Draft guidelins on employee ownership and other broad-based ownership strcutres still to be published

The Department of Trade, Industry and Competition (“DTI”) is in the process of drafting guidelines on employee ownership and other broad-based ownership schemes (“Schemes”), Minister Ebrahim Patel (“Minister”) announced.

The Minister held a press briefing on 30 April 2021, wherein he provided information on the progress with the implementation of employee ownership arrangements at five large companies. At the press briefing he indicated that the DTI is preparing draft guidelines on the use of such Schemes.

The B-BBEE Commission announced in 2019 that most Schemes were not compliant with B-BBEE legislation and therefore do not constitute ‘real black ownership’. This left businesses in the dark regarding the implementation of such Schemes in a manner which will be acceptable to the Commission.

However, and even though the full extent of the guidelines are not yet known, the Minister indicated that the guidelines will provide for the recognition of evergreen structures which provide for longevity for employee participation in ownership structures. This will provide much needed clarity on the implementation of certain sections of the Broad-Based Black Economic Empowerment Act relating to Schemes.

The Minister further announced that the DTI, business, and organised labour are in discussions to propose amendments to the Companies Act which will provide for greater opportunities for participation of employees at board level.