Interpretation of the Leniency Programme

1. Section 1 of the B-BBEE Act applies to interpretation of this Leniency Programme.
2. Section 2 of the B-BBEE Regulations also applies to this Leniency Programme.
3. A word or expression that is defined in the B-BBEE Act including the B-BBEE Regulations bears the same meaning in this Leniency Programme as in the B-BBEE Act or Regulations.

Reportable B-BBEE ownership transactions

The Leniency Programme apply to all ownership transactions (excluding Statement 103 which deals with recognition of equity equivalents for multinational) concluded prior to 24 October 2014 from R25 million and above at the time of being concluded. The threshold is aligned to the threshold determined by the Minister through Notice 551 in Government Gazette No. 40898.

The threshold is based on the value of the transaction excluding administration, professional and legal fees. For Statement 102, the value of the transaction means the value of the sale of asset/business/equity instrument

Who must report the B-BBEE ownership transaction?

Any party to the B-BBEE ownership transaction can report the transaction to the B-BBEE Commission in the prescribed FORM B-BBEE 22 issued in accordance with 13F(1)(a) of the B-BBEE Act, within ninety (90) days from the effective date of this Leniency Programme.

The following documents to be submitted with FORM B-BBEE 22 in reporting a B-BBEE ownership transaction:

1. Letter of authority or any similar proof that the party/entity registering the B-BBEE ownership transaction is authorised by the other parties/entities to the transaction to register;
2. Brief Description of the B-BBEE ownership transaction;
3. Explanation on the status of the B-BBEE ownership transaction and impact on black participants;
4. Copy of a signed the Sale Agreement, or similar agreement transferring shares/interest/assets/business, as the case may be, from one party/entity to another;
5. Copy of a signed Shareholders’ Agreements, or similar agreement governing the relationship between holders of interest, in respect of the B-BBEE ownership transaction;
6. Copy of signed trust deeds, if the ownership structure of the B-BBEE ownership transaction includes a trust;
7. Copy of a signed financing agreement relating to the transaction, irrespective of whether or not it was vendor financed;
8. Copy of the valuation report prepared for the purpose of determining the value of the B-BBEE ownership transaction;
9. Copy of the sale agreement where black people have exited due to sale or loss of shares;
10. Copy of the Schematic Diagram of the ownership structure before and after the conclusion of the B-BBEE ownership transaction;
11. List of shareholders of the measured entity after the conclusion of the B-BBEE ownership transaction, indicating the percentage of each shareholder, class of shares, and clearly reflecting black shareholders on the list;
12. Copy of a valid B-BBEE Certificate or a B-BBEE Sworn Affidavit, as the case may be, of the measured entity involved in the B-BBEE ownership transaction; and
13. Any document that the parties/entities deem relevant to the transaction.

A party that reports a B-BBEE ownership transaction will receive immunity from B-BBEE investigation in terms of sections 13F(1)(d) and 13J(1) of the B-BBEE Act, should there be any inconsistency with the B-BBEE Act.

Immunity from investigation will be removed should the party fail to report the B-BBEE ownership transaction to the B-BBEE Commission within the stipulated time frame or that the B-BEE Commission has already initiated an investigation in relation to the transaction or any related transaction wherein the black ownership derived from the reported B-BBEE ownership transaction is recognised by the related transaction.

Process post reporting the B-BBEE ownership transaction

Upon receipt of the B-BBEE ownership transaction, a reportable transaction number will be allocated within five (5) days, and within ten (10) days issue the certificate of reporting a B-BBEE ownership transaction to the party that submitted the transaction using FORM B-BBEE 23, after the B-BBEE Commission has satisfied itself that the party in question meets the requirements of the Leniency Programme. Part of the evaluation may involve request for additional information or meeting with the party that reported the B-BBEE ownership transaction.

The B-BBEE Commission may within ninety (90) days after issuing the reporting certificate, assess the reported B-BBEE ownership transaction to determine adherence to the B-BBEE Act, and advise the party that submitted the transaction in writing of any concerns about the transaction.

The party issued with the written advice must take steps to remedy the B-BBEE ownership transaction within 90 days after receiving the advice from the B-BBEE Commission.

The B-BBEE Commission will maintain a database of all reported B-BBEE ownership transaction and publish such on its website or through any media platform.

Immunity from B-BBEE investigation

1. The B-BBEE Commission will provide the party reporting the B-BBEE ownership transaction with written immunity from B-BBEE investigation. Immunity granted is only limited to the reported B-BBEE ownership transaction, and will not extend to other B-BBEE elements as per the applicable Codes or other ownership transactions such as party is part of, unless the transaction has been reported in terms of this Programme.
2. The B-BBEE Commission may either grant absolute or conditional immunity depending on the circumstances surrounding the reporting of the B-BBEE ownership transaction. Absolute immunity will be granted in instances where the B-BBEE Commission after assessing the reported B-BBEE ownership transaction is of the view that the is no need to refer certain aspects of the transaction to other regulatory institutions such as the Companies and Intellectual Property Commission. Conditional immunity on the other hand will be granted where the B-BBEE Commission has determined contraventions of other pieces of legislation and thus obligated to refer such violations to the relevant regulatory or enforcement institutions such as South African Revenue Services, National Prosecuting Authority and the Competition Commission.
3. Irrespective of whether absolute or conditional immunity from B-BBEE investigation has been granted, any party who after receiving immunity from the B-BBEE Commission is found to have engaged in any fronting practice outside the reported B-BBEE ownership transaction, will forfeit the immunity granted.
4. Failure to implement the directive of the B-BBEE Commission regarding remedying the B-BBEE ownership transaction will also result in the cancellation of the immunity status.
5. Further, if subsequent to granting immunity from B-BBEE investigation it is established by the B-BBEE Commission that the reporting party failed to disclose information that was material for purpose of benefiting from the Leniency Programme, the B-BBEE Commission will withdraw the immunity and proceed to investigate the B-BBEE ownership transaction in line with the requirements of the B-BBEE Act.

Requirements and rules for receiving immunity from B-BBEE investigation

1. A party reporting the B-BBEE ownership transaction will only qualify for immunity from B-BBEE investigation provided such a party is:
2. The first person to voluntarily report the B-BBEE ownership transaction to the B-BBEE Commission;
3. Disclose full and complete information pertaining to the reported B-BBEE ownership transaction;
4. Acting in good faith and cooperative in the manner that it interacts with the B-BBEE Commission and has not concealed any material information relating to the B-BBEE ownership transaction;
5. Willing to act in accordance with the directives of the B-BBEE Commission post assessment of the reported B-BBEE ownership transaction; and
6. The rules of confidentiality of information as prescribed in the B-BBEE Act also apply in respect of any information that is submitted through the Leniency Programme process. However, confidentiality claims cannot be raised to restrict the B-BBEE Commission from accessing all relevant and material information relating to the B-BBEE ownership transaction.

Failure to report a B-BBEE Ownership transaction

1. Any party that fails to report a B-BBEE ownership transaction within the stipulated time frame will forfeit any immunity made available by the B-BBEE Commission, and when the B-BBEE Commission solely becomes aware of such transactions, the B-BBEE Commission will initiate an investigation and findings of such an investigation will be issued without remedial actions, and further refer the matter for prosecution to the National Prosecuting Authority.

B-BBEE ownership transactions that cannot be reported

1. There are instances where the Leniency Programme will not be applied, for example:
2. Transactions that are already subject to investigation in terms of section 13J(1) of the B-BBEE Act read with regulation 15 of the B-BBEE Regulations;
3. Transactions where the B-BBEE Commission issued an advisory opinion and such advice was disregarded by the parties;
4. Matters referred to the B-BBEE Commission for investigation by other regulatory institutions such as, but not limited to, the South African Revenue Services, Competition Commission, Companies and Intellectual Property Commission, and South African National Accreditation Systems; and
5. Transaction involves persons who are under investigation in terms of section 13J(1) of the B-BBEE Act read with regulation 15 of the B-BBEE Regulations.