You may be a citizen of SA, but are you still black?

For the purpose of broad-based black economic empowerment (BBBEE), it is generally understood that an individual qualifying for this category of assistance has to be African, coloured or Indian, as well as a South African citizen.

BEE allows for a person to be a South African citizen through birth, descent or naturalisation.

However, citizenship through naturalisation only applies in limited circumstances.

With an increasing number of people immigrating to our shores and acquiring citizenship, the proviso that an individual be a South African citizen is coming under increasing scrutiny.

This has resulted in people who previously qualified as being black no longer doing so.

The circumstances in which citizenship by naturalisation resulted in qualification as a black person were recently amended.

This occurred when the Codes of Good Practice on BBBEE were amended in 2015.

In terms of the revised codes, citizenship through naturalisation must have occurred:

. Before April 27 1994, the date of the commencement of the Constitution of the Republic of SA Act of 1993; or

. On or after April 27 1994 – for anyone who would have been entitled to acquire citizenship by naturalisation prior to that date.

Hence, the test for whether an individual meets these naturalisation criteria is factual and objective.

By comparison, the original BEE codes stipulated that citizenship through naturalisation must have occurred:

. Before the commencement date of the Constitution; or

. After the commencement date of the Constitution, but also applicable to those who – without the apartheid policy – would have qualified for naturalisation before then.

The wording, “but who – without the apartheid policy – would have qualified for naturalisation before then” was broad enough to allow for a variety of circumstances to be accepted as reasons for an individual not being naturalised before the specified date.

The original BEE Act defined a black person even more widely than the original BEE codes.

The act defined black people as being Africans, coloureds and Indians without any link to South African citizenship.

This act has similarly been amended to reflect the same definition as that which appears in the revised BEE codes.

As a result, where an individual is a South African citizen through naturalisation, they may have qualified as being black for BEE purposes under the original BEE act or BEE codes – but may no longer do so under the revised ones.

This also has implications for entities in which that person holds shares, because, given the operation of law and the amendment of the definition of a black person, such entities will no longer have the same black ownership numbers that they had prior to the amendments.

According to the extent that the individual has given warranties that they qualify as being black – or the entity through which they hold shares qualifies as such – that individual may be in breach of those warranties.

In addition, a company which has provided warranties to third parties regarding its black ownership may be in breach of their warranties as a result of their shareholding no longer qualifying as black.

People, as well as companies which have previously relied on individuals qualifying as black through naturalisation, should undergo an analysis and take the necessary steps to manage this risk with regard to past, present and future transactions.

Source: Fin24.com