“I have a black woman that has been working for me for a number of years. She is an asset to my business and I have been planning to give her shares in my company. However, she’s from Zambia and is only a permanent resident of South Africa. Will she qualify as a black shareholder for purposes of BEE legislation if I make her a shareholder?”
To answer this, it is important to outline the objectives of the Broad-Based Black Economic Empowerment Act 53 of 2003 (“B-BBEE Act””). The B-BBEE Act was enacted to redress historical disparities suffered by specific races in South Africa. It aims to do this by increasing the participation of black South Africans in the economy and to afford them opportunities through increased employment and more equitable income distribution.
Section 1 of the B-BBEE Act defines Black people as Africans, Coloureds and Indians-
- who are citizens of the Republic of South Africa by birth or descent; or
- who became citizens of the Republic of South Africa by naturalisation -
- before 27 April 1994; or
- on or after 27 April 1994 and who would have been entitled to acquire citizenship by naturalisation prior to that date;
Additionally, our courts have also determined that Chinese persons will be included in the definition of Black people if they are citizens of South Africa by virtue of Section 1 above. This means that the B-BBEE Act qualifies Africans, Coloureds and Indians (including Chinese since 2008) who are citizens by birth, descent or naturalisation as Black persons for purposes of the B-BBEE Act and related legislation and regulations.
What this means is that the black woman working for your, being of Zambian descent and not a South Africa citizen, will not fall within the definition of a Black person for purposes of the B-BBEE Act and will not qualify as a Black person. Although nothing is stopping you from making her a shareholder in your company, you will not be able to receive any recognition for her as a Black shareholder. Any misrepresentation of her status, would also amount to an offence with the potential of a fine or imprisonment.