ICT charter`s legal implications

By Itumeleng Mogaki, ITWeb junior journalist

Johannesburg, 21 Sept 2005

The ICT black economic empowerment (BEE) charter and the Department of Trade and Industry`s Code of Good Practice are not legal documents, but once they have been finalised they will amount to "subordinate legislation".

This is according to Belinda Mapongwana, an associate at Bowman Gilfillan attorneys, who was speaking at the E-Government Conference in Rosebank yesterday.

She explained that the BEE Act, which is primary legislation, empowers the minister to issue Codes of Good Practice. Codes of Good Practice are subordinate legislation because they derive their status from the power given to the minister by the Act. In terms of hierarchy, subordinate legislation ranks below the primary legislation which is the Act, she said.

Mapongwana said although the private sector will not be legally bound to comply with the charter and code requirements, it will be difficult for companies to do business with the government or public entities unless they comply.

"The government and public entities must use the codes to determine whether they should do business with private entities or not. The private sector must also apply the principles and guidelines contained in the codes when implementing broad-based BEE," said Mapongwana.

In terms of equity ownership, Mapongwana said: "Equity interest actually held by black people will be measured as proof when awarding BEE points to a company."

Asked about the monitoring and evaluation of the ICT empowerment charter, she said: "The broad-based BEE Act of 2003 says a company must submit an annual report to the council, and the council will monitor whether the entity has complied with the requirements of the charter."

With regards to the legitimacy of a black empowerment partner, Mapongwana said it is in a company`s best interest to research a prospective partner before concluding a BEE deal.

"There is no monitoring tool in respect of whether the company is accredited or not," she said.