Regulatory Reversal: The PPRA’s Policy Shift on B-BBEE Certification for Fidelity Fund Certificates

PPRA Withdraws Mandatory B-BBEE Certification Requirement for Fidelity Fund Certificate Applications

In a significant development for the property sector, the Property Practitioners Regulatory Authority (PPRA) has retracted its earlier directive that mandated all principal property practitioners to furnish Broad-Based Black Economic Empowerment (B-BBEE) certificates when applying for Fidelity Fund Certificates (FFCs). This move, which was initially part of the PPRA’s compliance requirements under the Property Practitioners Act, had drawn considerable criticism from various stakeholders within the industry.

 

The initial requirement stipulated that a valid B-BBEE certificate, with a minimum score of 40 points (equivalent to a BEE Level 8), was necessary for the issuance of an FFC. The PPRA had communicated this change in April, following a webinar in March, where the legal manager and acting transformation manager of the PPRA, Deli Nkambule, emphasised the non-negotiable nature of this requirement.

 

However, in a quiet reversal of policy, the PPRA has now decided to forgo the demand for level 8 B-BBEE certificates with new FFC applications. This decision comes after the legal team of Sakeliga, a business lobby group, prepared to challenge the PPRA’s directive in court. Sakeliga’s legal arguments, which were outlined in letters of demand to the PPRA, contended that the Act’s reference to a valid BEE certificate could not be interpreted as a mandate for compliance at level 8 or any other level.

 

The PPRA’s board chair communicated this change in a letter to the Real Estate Business Owners of South Africa (Rebosa), indicating that the authority had sought legal counsel and would no longer be enforcing the B-BBEE certificate requirement for FFC applications. This development is particularly noteworthy as FFCs are issued triennially, with the next issuance scheduled for 2025, and the current application window open until October 31.

 

While the PPRA’s retreat from its earlier stance is a tactical victory for those opposed to the stringent B-BBEE certification requirement, it also raises concerns about the manner in which the policy was reversed. The lack of transparency and the abrupt nature of the policy change suggest that vigilance and engagement with regulatory bodies remain crucial for industry stakeholders.

 

As a leading law firm with a commitment to service excellence and a deep understanding of the property sector, Etienne Bedeker Inc. recognizes the importance of staying abreast of such regulatory changes and their implications for our clients. We continue to offer expert legal advice and support to ensure that property practitioners navigate these regulatory landscapes with confidence and compliance.

 

For more insights and updates on legal matters affecting the property sector, stay informed with Etienne Bedeker Inc.