The BEE Regulations of 2016, promulgated under the BEE Act, provide for the process of registering a major BEE transaction with the BEE Commission. The Minister of Trade and Industry published a notice on 9 June 2017, stipulating that a major BEE transaction is any BEE transaction concluded on or after 24 October 2014, which has a transaction value equal to or in excess of ZAR 25 million and results in an entity receiving ownership recognition in terms of Statement 100 of the Codes of Good Practice. These transactions must, within 15 days of being concluded, be submitted to the BEE Commission for registration by completing the prescribed form B-BBEE 18 in compliance with section 13F(1)(f) of the BEE Act.
All major BEE transactions concluded on or after 24 October 2014 (and before 9 June 2017) must be registered with the BEE Commission by 9 August 2017. Major BEE transactions concluded before 24 October 2014 may also be registered on a voluntary basis. There is also an obligation on parties to a major BEE transaction to notify the BEE Commission of any change to the BEE elements of an entity occurring after the transaction is registered (provided the change meets the ZAR 25 million threshold).
It is important to note that the BEE Act and the BEE Regulations do not require pre-approval of major BEE transactions by the BEE Commission.
The BEE Commission published a guidance note on 13 June 2017, which explains in more detail the reporting of major BEE transactions. In the guidance note, the BEE Commission stipulates that the following documents should be included when submitting form B-BBEE 18:
- a brief description of the major BEE transaction;
- a copy of a signed sale agreement, or similar agreement transferring shares/interest/assets/business, as the case may be, from one party/entity to another;
- a copy of a signed shareholders’ agreement, or similar agreement governing the relationship between holders of interest, in respect of the major BEE transaction;
- a copy of signed trust deeds, if the ownership structure of the major BEE transaction includes a trust;
- a copy of a signed financing agreement relating to the major BEE transaction, irrespective of whether or not it was vendor financed;
- a copy of a schematic diagram of the ownership structure before and after the conclusion of the major BEE transaction;
- a copy of a valid BEE Certificate or a BEE sworn affidavit, as the case may be, of the measured entity involved in the major BEE transaction; and
- any document that the parties/entities deem relevant to the major BEE transaction
One can claim confidentiality in respect of information submitted to the BEE Commission in terms of section 13L of the BEE Act. The BEE Commission may, subject to any confidentiality claimed, use the information submitted for registration of a major BEE transaction in producing a report which it may publish.
One has to question the capacity of the BEE Commission to consider each major BEE transaction in any detail. It may be that the BEE Commission will randomly check transactions or choose certain transactions based on criteria such as complaints lodged, high profile deals or ones that may have had adverse press coverage. There is no sanction in the BEE Act or in the BEE Regulations for failing to report a major BEE transaction within the prescribed time period. Failure to do so may however cause difficulties on exit and impact due diligence reporting, as future buyers are likely to request evidence of compliance with this legislative requirement.
