B-BBEE compliance for companies is not a legislative requirement. Companies are not required to disclose their B-BBEE status or verify their status. It is seen as business requirement.
However, the B-BBEE Act requires that all JSE listed entities must submit a compliance report on the status of their B-BBEE, on an annual basis, within the prescribed time frames and in the prescribed format. This means that compliance with the B-BBEE act is compulsory for such entities. Indeed, section 13G (2) requires a JSE listed entity to undergo a B-BBEE verification by a SANAS accredited verification agency and to disclose the contents of such a verification on the prescribed form to the BEE Commission. Failure to do so would constitute an offence in terms of the B-BBEE Act.
Directors of a JSE listed entity have a fiduciary duty to ensure that a company satisfies all legislative requirements imposed on it. It therefore means that a director of a JSE listed entity must ensure that the provisions of the B-BBEE Act related to reporting have been satisfied.
An auditor has a duty to report on irregularities discovered during an audit of a JSE listed entity. One such irregularity an auditor must report on is a material breach of a director’s fiduciary duty in terms of meeting the provisions of the B-BBEE Act that is applicable to a JSE listed entity.
An auditor is also obligated to ensure that the directors of a JSE listed entity are complying with their fiduciary duties. Measures should therefore be put in place to ensure that the necessary audit checks are carried out to ensure that a director’s fiduciary duty to comply with the provisions of the B-BBEE Act have been met.