[South Africa] Majority of JSE listed and organs of state entities fail to submit their annual compliance reports, B-BBEE Commission
The B-BBEE Commission has released the annual report on the national status and trends of broad-based economic empowerment for the calendar year 2018 as required by the B-BBEE Act, which report shows that only 43% of the JSE listed entities and 10% of the organs of state submitted their annual compliance reports as required, with the majority clearly failing to comply.
This year’s report shows no significant change in the levels of transformation with black ownership reflecting a decline to 25.2% black ownership from 27% in 2017 and management control still sitting at 38% for black people.
Section 13G of the B-BBEE Act makes it compulsory for all JSE listed entities, organs of state, public entities and SETAs to submit compliance reports on B-BBEE to the B-BBEE Commission, which the B-BBEE Commission must analyse in terms of section 13F (1) (g) of the B-BBEE Act. The report is released in the first quarter of the financial year each year and is now available on www.bbbeecommission.gov.za link http://bit.ly/2RMGO9A.
The findings of the analysis for the 2018 calendar year compared to 2017 indicated no significant improvement as only 43% (51% - 2017) of JSE listed companies and 10% (1% - 2017) organs of state complied with the reporting requirement, which may be followed by referral for prosecution as this worrying trend of non-compliance is clearly undermining the objectives of the B-BBEE Act.
The report is based on information that was submitted to the B-BBEE Commission for the period 1 January 2018 to 31 December 2018 by JSE listed entities, organs of state, public entities and SETAs as per section 13G reporting requirement in the B-BBEE Act, as well as 1674 B-BBEE certificates captured on the B-BBEE Portal for 2018.
The report results show that Black Ownership is at 25.2% (27% -2017) and Black Women Ownership at 10.1% (9% - 2017). As in 2017, only 38% (male – 21.63%; female – 16.76%) of JSE listed entities board control is held by black people and majority at 61.61% is held by white people and foreign nationals. The 2016 report indicated 30% (male – 18%; female – 12%) black South Africans held directorship on listed entities.
JSE listed entities achieving at least B-BBEE contribution level 4 have increased by 10.9% compared to 2017. The analysis indicates that 50.93% (40% - 2017) of entities are level 4 and higher, while 44.48% (60% - 2017) entities are between level 5 and non-compliant B-BBEE status. State organs that reported show that 59% rated between level 2 and level 7, while 41% were level 8 to non-compliant B-BBEE status.
The low level of reporting and the slow pace of improvement in B-BBEE elements is a concern, but the B-BBEE Commission welcomes that B-BBEE compliance is now part of the audit scope of the Auditor General and also that annual B-BBEE reporting is a listing requirement on the JSE. Therefore, with these interventions and the enforcement action of the B-BBEE Commission, reporting and the extent of B-BBEE implementation is expected to improve.
The B-BBEE Commission has started conducting site visits on the reports submitted and this is part of verification of the accuracy of the reports submitted as well as identifying best practices to share with other measured entities.
The B-BBEE Commission appreciates the level of cooperation already shown by measured entities on the site visits conducted thus far. The B-BBEE Commission remains available to assist those who require advice on B-BBEE for free.