one is for the licensing authority and the Provincial Department to keep an updated central registry of all licensed businesses known as the Business Registry. The business registry is inter alia a record of the business details, the nature of business, the expiration date of the license, and the registration details of said business.

The intention of the Bill seems to be in the right place. However, it may do some harm in the formation of small business which may not always comply with company laws and regulations in order to start-up. It does not make any provision for these circumstances where compliance may not necessarily be feasible and instead focuses on forcing businesses to operate strictly around the company laws and regulations. This then does not go to the promotion of the right to freedom of trade as postulated in the Bill but rather to strict compliance.

Written and prepared by Kirith P. Haria, Bouwer Kobeli Morabe Attorneys

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